I. T. A. No. 339 of 2013 (O & M).

AJAY KUMAR MITTAL and Ms. ANITA CHAUDHRY JJ.

Rajesh Sethi, Advocate, for the appellant.

JUDGMENT

The judgment of the court was delivered by

AJAY KUMAR MITTAL J. - This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order dated April 11, 2013, annexure A.4 passed by the Income- tax Appellate Tribunal, Chandigarh Bench "B" (in short, "the Tribunal") in I. T. A. No. 175/Chd.l2013, claiming the followtng substantial question of law:

"Whether, on the facts and the circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal was correct in treat­ing the income from adventure in the nature of trade as short-term capital gain ?"

A few facts relevant for the decision of the controversy involved, as narrated in the appeal may be noticed. The assessee disclosed short-term capital gains at Rs. 67,41,488 in her return of income which was treated by the Assessing Officer as income from adventure in the nature of trade as the income was treated as business income. The Assessing Officer drew sup­port from the Central Board of Direct Taxes Instruction No. 1827, dated August 31, 1989, and· CirculM No. 4 of 2007, dated June 15, 2007. Aggrieved by the order, the assessee filed an appeal before the Commis­sioner of Income-tax (Appeals) (the CIT(A». Vide order dated December 18, 2012, annexure A.3, the appeal was partly allowed, deleting the addi­tion of Rs. 11akh. Not satisfied, the assessee filed an appeal before the Tri­bunal. Vide order dated April 11, 2013, annexure A.4, the appeal was allowed. Hence, the instant appeal by the Revenue.

We have heard learned counsel for the appellant and perused the recorded.

The point for consideration in this appeal is whether the profit which was earned by the assessee from sale of shares was to be treated as income from adventure in the nature of trade or as short-term capital gain. Accord­ing to the assessee, the same has resulted in short-term capital gain whereas the stand of the Revenue is that it was income from adventure in the nature of trade.

5 There is no straitjacket formula for concluding whether the transaction would fall within the domain of "profits derived from an adventure in the nature of trade" or outside its ambit. The facts and circumstances of each case would be determinative of the character of the receipt. The primary consideration in such cases relates to examining the nature of the transac­tion. Where a person invests money in an asset with intention to hold it, enjoys its usufruct for some time and then sells it at enhanced price, it would be a case of capital accretion outside the scope of profits resulting from an adventure in the nature of trade. On the other hand, where income accrues on realisation of investments consisting of purchase and resale, income accruing could be treated as adventure in the nature of trade. The cardinal question which would require to be answered would be whether a purchaser was a trader and had purchased the commodity with the clear understanding that it was his usual trade or business or incidental to it.

6 Adverting to the factual matrix in the present case, it may be noticed that the assessee purchased some shares. When the rates of the said shares had risen, the assessee decided to sell part of the shares with a view to repay the loan already taken. According to the assessee, the investment in shares was made for capital only and not for resale thereof. Further, the Tribunal, vide order dated April 11, 2013, annexure A.4 while accepting the plea of the assessee had recorded as under :

"4. We have heard rival submissions and have carefully perused the entire record. We have considered various reasons which have been given by learned authorised representative, even given before the learned Commissioner of Income-tax {Appeals) and which are enumerated at page 3 of his order and the existence of which would prove that the impugned income cannot be treated as business income. We find from the totality of facts and circumstances of the case that this income cannot be treated as the assessee's business income from adventure in the nature of trade because this is an investment in shares and sale of some of the shares in order to repay the loan in the condition when the price of shares has quickly risen. Any income derived from the sale of shares has to be treated either long-term capital gain or short-term capital gain subject to holding of the shares. In this case, this income has to be treated as short-term capital gain and not as a business income. The following reasons which we are extracting from page 3 of the Commissioner of Income­tax .. (Appeals) order are also relevant for this consideration. We extract these reasons verbatim hereinafter as under :

'I. That the assessee is not a business person and she hardly ever indulged in any purchase or sale of shares in the past. She has no knowledge of the share market or equities that are traded in it.
II. The majority of the shares purchased were of the group com­panies only, indicating the lack of intention to deal in the shares.
ill. Out of the total shares purchased, only a part were sold because of an unexpected spurt in prices and the remaining were retained.
lV. Part shares were sold to try and repay the loan at the earliest as the appellant was a person of limited means and did not wish to carry a liability for long.
V. Buying bulk shares for increasing stake in group companies by raising soft loans does not indicate intent to deal in shares.
VI. The shares were held for a sufficiently long period of time for them to qualify as investments.
VII. The shares purchased were only of one company which was predominantly fainily owned.
VIII. The profit earned on sale of part shares was only incidental. IX. Engaging a broker for purchase and sale of the shares cannot be vital for determining the nature of the receipt as for making the investments, the services of brokers are always availed.
X. Conduct of the assessee and her intention is also one of the relevant factors though not the sole test.'

5. Keeping in view all the above reasons and the others, which we have mentioned in the former part of this order, we can safely con­clude that this is fiot 'an income from adventure in the nature of trade but it is only a short-terms capital gain derived by the assessee. Accordingly, we allow the appeal of the assessee and order to delete the impugned addition."

Learned counsel for the Revenue was unable to show that the activity undertaken by the assessee was an adventure in the nature of trade. No error could be pointed out in the findings recorded by the Tribunal war­ranting interference by this court.

No question of law much less substantial question of law arises in the appeal and the same is, consequently, dismissed.