MANOJ KUMAR SAMDARIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE appellant - hereafter called "the assessee" impugns an order of the Income Tax Appellate Tribunal ("ITAT") dated 05 -10 -2012 whereby the latter allowed the revenue's appeal and upset the order of the Commissioner of Income Tax (Appeals). It is argued that having regard to the circumstances, the substantial question of law is that the Tribunal fell into error in holding that the profit derived from the sale of shares for AY 2007 -08 was not short term capital gain, but business income.

(2.) IN the return, the assessee, for the year 2007 -08 claimed that 65,45,321/ - had to be treated as short term capital gain, on account of sale of shares. The Assessing Officer noted that the assessee provided the funds to M/s Vimgi Investments Pvt. Ltd to trade in shares on his behalf, which is supported by the brokers notes and confirmed copy of the account of the broker filed by the assessee by letter dated 10.8.2009. Since the broker had traded on behalf of the assessee, practically on day -to -day basis, the Assessing Officer observed that the appellant is engaged in the activity of sale/purchase of share. Therefore, the AO show caused the assessee why the profit of Rs.65,45,321/ - should not be assessed as business income against the income shown as short term capital gain. By reply dated 13.11.2009 the assessee contended that the income was shown as short term capital gain because of transfer of short term capital asset as per section 111A, and that all the shares were received and transferred through DEMAT account and that STT was paid on all such transaction of sale and purchase of shares.

(3.) THE revenue approached the ITAT contending that a proper application of the law to the facts of the case revealed that the sums used to derive the income in question were not investments but clearly for business purposes and therefore they had to be treated as such. The ITAT, in its impugned order, by the operative portion, allowing the revenue's appeal, held as follows: