Asstt. CIT v. Suresh R. Shah - Taxpublishers.in

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The Tax Publishers2012 TaxPub(DT) 2600 (Mum-Trib) : (2012) 047 (II) ITCL 0283 INCOME TAX ACT, 1961 --Head of income--Business income or capital gainsSale of shares--Assessee was engaged in the textile business. He claimed that he had received short-term capital gain and long-term capital gains from sale of shares but assessing officer assessed the same under the head 'business income' on the ground that assessee was dealing in large volume of shares. The frequency of purchase and sale was extremely high and the holding period for most of the scripts ranges from a few days to few months. Assessee submitted that he sold only four scripts and except one script all the shares were held for 5 to 12 years and due to boom in the share market, he encashed the investments. For short-term capital gains, assessee submitted that he had transacted only in seven shares and major portion of the shares were held for more than one month and nearly 50 per cent of the shares were held for more than 6 months. Held: It could be seen from the balance sheet that assessee was not only investing in shares but had maintained funds and fixed deposits as well as PPF. As a prudent investor, assessee distributed his investment in all modes of investment by selling a portion of the shares considering the favourable share market which did not mean that assessee was a trader during this year. Further, assessee had not taken any borrowed loan for the purpose of investing in shares. Thus, merely because assessee claimed speculation loss of Rs. 13,484 from shares, short-term capital gain and long-term capital gain admitted by assessee could not be assessed under the head 'business'. Income Tax Act, 1961, Section 14 IN THE ITAT, MUMBAI 'H' BENCH N.V. VASUDEVAN, J.M. & J. SUDHAKAR REDDY, A.M. Asstt. CIT v. Suresh R. Shah ITA No. 6267/Mum/2009 A.Y. 2006-07 10 November, 2010 Income Tax Act, 1961, S. 14 Decision: In assessees favour. Appellant by : Sandeep Goel. Respondent by : Dr. P. Daniel. ORDER *J. Sudhakar Reddv. A.M.* This is an appeal filed by the Revenue directed against the order of the Commissioner (Appeals) -35, Mumbai dated 17-09-2009 for the assessment year 2006-07. 2. Facts of the case are brought out at para 2 page 1 of the Commissioner (Appeals) order which are extracted below for ready reference. The appellant is engaged in the textile business in the name and style of M/s. Trend Creations. For the relevant assessment year, the appellant filed his return of income on 3-7-2006 admitting total income of Rs. 36,213 alongwith short term capital gain of Rs. 1,71,08,298. The assessing officer selected the case for scrutiny and completed the assessment under section 143(3) determining the total income at Rs. 1,92,00,510. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2600 (Mum-Trib) : (2012) 047 (II) ITCL 0283

INCOME TAX ACT, 1961

--Head of income--Business income or capital gainsSale of shares--Assessee was engaged in the textile business. He claimed that he had received short-term capital gain and long-term capital gains from sale of shares but assessing officer assessed the same under the head 'business income' on the ground that assessee was dealing in large volume of shares. The frequency of purchase and sale was extremely high and the holding period for most of the scripts ranges from a few days to few months. Assessee submitted that he sold only four scripts and except one script all the shares were held for 5 to 12 years and due to boom in the share market, he encashed the investments. For short-term capital gains, assessee submitted that he had transacted only in seven shares and major portion of the shares were held for more than one month and nearly 50 per cent of the shares were held for more than 6 months. Held: It could be seen from the balance sheet that assessee was not only investing in shares but had maintained funds and fixed deposits as well as PPF. As a prudent investor, assessee distributed his investment in all modes of investment by selling a portion of the shares considering the favourable share market which did not mean that assessee was a trader during this year. Further, assessee had not taken any borrowed loan for the purpose of investing in shares. Thus, merely because assessee claimed speculation loss of Rs. 13,484 from shares, short-term capital gain and long-term capital gain admitted by assessee could not be assessed under the head 'business'.

Income Tax Act, 1961, Section 14

IN THE ITAT, MUMBAI 'H' BENCH

N.V. VASUDEVAN, J.M. & J. SUDHAKAR REDDY, A.M.

Asstt. CIT v. Suresh R. Shah

ITA No. 6267/Mum/2009

A.Y. 2006-07

10 November, 2010

Income Tax Act, 1961, S. 14

Decision: In assessees favour.

Appellant by : Sandeep Goel.

Respondent by : Dr. P. Daniel.

ORDER

J. Sudhakar Reddv. A.M.

This is an appeal filed by the Revenue directed against the order of the Commissioner (Appeals) -35, Mumbai dated 17-09-2009 for the assessment year 2006-07.

2. Facts of the case are brought out at para 2 page 1 of the Commissioner (Appeals) order which are extracted below for ready reference.

The appellant is engaged in the textile business in the name and style of M/s. Trend Creations. For the relevant assessment year, the appellant filed his return of income on 3-7-2006 admitting total income of Rs. 36,213 alongwith short term capital gain of Rs. 1,71,08,298. The assessing officer selected the case for scrutiny and completed the assessment under section 143(3) determining the total income at Rs. 1,92,00,510.