Shri Rajan M Shah, 4, Hem Niwas, Kalichand road, Kandivali (W), Mumbai-400067 Vs. The Asstt. Commissioner of Income Circle 25(3), Pratyakshakar Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai-400051
June, 01st 2015
, " "
IN THE INCOME TAX APPELLATE TRIBUNAL"D" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM)
.. , ,
( / Assessment Years : 2006-07)
Shri Rajan M Shah, / The Asstt. Commissioner of
4, Hem Niwas, Income Circle 25(3),
Kalichand road, Vs.
Kandivali (W), Bandra Kurla Complex,
Mumbai-400067 Bandra (E),
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AKJPS7525D
/ Assessee by Shri Ketan L Vajani
/ Revenue by Shri Love Kumar
/ Date of Hearing : 3.3.2015
/Date of Pronouncement : 29.5.2015
/ O R D E R
Per B R Baskaran, AM:
The assessee has filed this appeal challenging the order dated
5.11.2012 passed by the Ld. CIT(A)-35, Mumbai and it relates to the
assessment year 2008-09.
2. The assessee is aggrieved by the decision of the Ld. CIT(A) in
confirming the assessment of "Short Term Capital Gains" (STCG) and
"Long Term Capital Gains" (LTCG) arising on sale of shares as business
income of the assessee.
2 ITA. No.971/M/2013
3. We heard the parties and perused the record. During the year
under consideration, the assessee declared STCG of Rs.16.20 lakhs and
LTCG of Rs.15.82 lakhs, both arising on sale of shares. The AO treated
the same as business income of the assessee and it was also confirmed by
the ld. CIT(A).
4. Before us, the main contentions of the ld.AR are that
(a) the assessee is an investor mainly involved in purchase and sale
of bonds/securities and he has also dealt in as part of his investment
(b) the assessee has only invested his own funds and he has not
borrowed any funds for this purpose.
(c) there is no major repetitive purchases and sale of same shares.
(d) the assessee has received dividend income of Rs.14.30 lakhs
(e) the assessee has maintained regular books of account and
shares have been shown as investments only.
5. On the contrary, the ld. DR submitted that the assessee should be
treated as trader in shares considering the volume and frequency of
transactions in shares and repetitive transactions entered by the assessee.
6. A perusal of the Balance Sheet furnished by the assessee would
show that the assessee has invested his own funds and he has not
borrowed any fund for the purpose of making investment in shares. The
investment details of the assessee as at the end of the year under
consideration are given as under:
3 ITA. No.971/M/2013
Particulars Amount in Rs.
LIC New 5,19,000
MKVDC Bond 1,14,96,000
ICICI Bond 9,00,000
Shares in 3A capital services 1,39,80,000
A perusal of the investment details would show that more than 50 % of
the investments have been made in bonds issued by various Financial
Institutions. Further the assessee has classified the Share purchases as
part of his investments only.
7. The details of purchases and sale of shares undertaken during the
year under consideration are given in paragraph 16 (Pages 13 to 15) of
the order of Ld CIT(A). A careful perusal of the details of shares
purchased and sold by him would show that though the assessee had held
shares ranging from 2 days to 354 days, yet the majority of the shares
have been held for more than 100 days. The assessee has furnished an
analysis of sale of shares in "period range" and the same finds place in
page 25 of the order of Ld CIT(A). A perusal of the same would show that
only 13% of the shares that were sold (falling in STCG) were held for less
than 100 days, meaning thereby the assessee has held about 87% of the
shares that were sold under STCG category for more than 100 days. With
regard to the allegation of repetitive transactions, we notice that the
assessee has either sold shares in more than one lot in some of the cases
or there is considerable time gat between one set of transaction another
8. Under these set of facts, we are of the view that the assessee
cannot be considered to be a trader in shares and accordingly, we hold
that the assessee has carried on share transactions as investor only. In
4 ITA. No.971/M/2013
view of the above, we set aside the order of ld.CIT(A) and direct the AO to
assess the profit arising on sale of shares as capital gains only.
9. In the result, the appeals filed by the assessee is allowed.
The above order was pronounced in the open court on 29th May, 2015.
29th May, 2015
( /SANJAY GARG) ( .. / B.R. BASKARAN)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai: 29th May,2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
, /ITAT, Mumbai