CA Saurabh Chokhra
Brief of the case:
The ITAT Bench Jaipur in the above cited case held that as per CBDT circular 6/2016 dated 29.02.2016 , if the assessee has treated the securities as investment and not as stock in trade earlier years,the revenue is not permitted to take a contrary view in the present year to claim that the security is stock in trade
Facts of the case:
1. Assessee filed his return of income declaring total income of Rs. 85,86,760/-. During the course of assessment proceedings, the AO observed that the assessee claimed investment activity and shown short term capital gain from share transaction of Rs 73,70,214/-.
2. AO examination of records of assessee observed that assessee has done voluminous transactions in shares & units. The transactions are frequent and amount involved is very large. On careful analysis of the entire portfolio and resultant purchase andsale of scrips, the AO observed that there has been a systematic and regular trading pattern and shares have been purchased and sold at very regular intervals. This feature is seen in respect of buying of shares of a single company or in respect of buying and selling of shares of many a company for a very short holding period of a few days and few months.
3. AO rejected the contention of the assessee that shares were purchased as investment by observing that out of total no. of shares, most of transactions held is for less than 5 months, many of the shares have been sold within few days of purchase.
4. Accordingly, in his order AO assessed such income as business income. CIT(A) , however, allowed assessee’s appeal by holding that in earlier assessment years also short term capital gain declared by the assessee was not disturbed and further assessee had not indulged in any squaring-up of the transactions on the same day(intraday settlement without delivery of shares).
5. Aggrieved revenue is in appeal before ITAT.
