The assessee is engaged in business of auto spare pails and investment in bonds, mutual funds and other securities. The assessee filed his return declaring STCG on the basis that the shares were purchased with an intention of investment. But the Ld. AO rejected the assesse’s claim making profit from sale of shares taxable under the provisions of business income. On further appeal to Ld. CIT (A), the same was upheld stating that assessee failed to maintained separate books of accounts for the investment and the sale purchase took place in very short time period. Whenever any share is purchased with the intention of investment, it cannot be sold off within a very short span of time, since the share market is always fluctuating. However, Hon’ble ITAT allowed the assessee’s claim overlooking the revenue’s contention.
The Hon’ble High Court held in favour of revenue stating that having regard to the short duration of holding of the shares, and the lack of clarity in the account books the said amount shall be treated as business income and not capital gains.