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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Rajesh Kumar
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 15/06/2012 of the ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to treating the profit on sale of scrips with holding period of more than 30 2 Shri Manoj N.Tekriwal Rs.56,32,080/- and long term capital gain at Rs.1,98,555/-.
During hearing of this appeal, the crux of argument, advanced on behalf of the Revenue, by Shri Randhir Gupta, ld. DR, is identical to the ground raised. On the other hand, Shri G.P. Mehta, ld. counsel for the assessee, defended the conclusion arrived at in the impugned order.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in share trading, derives income from capital gains. We note that the ld. Assessing Officer concluded that the assessee is doing business/trading of shares mainly on the plea that there were repeated transactions in some scrips, which laid to earning of huge profits, there are more than 100 scrips transacted in 150 days during the year, holding period was less than 15 days in many scrips and the intention of the assessee was not to hold the scrips for a longer period i.e. not the purposes of investment but with the intention of trading. We note that the ld. Commissioner of Income Tax (Appeals), while reaching to a particular conclusion, duly considered the submissions of the assessee as contained in para 4.2 (page -2) onwards of the impugned order and found that the assessee showed investment in shares of 42 companies only. Before coming to any conclusion, we are summarizing hereunder the holding period of the shares for ready reference:-
3 Shri Manoj N.Tekriwal Period of No. of sale Capital Gain % of total holding Transactions capital gain 0-30 days 24 3,17,331 5% 31-60 days 7 15,34,022 26% 61-90 days 8 9,18,734 15% 91-180 days 16 32,07,258 54% 181-365 days 11 -27,934 0% Total 66 59,49,411 100% From the chart (reproduced at page-3 of the impugned order), we note that the assessee earned 50% of the short term capital gains out of the investment, where, the holding period is more than 90 days i.e. for the capital gain of Rs.9,18,734/-(15% of the total capital gain) the holding period is between 61 to 90 days, whereas, for gain of Rs.32,07,258/- (which is 54% of the total capital gain) the holding period is 91 to 180 days and the Number of sale of transactions are only 16, thus, the contention of the ld. DR and finding of the ld. Assessing Officer that the assessee hold majority of the shares for a period of less than 15 days is factually incorrect. There are 5% of the transactions, where the capital gain is to the tune of Rs.3,17,331/- having holding period up to 30 days and only 7 transactions (which is 26% of the capital gain) wherein, the holding period is 31 to 60 days, thus, for 66 transactions, the capital gain is Rs.59,49,411/-. The totality of facts, clearly indicate that the volume of transactions is not so high as has been mentioned by the ld. Assessing Officer. It is also not worthy that in immediate assessment year i.e. A.Y. 2007-08, which was framed u/s 143(3) of the Act, the Assessing Officer accepted the claim of capital gains earned by the assessee. Whether the assessee can be called an investor as well as trader has 4 Shri Manoj N.Tekriwal Circular No.4 of 2007 (291 ITR (ST.)35). The case of the assessee further find supports from the decision from Hon’ble jurisdictional High Court in the case of Gopal Purohit 228 CTR 582 (Bom.), which was taken in a appeal filed against the decision of the Tribunal in 29 SOT 117 (Mumb. Trib.) and Janak S. Rangwala vs ACT (11 SOT 627) (Mum.). Admittedly, there are various decisions available on the issue but there is no strait jacket formula, which can be said to be fitting to the case of the assessee. However, the frequency, volume, duration, amount involved, nature of amount invested, intention of the assessee, holding period, etc are some of the factors, which has to be considered while taking a decision as per the assessee, there are 42 transactions of short term capital gain and 11 are for long term capital gain. The total number of days are 150 of buying and selling of scripts within a year and the sales are not on day to day basis. Admittedly, the most of the transactions resulted into profits, which is the motive of every investor/trader, but it cannot be conclude that the assessee was indulging in purely business activity. It is also noted that there are not much repetitive purchase and sale of the scrips except few. The conduct of the assessee also depicts that the intention was to hold the shares for some time before they are disposed off. There is no much intra trading activity. Even otherwise, a prudent investor keeps a watch on the market rent and sometimes a when a particular scrips is continuously in a decreasing trend then to save himself from further losses liquidate the same. The conduct of the 5 Shri Manoj N.Tekriwal 42 scrips in 150 days, it can be said that the frequency is not high. The ld. Commissioner of Income Tax (Appeals) treated the profit of Rs.3,17,331/- on sale of scrips where the holding period was less than 30 days as business and for the remaining where the holding period was more than 30 days, was treated as short term capital gain. So far as, long term capital gain of Rs.1,98,555/- is concerned, there were only 14 transactions, comprising of 12 companies, out of which, gain was resulted out of 7 scrips and in remaining 5, there was a loss. The holding period was more than one year, thus, it cannot be said to be a business profit and was rightly held as long term capital gain. Thus, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals).
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 26/10/2015.