“Intention” at the time of purchase of shares, “Volume” and “Frequency” of transactions in shares are key factors in determining whether gain arising on sale of such shares is to taxed as “Capital Gain” or as “Business income”:

Assessee, a salaried employee, offered certain gain arising on sale of shares as LTCG (Long Term Capital Gain” over and above his income from salary which was treated as “Business income” by AO. Both, the lower appellate authorities reversed AO’s order after observing that the assessee invested his funds as investment and whenever it was convenient, it was sold. Assessee’s intention at the time of purchase was to invest and not to trade. Merely because on one or two occasions, there was also purchase and sale of shares, it can’t be said that assessee was trading in shares. Hence, the said gain was held to be “LTCG” and not “Business income”. The said view was also upheld by the Hon’ble High Court.

[MITESH NATHULAL LAVTI - TAX APPEAL NO.1506 of 2011 - GHC

BRIJESH BHAGWATILAL LAVTI - TAX APPEAL NO.1508 of 2011 - GHC,   SAURABH RAMESHCHANDRA LAVTI - TAX APPEAL NO.1509 of 2011 - GHC,   MANISH NATHULAL LAVTI (TAX APPEAL NO.1510 of 2011 - GHC]