{"id":3016,"date":"2011-04-14T12:17:06","date_gmt":"2011-04-14T06:47:06","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=3016"},"modified":"2011-04-14T12:17:06","modified_gmt":"2011-04-14T06:47:06","slug":"ramesh-babu-rao-vs-acit-itat-mumbai-large-volume-in-shares-not-deciding-factor-to-hold-assessee-trader","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/ramesh-babu-rao-vs-acit-itat-mumbai-large-volume-in-shares-not-deciding-factor-to-hold-assessee-trader\/","title":{"rendered":"Ramesh Babu Rao vs. ACIT (ITAT Mumbai)"},"content":{"rendered":"\n\n
Click here to download the judgement (ramesh_babu_rao_shares_stcg.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nLarge volume in shares not deciding factor to hold assessee trader
\n<\/strong><\/p>\n

The assessee, a retired professor, offered gains from sale of shares as short-term capital gains (STCG). The AO assessed the gains as business profits on the ground that (a) in the earlier years, the assessee had offered similar gains as business profits<\/em> and the volume<\/em> of transactions was higher<\/em> in the present year, (b) there were 54 scrips which were purchased and sold during the year which resulted in sales of more than Rs. 24 crores<\/em>, (c) In one particular share, the assessee purchased on 54 occasions and sold on on 25 occasions within a short duration<\/em>. On appeal, the CIT (A) reversed the AO. On appeal by the department, HELD dismissing the appeal:<\/p>\n

The assessee was an investor and the gains are assessable as capital gains because: <\/p>\n

(a) The assessee was a good timer of purchase and sale of shares thereby substantially increasing his gains in the stock market;<\/p>\n

(b) The large turnover was because of bulk purchases and sales in a scrip. There were very few transactions of purchase and sale, as the assessee was purchasing in block of a particular share in large volume. Accordingly, large volume cannot be a deciding factor to hold as a trader;<\/p>\n

(c) the assessee was not a broker or sub-broker and did not have any office establishment;<\/p>\n

(d) The assessee did not do any speculative activity nor indulge in any sales without delivery;<\/p>\n

(e) The shares were shown as capital assets in the books of account;<\/p>\n

(f) The assessee had not pledged any shares with any financial institutions, nor borrowed any funds<\/p><\/blockquote>\n

\nFor more see Nagindas P. Sheth (HUF) vs. ACIT<\/a><\/strong> (ITAT Mumbai) & the cases referred to therein\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The large turnover was because of bulk purchases and sales in a scrip. There were very few transactions of purchase and sale, as the assessee was purchasing in block of a particular share in large volume. Accordingly, large volume cannot be a deciding factor to hold as a trader<\/p>\n

Read more ›<\/a><\/div>\n

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