ACIT 16(2), MUMBAI vs. SHILPA SACHIN MORAKHIA, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dt.24.02.2014, of the CIT(A)-27 the AO has filed the present appeal. Assessee,an individual, derives income from business, capital gains and other sources.She filed her return of income on 25.9.2010 declaring total income of rs.4.73 lacs.The AO completed the assessment u/s. 143 (3) on 5.3.2013 determining income of the assessee at Rs.68,49,820/-. 2.Effective Ground of appeal is about treating the sale of shares.During the assessment proceedings,the AO found that the assessee had shown short term capital gain (STCG) of Rs.70.75 lacs and long term capital gain (LTCG) of Rs.4.73 lacs. Vide his order sheet noting dt.14.12.2012 ,he asked the assessee to explain as to why STCG should not be taxed as business income.After considering the submission of the assessee the AO referred to the case of Laxminarayan Ramgopal (25 ITR 449) ;Bharat Development Pvt. Ltd.(4 Taxman 58); and held that the assessee was having a systematic and regular course of share transaction activity, that there was a continuity of share transaction activity over a period of time, that there was a clear profit motive in the transactions undertaken by the assessee, that the quantity of shares transacted and the quantum of shares involved was very huge,that the assessee’s holding period of shares in some of the cases were less than even a month, that the dividend earned by the assessee was very small, that there was high frequency and repetition of the purchase and sale transactions, that the shares held by the assessee could not be taken as investment. He referred to the circulars issued by the CBDT and finally held that STCG of Rs.70.75 lacs, had to be taxed under the head business income. 3.Aggrieved by the order of the Assessing Officer and the assessment proceedings the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, it was held that she had been a regular investor in shares over a period of time, that AO was treating the loss on shares under the head capital gains and gains under the head business profit, that in earlier years the then FAA had partly allowed the appeal of the assessee .

3359/M/14