While rejecting a plea of a House wife who claimed that the income earned from the sale of shares is capital gain, the Bombay High Court held that such income is assessable as business income since she moved as per stock market trend and was selling shares at first available opportunity.
Assessee, a house wife claimed short-term capital gains on sale and purchase of shares as well as speculation income from trading of shares. However, the Assessing Officer rejected the return by finding that the assessee integrated both and this is a systematic activity or trading of shares with business motive. Thus, this is a trading activity and, therefore, he treated the short-term capital gain offered by the assessee as business income.
On second appeal, the Tribunal confirmed the findings of the Assessing Officer.
The department was of the view that the assessee had made delivery based transactions in over forty one scrips, not once but generally a number of times.
While rejecting the assessees’ appeal, the bench comprising Justices B P Collabawala and S C Dharmadhikari noted that the assessee sold the shares within a period of one week from the date of purchase in more than eighty per cent of the cases.
“It is this trend which resulted in the concurrent finding against the assessee. The intention of the assessee in indulging in these transactions is to earn profit at the earliest possible occasion and when there is a rise in the price. The assessee is moving as per the stock market trend. At the first available opportunity, the assessee is selling the shares. This type of activity of sale and purchase is rightly termed, not as an investment, but actuated by motive of sale and purchase so as to earn profit at the earliest occasion. In the year 2006-07, which is immediately preceding the assessment year, the assessee herself offered the profit from sale and purchase of shares as business income. Hence, the shifting stands as also the peculiar nature of the transactions resulted in the Tribunal upholding concurrent findings against the assessee,” the bench said.Subscribe Taxscan AdFree to view the Judgment