Case Law Details
Jitendra Manilal Malkan Vs ITO (ITAT Ahmedabad)
It is observed that during the year the assessee had purchased 34 different scripts and out of which he had sold 32 scripts and did not sell only two scripts (Bombay Rayon fashion and Central Bank of India). Further, out of 32 scripts sold by the assessee during the year, 29 scripts were completely sold while three scripts were partly sold.
From the assessee’s conduct, it is evident that the shares were not purchased for purpose of holding them as investment and the fact that most of the shares were sold by the assessee during the first itself indicates that the assessee intended to purchase and sell shares as business activity and not to hold shares on long-term basis for earning capital gains or earning dividend income.
The CBDT has also issued guidelines for assessing officers on tests for distinction between shares held as stock-in-trade and shares held as investment vide office memorandum, dated 13.12.2005 [F. No. 149/287/2005-TPL] and one of the criteria mentioned therein is whether, the purchase is made solely with the intention of resale at a profit or for long-term appreciation and/or for earning dividends and interest and also the typical holding period for securities bought and sold.
We see that in instant facts, almost all the shares which the assessee purchased during the year were sold by him. As noted above, out of 34 stocks purchased during the year, the assessee sold 32 of those scripts, which is a clear indicator that the intention at the time of purchase of scripts was to sell them at a profit.
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