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| DATE: | March 2, 2011 (Date of publication) |
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| Click here to download the judgement (vachharajani_shares_stcg_business_income.pdf) |
Despite high volume & short holding period, shares gain is STCG
The assessee, a marine consultant, offered income by way of LTCG, STCG, speculative profit & profit from futures trading. The AO held that as the volume of transactions was high (222), the period of holding of the STCG shares was short (2 -5 Months) & there was speculation & F&O profit, the LTCG & STCG was assessable as business profit. On appeal, the CIT (A) reversed the AO. On appeal by the department, HELD dismissing the appeal:
(i) As regards the LTCG, the shares were held for several years and so the assessee has acted as investor and not as a trader and so the gains are assessable as LTCG;
(ii) As regards the STCG, the view of the CIT(A) had to be upheld because
(a) there was no intra-day trading,
(b) most of the shares were held for a period of 2 to 5 months,
(c) In the preceding AY, the AO did not assess the STCG as business income and on the principles of consistency, a different view cannot be taken on the same facts,
(d) the assessee has no borrowings and
(e) merely because there was a speculative business does not mean that even delivery based transactions of shares should be assessed under the head business.
sir in view of difference of opinion on the point in issue by the benchs matter should be resolved by making certain rule as to define nature of transaction.