CIT Vs. CNB FINWIZ LTD

JUDGEMENT

(1.) THIS appeal by the Revenue, which pertains to assessment year 2005 -06, in the case of CNB Finwiz Ltd., raises the following substantial question of law: -

(2.) THE respondent -assessee, had for the assessment year 2005 -06, filed original return on 30th October, 2005, declaring income of Rs.1,46,09,330/ -. The assessment order records that the respondent - assessee was a share broker registered with the National Stock Exchange and Bombay Stock Exchange and engaged in business of sale and purchase of shares. The respondent -assessee had declared short -term capital gain of Rs.82,32,316/ - from sale and purchase of shares. After referring to Circular No. dated 15th June, 2007 and judgment of Supreme Court in the case of CIT (Central), Calcutta Vs. Associated Industrial Development Company (P) Ltd., (1971) 82 ITR 536 (SC) and some other decisions, the Assessing Officer had held that profit from sale and purchase of shares should be treated as "income from business" as the shares were held as "stock -in -trade" and not as an "investment". However, there was no adjudication and reference to facts, except noticing that the assessee, who had no opening stock, had purchased shares for Rs.2,95,00,155/ - and sold shares for Rs.2,40,11,239/ -. The Assessing Officer recorded that nearly 81% of shares purchased were sold during the year in question and the respondent -assessee had not earned any dividend. The Assessing Officer has in a chart reproduced details of sale and purchase of shares subject matter of short term capital gains. The chart reads: -

(3.) IT is noticeable that there were only two transactions for purchase of shares of NTPC and Dena Bank and three transactions were for purchase of shares of State Bank of India. Similarly, there were two transactions for sale of shares of NTPC and Dena Bank and two transactions for sale of shares of State Bank of India. We also notice that the appellant had shown "business income" of Rs. 63.77 crores, which was in addition to the short -term capital gain of Rs. 82,32,316/ - from sale of shares.