IN THE ITAT MUMBAI BENCH ‘J’
Jignesh Indulal Patel
Versus
Income-tax Officer, 4(1)(2), Mumbai
IT APPEAL NO. 3455 (MUM.) OF 2009
[ASSESSMENT YEAR 2005-06]
AUGUST 31, 2012
ORDER
Dinesh Kumar Agarwal, Judicial Member – This appeal preferred by the assessee is directed against the order dtd. 19-3-2009 passed by the ld. CIT(A) – IV, Mumbai for A.Y. 2005-06.
2. Briefly stated facts of the case are that the assessee an individual derives income from brokerage, shares and interest. He filed return declaring total income of Rs. 6,84,320/-. However, the assessment was completed at an income of Rs. 13,50,360/- including the addition by treating the short term capital gain and long term capital gain as business income, disallowance of securities transaction tax Rs. 1,15,213/- and disallowance of provision of loss on derivatives Rs. 2,589/- vide order dtd. 28-12-2007 passed u/s 143(3) of the Income Tax Act, 1961 (the Act). On appeal, the ld. CIT(A) while confirming the above disallowance/addition, partly allowed the appeal.
3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us.
4. Ground No. 1 reads as under:-
“The learned Commissioner of Income Tax (Appeals) erred in law and in fact treating the Capital Gain of Rs. 4,44,984/- (Short Term Gain of Rs. 4,28,039/- and Long Term Gain of Rs. 16,945/-) as Business income.”
5. Brief facts of the above issue are that the A.O. observed that the assessee is a sub-broker and has also carried out purchase and sale of shares on own account. Considering the volume of transactions, the assessee was asked to justify the claim that income is from capital gains. In response, the assessee stated that such transactions are of two kinds viz. business transactions and investment transactions. The assessee further stated that the business transactions are those transactions which are recorded in the books of account under the head ‘Jignesh Patel (Margin a/c)’ and wherein the assessee had also utilised margin funding. The shares purchased with an intention to invest have been recorded in the books of account under the head ‘Jignesh Patel’. The assessee further stated that the unsold shares are shown separately as “Investments” in the balance sheet. The A.O. after considering the assessee’s reply has elaborated the volume of transaction at page 6 of the assessment order as under:-
JIGNESH PATEL
