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Mrs. Perin F. Lalkaka Thumbelina, Opp. Sarvamangal Society, Naranpura Vistar, Ahmedabad V/S D.C.I.T Circle-7, Ahmedabad
November, 07th 2013
                                          1      ITA 3284/AHD/2010
                                                  A.Y. 2006-07

                            I.T. A. No. 3284 /AHD/2010
                            (Assessment Year:2006-07)

       Mrs. Perin F. Lalkaka          V/S D.C.I.T Circle-7,
       "Thumbelina", Opp.                 Ahmedabad
       Sarvamangal Society,
       Naranpura Vistar,

          (Appellant)                          (Respondent)

                               PAN: AAGPL6462K

         Appellant by          : Ms. Urvashi Shodhan
         Respondent by         : Shri P.L. Kureel, Sr. D.R.

                                   ( )/ORDER

Date of hearing                    : 30-10-2013
Date of Pronouncement              : 01-11-2013

  1.      This appeal is filed by the Assessee against the order of CIT(A)-XIV,
          Ahmedabad dated 27.10.2010 for A.Y. 2006-07.

  2.      The fact as culled out from the material on record are as under.

  3.      Assessee is an individual having income from business, capital gains and
          interest income. Assessee filed her return of income for A.Y. 06-07 on
                                          2       ITA 3284/AHD/2010
                                                   A.Y. 2006-07

     29.12.2006 declaring total income of Rs. 43,74,639/-. The case was
     selected for scrutiny and thereafter the Assessment was framed under
     section 143(3) vide order dated 19.12.2008 and the total income was
     determined at Rs. 43,74,639/-. While framing the assessment A.O.
     considered the short term capital gain of Rs. 5,55,334/- shown by
     Assessee as business income of the Assessee. Aggrieved by the order of
     A.O., Assessee carried the matter before CIT(A). CIT(A) vide order
     dated 27.10.2010 dismissed the appeal of the Assessee. Aggrieved by the
     aforesaid order of CIT(A) , the Assessee is now in appeal before us and
     has raised the following effective ground:-
     1. The learned CIT(A) has erred in law and on facts in confirming the treatment of
     the short-term capital gain of Rs. 5,53,334/- as business income.

4.   During the course of assessment proceedings, A.O. noticed that Assessee
     had shown income of Rs. 5,55,334/- as short term capital gains earned on
     shares. He further noticed that Assessee had entered into 60 transactions
     of purchase and sales and the value of purchase was to the tune of Rs.
     63,11,345/- and that of sale was Rs. 68,66,679/-. He also noticed that the
     holding period ranged from 1 to 6 months and the number of companies
     in which the assessee had traded were around 60 companies.                  A.O.
     therefore concluded that Assessee was indulging in frequent buying and
     selling of shares on a very large scale continuously during the year. He
     was of the view that had the intention of the Assessee been to purchase
     the shares for the purpose of investments then the Assessee would have
     only got shares and sold them only on emergency and not frequently as
     done at present by the Assessee. He thus relying on the decision of
     Ahmedabad Bench in the case of Poornima Shah (ITA No.
                                          3       ITA 3284/AHD/2010
                                                   A.Y. 2006-07

     3154/AHD/2002) held the profit earned from buying and selling of shares
     to be "income from business" and accordingly the short term capital gain
     was treated as business income.             Aggrieved by the order of A.O.
     Assessee carried the matter before CIT(A). CIT(A) vide order dated
     27.10.2010 dismissed the appeal of the Assessee by holding as under:-
     5.2   Before commenting on the merits of AR's submission, it is to be seen that
     although the AO has mentioned the no. of transactions, it's value of purchase and
     sale, No. of transactions and investment on a particular, day, but he has not given
     any chart or break up of the shares purchased and sold in a proper manner i.e. date
     of purchase and sale, rate of purchase and sale, number of shares purchased and
     sold, number of shares of company-wise, purchase amount of shares, rate of sale,
     date of sale, number of shares sold, number of shares sold company-wise, net capital
     gain/ net capital loss and so on. Similarly the AR has also rebutted the AO's plea in a
     general manner but is not supported by documentary evidence i.e. copy of balance
     sheet and copy of the P&L A/c. to show the closing stock in a particular year and the
     expenses incurred for the purpose of purchase and sale of shares, no break- up of the
     money available with the appellant at the time of purchase of shares, no break up of
     money borrowed by the appellant before the' purchase of shares/investment in shares.
     Further there is no chart or break up of the details already mentioned in the above
     para. The AR has only replied in theory and in a general manner citing some
     decisions in his favour and rebutted the decision relied by the AO. In absence of the
     details of the transactions of shares/investment for retaining period, number of-
     shares, name of the company and rate of purchase and sale and other things, it is not
     possible to decide as to whether the transaction is a short term capital gain/
     investment or meant for a business activity. Thus, I have no alternative but to confirm
     the order of the AO on this issue. Therefore, the AO's treatment of Short Term Capital
     Gain of Rs.5,55,334/- as business income is confirmed and the appeal is dismissed.

5.   Aggrieved by the order of CIT(A), the Assessee is now in appeal before
                                    4      ITA 3284/AHD/2010
                                            A.Y. 2006-07

6.   Before us, the ld. A.R. submitted that Assessee is the Senior Citizen and
     her taxable income was over 25 lacs for the last few years. She had
     substantial surplus fund which had been invested in various investments.
     It was further stated that Assessee did not borrow any money to make
     investments, Assessee had taken the delivery of the shares and had not
     entered into the transactions of sale without taking delivery. It was
     further submitted that no F & O activity was carried out by the Assessee.
     The ld. A.R. further pointed to the statement of capital gains earned
     during the year and also submitted share-wise ledger account and the
     copy of which were placed in paper book. She further submitted the copy
     of the pass book of the Assessee to demonstrate that the Assessee had
     used her own funds and no borrowed funds were used for making
     investments. She further submitted that the intention of the Assessee was
     to hold the shares as investment. She also placed on record, the chart
     showing the capital gains earned by the Assessee in 3 years prior and 3
     years after A.Y. 06-07 and from it demonstrated the capital gains earned
     by the Assessee in various years. She further submitted that the loss
     incurred by the Assessee in A.Y. 08-09 & 09-10 have been carried
     forward and not adjusted against the taxable income which proves her
     intention that the investments were not business activity of the Assessee.
     She further placed reliance on the decision of Ahmedabad Tribunal in the
     case of Kalpesh C. Shah ITA No. 2818/Ahd/2011 order dated 31.10.2012
     apart from various other decisions in her support. The ld. D.R. on the
     other hand supported the order of A.O. and CIT(A).
                                     5      ITA 3284/AHD/2010
                                             A.Y. 2006-07

7.   We have heard the rival submissions and perused the material on record.
     It is an undisputed fact that Assessee had earned profit on sale of shares
     amounting to Rs. 5,55,334/- which has been treated by Assessee as short
     term capital gains but on the other hand the A.O. has treated into as
     "business income" and which has also been confirmed by CIT(A). From
     the order of CIT(A), we find that the reason for confirming the order of
     A.O. interalia was that the Assessee had not given any chart or break up
     of the shares purchase and sold containing the details of date of purchase
     and sale, rate of purchase and sale, number of shares purchase and sold,
     number of shares company wise, purchase amount of shares, net capital
     gain loss etc. He has further noted that the Assessee has also not filed
     any copy of balance sheet or Profit and Loss account to prove the
     availability of own funds with the Assessee and further substantiate her
     stand that no borrowed funds have been used by the Assessee. In the
     absence of aforesaid details, according to CIT(A), the matter could not be
     decided as to whether the transactions entered by the Assessee were in
     the nature of short term capital gain or the transactions were meant for
     business activity.

8.   Before us in the paper book the Assessee has filed the details and
     working of the capital gains earned giving various details therein. She has
     also filed the copy of the bank book of the Assessee in support of her
     contention that she was having own funds and further her own funds have
     been used for the purpose of making investments. She has also filed copy
     of balance sheet. In view of the aforesaid submissions and details filed
     by the Assessee, we feel that the matter needs to be reexamined at the
     end of CIT(A). We therefore feel that to meet the ends of justice and fair
                                            6      ITA 3284/AHD/2010
                                                    A.Y. 2006-07

             play the matter needs re-examination by CIT(A) and we therefore restore
             the issue to the file of CIT(A) for him to decide the issue after
             considering the submissions of the Assessee, the case laws relied by the
             Assessee and other supportings and details placed by the Assessee and
             thereafter decide the issue after giving a reasonable opportunity of
             hearing to the Assessee. The Assessee is also directed to cooperate by
             submitting the necessary details called for by CIT(A).

     9.      In the result, the appeal of the Assessee is allowed for statistical

              Order pronounced in Open Court on 01- 11 - 2013.

             Sd/-                                               Sd/-
   (D.K. TYAGI)                                        (ANIL CHATURVEDI)
 JUDICIAL MEMBER                                      ACCOUNTANT MEMBER
Ahmedabad.                         TRUE COPY

Copy of the Order forwarded to:-
1.        The Appellant.
2.        The Respondent.
3.        The CIT (Appeals) ­
4.        The CIT concerned.
5.        The DR., ITAT, Ahmedabad.
6.        Guard File.
                                                           By ORDER

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