The ACIT, Circle-1, Kakinada, Kakinada V. M/s R.K.R. Investments Services Pvt. Ltd, Kakinada

CO 14/VIZ/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9771 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Keywords: Business income; Business expenditure; Rule of consistency; Source of fund; Speculative transactions

Judgement Text

ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 169 /VIZAG/ 2012 ASSESSMENT YEAR : 2008-09 ACIT CIRCLE-1 KAKINADA VS. SRI R.K.R. INVESTMENTS SERVICES PVT. LTD. KAKINADA (APPELLANT) (RESPONDENT) PAN NO.AACCR 9667B C.O. NO.14/VIZAG/2012 (ARISING OUT OF ITA NO.169/VIZAG/2012) ASSESSMENT YEAR : 2008-09 ACIT CIRCLE-1 KAKINADA VS. SRI R.K.R. INVESTMENTS SERVICES PVT. LTD. KAKINADA (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI D. MANOJ KUMAR, ADDL. CIT DATE OF HEARING : 11.07.2014 DATE OF PRONOUNCEMENT : 30.07.2014 ORDER PER BENCH:- THIS APPEAL IS FILED BY THE REVENUE DIRECTED AGAIN ST THE ORDER DATED 25.01.2012 OF CIT(A), VISAKHAPATNAM. THE CROSS OBJ ECTIONS HAVE BEEN FILED BY THE ASSESSEE. 2. FACTS IN BRIEF. ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND MAKING INVESTMENT IN SHARE S AND SECURITIES. RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,88,73,920/- IS FILED WHICH IS TAKEN UP FOR SCRUTINY. DURING THE SCRUTINY PROCEEDINGS, IT IS OBSERVED THAT THE ASSESSEE DISCL OSED INCOME UNDER THESE HEADS VIZ (I) BUSINESS INCOME ON ACCOUN T OF SPECULATIVE TRANSACTIONS; (II) INCOME FROM OTHER SOURCES COMPRISING OF DIVIDEND IN COME; AND (III) SHORT-TERM CAPITAL ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 2 GAINS ON PURCHASE AND SALE OF SHARES. ASSESSEE DISC LOSED GAINS FROM SPECULATION TRANSACTION OF RS.5,22,03,461/-; SALE OF INVESTMENT RS.21,28,52,916/-; OTHER INCOME OF RS.1,24,624/- AND DIVIDEND INCOME OF RS.65,907/- . AFTER CLAIMING VARIOUS EXPENDITURES NET PROFIT OF RS.1,82,04,255/- IS ARRI VED AT. IN THE COMPUTATION OF INCOME ASSESSEE SEGREGATED NET PROFIT UNDER TWO DIF FERENT HEADS I.E BUSINESS INCOME AND INCOME FROM SHORT-TER M CAPITAL GAIN. AS PER THE ASSESSEE SPECULATION TRANSACTIONS I.E THE TRANSACTI ONS SQUARED OFF ON THE SAME DAY ARE TREATED AS BUSINESS INCOME AND THE PROFITS FROM SHARES WHICH WERE HELD FOR SOME TIME, BY TAKING DELIVERY, IS TREATED AS SHORT-TERM CAPITA L GAINS. LOSS FROM SPECULATION IS SET OFF AGAINST THE INCOME FROM THE CAPITAL GAINS FINALLY ARRIVING AT THE TOTAL INCOME OF RS.1,88,73,920/-. AO, AFTER CAREFUL EXAMINATION OF THE SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE, IS OF THE OPINION THAT THE ENTIRE TRANSACTION IN SHARES IS IN THE NATURE OF BUSINESS BASED ON THE NATURE FREQUENCY AND VOLUME OF THE TRANSACTIONS. ASSESSEE IS ASKED TO CLARIFY THE FOLLOWING POINTS IN THIS REGARD. '(1) THE PARAMETERS ON WHICH THE INCOME FROM SALE O F SHARES IS BIFURCATED INTO THE DIFFERENT HEADS OF 'BUSINESS' AND 'INVESTMENT'; (2) WHETHER THE BROKERS FOR THE -SPECULATION ACTIVI TY AND THE DELIVERY BASED TRANSACTIONS ARE THE SAME; (3) WHETHER SEPARATE ACCOUNTS ARE MAINTAINED WITH THE BROKER FOR INVESTMENT TRANSACTIONS AND SPECULATIVE TRANSACTION S; (4) WHETHER THERE ARE DIFFERENT BANK ACCOU NTS THROUGH WHICH PAYMENTS ARE MADE/RECEIVED FROM THE BROKERS FOR T HE TWO ACTIVITIES OF BUSINESS AND INVESTMENT; (5) WHETHER ANY SEPARATE INVESTMENT LEDGER IS MAINT AINED FOR THE INVESTMENT ACTIVITY, APART FROM THE LEDGER MAINTAIN ED FOR BUSINESS ACTIVITY; (6) WHETHER PAYMENT IS MADE SCRIP-WISE OR BY WAY OF PERIODIC SETTLEMENT'. 2.1 IN RESPONSE ASSESSEE STATED THAT ONLY THE SHARE S PURCHASED AND SOLD ON THE SAME DAY ARE TREATED AS BUSINESS TRANSACTIONS AND I F DELIVERY IS TAKEN IN ANY SHARE THE SAME IS CONSIDERED AS INVESTMENT AND THE GAINS THER E FROM ARE TREATED AS SHORT-TERM CAPITAL GAINS. ASSESSEE HOWEVER MENTIONED THAT THER E ARE NO SEPARATE BROKERS FOR THESE TRANSACTIONS AND NO SEPARATE BOOKS OF ACCOUNT FOR SPECULATION AND INVESTMENT ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 3 ACTIVITY AND NO SEPARATE INVESTMENT LEDGER IS MAINT AINED BY THE ASSESSEE FOR THE INVESTMENT. FURTHER THERE IS NO EARMARKING OF FUNDS BETWEEN SPE CULATION AND INVESTMENT. ASSESSEE FURTHER EXPLAINED THAT PAYMENTS MADE TO THE BROKERS ARE AFTER NETTING OF THE AMOUNTS ACCRUING TO THE ASSESSEE AS A RESULT OF THE TRADE/I NVESTMENT. BASED ON THIS REPLY THE FOLLOWING INFERENCES ARE DR AWN BY THE AO. ; (1) THE ASSESSEE DOES NOT KNOW AT THE TIME OF PLACI NG THE PURCHASE ORDER WHETHER IT IS GOING TO SPECULATE IN THE SHARE (I.E PURCHASE AND SALE ON THE SAME DAY WITHOUT DELIVERY) OR WHETHER IT IS GOI NG TO TAKE DELIVERY OF THE SHARES; (2) DECISIONS ABOUT SQUARING OFF DURING THE DAY OR TAKING DELIVERY ARE TOTALLY GUIDED BY THE MARKET PRICES OF THE SCRIP IN THE LATER PART OF THE DAY; (3) NO SCRIP-WISE AND TRANSACTION-WISE PAYMENTS ARE MADE BY THE ASSESSEE. EVEN THE NET POSITION OF ALL THE TRANSACTIONS ENTER ED INTO BY THE ASSESSEE IS ALSO NOT SETTLED BY MAKING PAYMENT OR RECEIVING THE AMOUNTS. THE BALANCE IS SIMPLY EITHER DEBITED OR CREDITED TO THE LEDGER ACCOUNT OF THE BROKER AND SUCH LEDGER ACCOUNT KEEPS RUNNING FOR TH E ENTIRE YEAR; (4) IF THE ASSESSEE HAS PROFITS FROM SPECULATIVE TR ANSACTIONS DURING THE DAY THE SAME ARE ADJUSTED AGAINST THE AMOUNTS PAYAB LE FOR DELIVERY BASED TRANSACTIONS, IF ANY; (5) THERE ARE NO SEPARATE BOOKS FOR THE SPECULATIVE BUSINESS AND THE DELIVERY BASED TRANSACTIONS; (6) THE SPECULATIVE TRANSACTIONS AND THE DELIVERY B ASED TRANSACTIONS ARE ALL ROUTED THROUGH THE SAME BROKER IN ALL CASES ; (7) THERE WAS NO SEPARATE INVESTMENT LEDGER MAINTAI NED BY THE COMPANY FOR ITS INVESTMENTS (BOTH LONG TERM AND SHO RT TERM). THE COMPANY IDENTIFIED THE SCRIPS' AS SHORT TERM OR LON G TERM INVESTMENTS BASED ON THE LEDGER ACCOUNT OF THAT PARTICULAR SCRI P IN THE LEDGER; (8) THE ONLY BASIS OF SEGREGATION OF THE TRANSACTIO NS BY THE ASSESSEE IS WHETHER AT THE END OF THE DAY A DELIVERY WAS TAKEN OR NOT. IF PART OF THE PURCHASES IS SOLD WITHIN THE DAY, THEN SUCH PAR T IS TREATED AS 'SPECULATION BUSINESS' AND THE BALANCE PART OF THE PURCHASE FOR WHICH DELIVERY IS TAKEN IS TREATED AS 'INVESTMENT'. FURTH ER, ALL THE QUANTITY OF THE SHARES IN WHICH DELIVERY IS TAKEN MAY BE SOL D WITHIN THE YEAR OR ALTERNATIVELY SOME BALANCE MAY BE LEFT WHICH IS CONSIDERED AS AN ASSET UNDER THE HEAD 'INVESTMENTS'. (9) WHETHER A TRANSACTION IS 'SPECULATIVE' OR 'INVE STMENT' IS KNOWN ONLY AT THE END OF THE DAY AND NOT WHEN THE PURCHAS E ORDER IS PLACED'. ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 4 2.2 CONSIDERING THE ABOVE, A SHOW-CAUSE NOTICE IS I SSUED TO THE ASSESSEE ASKING IT TO EXPLAIN AS TO WHY THE ENTIRE SHARE TRANSACTIONS SHO ULD NOT BE TREATED AS BUSINESS TRANSACTION. IN RESPONSE THE ASSESSEE MADE THE FOLL OWING SUBMISSIONS. 1. THE ASSESSEE IS AN INVESTOR AS WELL AS A TRADER. WHEREVER TRANSACTIONS ARE QUARED UP DURING THE SAME DAY, THEY ARE TREATED AS 'TRADING TRANSACTIONS' AND IF DELIVERY IS TAKEN THEY ARE TREATED AS 'INVES TMENT TRANSACTIONS'. 2. THOUGH THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF LEDGERS FOR INVESTMENT TRANSACTIONS AND TRADING TRANSACTIONS, T HE SAME COULD BE IDENTIFIED FROM THE TRANSACTION SLIPS OF BROKERS A ND LEDGER EXTRACTS; 3.THE ASSESSEE ROOTED THE ENTIRE TRANSACTIONS OF I NVESTMENT OR TRADING THROUGH THE SAME ACCOUNT OF THE BROKER AND SALE PRO CEEDS ARE ADJUSTED WITH THE AMOUNTS WHETHER THE SCRIPS ARE FOR. INVEST MENT OR FOR TRADING; 4. THE ASSESSEE TREATED THE ENTIRE HOLDING AS INVES TMENTS IN ITS BALANCE-SHEET; 5. AS PER THE ACCOUNTING STANDARD 13, THE INVESTMEN TS HAVE TO BE VALUED AT COST AND THE ASSESSEE VALUED THE INVESTMENTS AT COS T AT THE END OF THE YEAR; 6. 80% OF TOTAL TRANSACTIONS OF THE YEAR ARE FOR IN VESTMENT AND THE BALANCE 20% ARE TRADING TRANSACTIONS; 7. THERE ARE NO MUCH BORROWINGS FROM OUTSIDERS; 8. THE ASSESSEE DID NOT DEAL IN DERIVATIVES; - 9. THE ASSESSEE IS NOT A STOCK BROKER; 10. THE ASSESSEE DID NOT CLAIM ANY EXPENDITURE RELA TING TO INVESTMENT TRANSACTIONS; 11. SOME OF THE SCRIPS WERE HELD BY THE ASSESSEE FO R A LONGER PERIOD; 12.THE DECISION OF THE ASSESSEE FOR HOLDING A PARTI CULAR SCRIP FOR A PARTICULAR PERIOD OR SQUARING UP OF THE SAME DAY WILL DEPEND U PON VARIOUS FACTORS, BOTH INTERNAL AND EXTERNAL, SUCH AS MARKET CONDITIO NS, INTERNATIONAL MARKET CONDITIONS, POLITICAL CONDITIONS AND ALSO FINANCIAL POSITION OF THE ASSESSEE. 13.THE INTENTION OF THE ASSESSEE CANNOT BE READ FRO M ITS MIND BUT IT REFLECTS IN ITS CONDUCT AND THE WAY IT TREATS THE TRANSACTIONS. FOR EXAMPLE, IN THE CASE OF SATYAM COMPUTERS, THE ASSESSEE PURCHASED THE SHARES IN TWO LOTS. ONE WAS SOLD FOR A PROFIT AND THE SECOND LOT WAS HELD BY HI M AS AN INVESTMENT. THOUGH THE ASSESSEE COULD MAKE PROFITS ON THE SECOND LOT B Y SELLING IT ON THE SAME DAY AS TREADING TRANSACTIONS, AS WAS DONE IN THE CASE O F FIRST LOT. ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 5 14.THE PROPOSAL TO TREAT THE ENTIRE TRANSACTIONS OF THE ASSESSEE AS BUSINESS TRANSACTIONS WILL DISTURB THE CONSISTENCE OF THE PR INCIPLE WHICH THE ASSESSEE IS FOLLOWING RIGHT FROM ITS INCEPTION. IN THE ABSENCE OF CHANGE IN FACTS, THE PRINCIPLE OF CONSISTENCY SHOULD BE ACCEPTED. 2.3 AFTER CONSIDERING THE EXPLANATION OF THE A SSESSEE AO WENT ON TO OBSERVE THE FOLLOWING: 1. THE ASSESSEE MERELY EXPLAINED THE METHOD IN WHICH H E HAD CLASSIFIED THE TRANSACTIONS. IT DOES NOT EXPLAIN WHY THE ENTIR E ACTIVITY SHOULD NOT BE TREATED AS BUSINESS; 2. IT IS NOT IDENTIFICATION FROM THE SAME BOOKS BUT WH ETHER OR NOT THE ASSESSEE HAS KEPT THE INVESTMENT TRANSACTIONS AND TRADING TR ANSACTION SEPARATE. EVEN IF SEPARATE BOOKS OF INVESTMENT TRANSACTIONS A RE KEPT, THE SHEER MAGNITUDE AND FREQUENCY WOULD RENDER SUCH INVESTMEN T TRANSACTIONS TO BE BUSINESS TRANSACTIONS; 3. THIS IS EXACTLY ONE OF THE-CASES OF THE REVENUE THA T THE SPECULATIVE TRANSACTIONS AND THE INVESTMENT TRANSACTIONS ARE IN TERLACING AND INTERMINGLING WITH EACH OTHER; 4. THE WAY THE ASSET IS TREATED IN THE BALANCE SHEET D OES NOT INDICATE OR IMPLY THE EXACT NATURE OF THE ASSET. IT IS HELD IN THE CASE OF KEDARNATH JUTE MANUFACTURE COMPANY LTD VS. CTT 82ITR 363 AS F OLLOWS: 'WHETHER THE ASSESSEE IS ENTITLED TO A PARTICULAR D EDUCTION OR NOT WILL DEPEND ON THE PROVISION OF LAW RELATING THERETO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT HAVE TAKEN. 5. THE ASSESSEE IS AN INVESTOR AS WELL AS A TRADER. WH EREVER TRANSACTIONS ARE SQUA RED UP DURING THE SAME DAY, THEY ARE TREATED A S 'TRADING TRANSACTIONS' AND IF DELIVERY IS TAKEN THEY ARE TREATED AS 'INVES TMENT TRANSACTIONS' FOR INCOME TAX PURPOSES. IT IS HELD IN THE CASE OF M/S. TUTICORN CHEMICALS & FERTILIZERS LTD VS. CIT 227 ITR 172 (SC) THAT THE P RINCIPLES OF TAXATION PREVAIL OVER THE ACCOUNTING STANDARDS. 6. THERE IS NO DISTINCTION BEING MADE BETWEEN TRADING TRANSACTIONS AND INVESTMENT TRANSACTIONS. FROM THE TOTALITY OF THE F ACTS LIKE FREQUENCY OF EXPOSURE TO THE STOCK MARKET, THE VARIED NUMBER OF SCRIPS TRADED, THE VOLUME AND THE MAGNITUDE OF THE TRANSACTIONS ETC., IT IS BEING HELD THAT EVEN THE SO-CALLED INVESTMENT ITSELF IS NOTHING BUT A BUSINESS ACTIVITY. FURTHER, EVEN IN THE SO-CALLED INVESTMENT ACTIVITY, IT IS HELD THAT THE PURCHASES TO SALES RATIO IS AT 24:25, WHICH IS ABNO RMALLY HIGH; 7. IT IS NOT A NECESSARY FACTOR THAT A TRANSACTION WOU LD BE HELD BUSINESS IN NATURE ONLY IF THERE ARE BORROWED FUNDS. IN THE CAS E OF THE ASSESSEE, SINCE TRANSACTIONS WITH THE BROKER ARE SETTLED THROUGH A LEDGER FOR THE ENTIRE ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 6 YEAR, IN FACT, THERE IS NO NECESSITY OF BORROWED FU NDS; 8. DEALING IN DERIVATES IS NOT A PRECONDITION TO TREAT ANY ASSESSEE'S TRANSACTIONS AS BUSINESS IN NATURE. IN ANY CASE, TH E ASSESSEE ADMITTEDLY INDULGED IN SPECULATIVE TRANSACTIONS WHICH ARE AKIN TO DERIVATIVE TRADING; 9. IT IS NOT JUST THE STOCK BROKERS WHOSE INCOMES ARE ASSESSED AS BUSINESS INCOME. ANY INCOME WHOSE TRANSACTIONS CONTAIN THE C OLOUR AND CHARACTER OF BUSINESS, IS LIABLE TO BE ASSESSED AS BUSINESS INCO MES; 10. THE NON-CLAIMING THE EXPENDITURE DOES NOT ALTER THE NATURE OF RECEIPT; 11. IT IS ALREADY MENTIONED THAT IN 60 OUT OF THE 72 SC RIPS, THE HOLDING PERIOD IS LESS THAN 2 MONTHS. IN MORE THAN 60% OF THE CASES, HOLDING PERIOD IS LESS THAN 15 DAYS. HENCE ASSESSEE'S TREATMENT IS NO T CORRECT; 12. THIS IS EXACTLY THE CASE OF THE REVENUE. ALL THE CO NDITIONS MENTIONED HAVE A BEARING ON THE BUSINESS DECISIONS OF A PERSON. A PR UDENT INVESTOR USUALLY HOLDS A SCRIP FOR A FAIRLY LONG PERIOD, AT LEAST, F OR A YEAR OR SO. THE NATIONAL AND INTERNATIONAL ISSUES TO NOT INFLUENCE HIM OR CO MPEL HIM TO SELL HIS INVESTMENTS. THE INVESTOR GENERALLY HAS A LARGER PI CTURE AND A WIDER HORIZON, UNLIKE A TRADER IN SHARES, WHOSE DECISIONS TO HOLD OR SELL CHANGE WITH MUCH HIGHER FREQUENCY, ALMOST EVERY DAY. 13. THOUGH THE ASSESSEE MADE PROFITS FROM THE FIRST LOT , THE SECOND LOT IS RETAINED SINCE THERE IS A POSSIBILITY THAT THE SCRI P WOULD FURTHER MOVE UP. IN FACT, AT SR.NO.38 OF TABLE NO. 5 ABOVE, IT CAN B E CLEARLY SEEN THAT THE SECOND LOT WAS ALSO SOLD WITHIN 5 DAYS. HENCE, ASSE SSEE'S CITING THE SATYAM COMPUTERS SCRIP CASE IS RATHER AGAINST IT CASE. THI S ISSUE IS DISCUSSED AT LENGTH AT PARA 6(D) OF THIS ORDER. 14. MERELY BECAUSE DISTURBING THE METHOD BEING FOLLOWED BY THE ASSESSEE WOULD CAUSE HARDSHIP, A CASE CANNOT BE MADE FOR NOT TAXING THE INCOMES AS PER LAW. IT WAS HELD IN THE CASE OF CFT VS. VADILAL LALLUBHAI 86 ITR 2(SC) THAT IF A PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER O F THE LAW, HE MAY BE TAXED, HOWEVER GREAT THE HARDSHIP MAY APP EAR TO THE JUDICIAL MIND TO BE. FURTHER, IT WAS HELD IN THE CA SE OF NEW JAHANGIR VAKIL MILLS LTD VS. CIT 49 ITR 137 (SC) AS FOLLOWS : 'EVEN IF AN ASSESSEE HAD NOT BEEN TREATED AS A DEAL ER IN SHARES IN EARLIER YEARS AND THE PROFITS FROM PURCHASE AND SAL E HAVE NOT BEEN ASSESSED AS BUSINESS PROFITS, THE ABOVE FACT WOULD NOT ACT IN ANY WAY AS RESJUDICATA TO PRECLUDE THE DEPARTMENT IN HO LDING THAT HE WAS A DEALER IN SHARES IN THE SUBSEQUENT YEARS'. 2.4 ON THE BASIS OF THESE OBSERVATIONS AND AFTER DE TAILED ANALYSIS OF THE ENTIRE TRANSACTIONS AND ALSO BY DRAWING STRENGTH FROM CBDT 'S INSTRUCTION NO. 1827 DTD. 31.08.89 AND INSTRUCTION DTD.16.05,2006; THE AO HEL D THAT THE ASSESSEE IS INVOLVED ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 7 IN THE BUSINESS OF SHARE TRADING AND THE ENTIRE ACTIVI TY OF DEALING IN SHARES HAS TO BE TREATED AS BUSINESS ACTIVITY. CONSEQUENTLY, AO TREA TED THE ENTIRE GAINS FROM SHARE TRADING TRANSACTION AS PROFITS AND GAINS OF BUSINES S. AO ALSO RELIED ON FOLLOWING JUDGEMENTS WHILE ARRIVING AT THIS CONCLUSION. ' (I) PM MOHD MIRA KHAN VS. CIT 73 ITR 735 (SC); (II) CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT CORP LTD 82 ITR 586 (SC); (III) DALHOUSIE INVESTMENT TRUST CO. LTD VS. CIT 68 ITR 4888 {SC); (IV) CIT VS. MOTILAL HIRABHAI SPINNING & WEAVING CO . LTD 113 ITR 173 (GUJ.) (V) JAIPURIA BORS LTD VS. CIT 180 ITR 208(CAL); (VI) RAJA BAHADUR VISWESWARASINGH VS. CIT 41 ITR 68 5 (SC); (VII) DALMIA CEMENTS LTD VS. CIT 105 ITR 633 (SC); (VIII) SMT. INDRAMANI BAI VS. ACIT 200 ITR 595 (SC) ; (IX) JUGGILAL KAMLANATH VS. ,CIT 75 ITR 186; (X) DCIT VS. JINDAL EXPORTS 287 ITR (AT) 172 (DELHI ) 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL. THE FIRST APPELLATE AUTHORITY GRANTED RELIEF BY OBSERVING AS FOLLOWS: A) THE COMPANY IS HAVING OBJECTS BOTH TO DO BUSINESS I N SHARES AND ALSO TO INVEST IN SHARES B) A PERUSAL OF THE COMPANYS BALANCE SHEET MAKES IT C LEAR THAT THE COMPANY IS NOT DEPENDANT ON BORROWED FUNDS AND IS INVESTING IT S OWN FUNDS. C) THE COMPANY REFLECTS TWO PORTFOLIOS IN ITS BOOKS OF ACCOUNTS I.E. TRADING AND INVESTMENT PORTFOLIO. D) ASSESSEES VALUATION METHOD OF TREATING DAY TRADING TRANSACTIONS AS SPECULATIVE TRADING AND DELIVERY BASED TRANSACTIONS AS INVESTMENTS IS DONE ON A CONSISTENT BASIS. E) THE DEPARTMENT HAS ACCEPTED SUCH A CLASSIFICATION I N SCRUTINY PROCEEDING IN THE EARLIER YEAR. 4. THE LD. CIT(A) FOLLOWED THE DECISIONS OF THE HON BLE MUMBAI HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT 336 ITR 287 (BOM.) AND GRANTED RELIEF. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 8 1. THE CIT(A) ERRED IN NOT APPRECIATING THE CONCLUSIO NS ARRIVED AT BY THE AO. 2. THE CIT(A) ERRED IN NOT MAKING A CLEAR DEFINITION T O THE TRANSACTIONS OF THE ASSESSEE SO AS TO DECIDE THE CHARACTER OF THE S AME AS EITHER BUSINESS OR INVESTMENT. 3. THE CIT(A) ERRED IN NOT CONSIDERING THE PERIODICITY , FREQUENCY, PROFITABILITY OF THE TRANSACTIONS BEFORE DECIDING T HE CHARACTER OF THE TRANSACTION. 4. THE CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE G AINS FROM DELIVERY BASED TRANSACTIONS AS CAPITAL GAINS AND OTHERS AS B USINESS INCOME. 5. THE CIT(A) ERRED IN NOT GIVING COGNIZANCE TO THE RE FERENCE MADE BY THE ASSESSING OFFICER AT PAGE 22 OF THE ASSESSMENT ORDER THAT INSTRUCTION NO.1827 DATED 31.8.1989 WAS SUPPLEMENTE D WITH THIS INSTRUCTION DATED 16.5.2006. 6. THE CIT(A) ERRED NOT TAKING INTO ACCOUNT THE CRUCIA L ANALYSIS MADE OUT BY THE ASSESSING OFFICER WITH REGARD TO THE SCALE O F ACTIVITY, SOURCE OF FUNDS FOR MAKING SUCH TRANSACTIONS, HOLDING PERIOD, WHETHER THE TRANSACTIONS WERE ENTERED INTO CONTINUOUSLY OR PERI ODICALLY, WHETHER IT IS FOR A PROFIT MAKING OBJECT, AND RATIO OF THE PUR CHASES TO SCALES ETC., TO DECIDE THE CHARACTER OF THE TRANSACTION. 6. THE LD. D.R. SHRI D. MANOJ KUMAR RELIED ON THE O RDER OF THE ASSESSING OFFICER AND SUBMITTED THAT A PERUSAL OF THE SCRIP-W ISE DETAILS GIVEN IN TABLE 1 AT PAGE 3 TO 5 OF THE ASSESSMENT ORDER INDICATES TH AT THE ASSESSEE IS INDULGING IN TRADING ACTIVITY ON A DAILY BASIS AND HENCE TO CLAIM THAT IT IS ALSO AN INVESTOR IN SHARES IS AGAINST THE FACTS OF THE C ASE. HE REFERRED TO PARA (D) AT PAGE 5 OF THE ASSESSMENT ORDER AND SUBMITTED THA T THE AO HAS RECORDED THAT THE ASSESSEE IS INDULGED IN PURCHASE AND SALE OF SHARES. 17 DAYS OUT OF 22 DAYS THE MARKET WAS OPEN IN THE MONTH OF AUGUST. HE ARGUED THAT THE VOLUMES OF THE TRANSACTIONS ARE HIGH AND IN CERTAIN SCRIPS, THE ASSESSEE SIMULTANEOUSLY HAD SPECULATIVE TRANSACTIONS AND ALS O TAKEN DELIVERY OF THE SHARES OF THE COMPANY ON THE SAME DAY. HE REFERRED TO TABLE 2 AND TABLE 3 IN THE ORDER OF THE ASSESSING OFFICER TO POINT OUT THAT ON THE SAME DAY, PURCHASE AND SALE WAS INDULGED BY THE ASSESSEE. FU RTHER, HE DREW THE ATTENTION OF THE BENCH AT PAGE 12 & 13 OF THE ASSES SMENT ORDER AND POINTED OUT THAT THE PERIOD OF HOLDING IS 27 DAYS, 17 DAYS, 3 DAYS, ETC. HE POINTED OUT THAT 60 OUT OF 72 SCRIPS, IN WHICH THE ASSESSEE TRADED, THE PERIOD OF ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 9 HOLDING WAS LESS THAN 2 MONTHS AND IN SEVERAL CASES THE PERIOD OF HOLDING WAS LESS THAN 15 DAYS. HE ALSO ARGUED THAT THE DIV IDEND RECEIVED BY THE ASSESSEE FROM OUT OF 72 SCRIPS WAS ONLY 65,907, AS ONLY 5 COMPANIES HAVE PAID DIVIDENDS. HENCE, HE ARGUED THAT THE ORDER OF THE CIT(A) HAS TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER HOLD ING THAT THE INCOME FROM PURCHASE AND SALE OF SHARES IS TO BE ASSESSED AS BU SINESS INCOME HAS TO BE UPHELD. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND STRONGLY OPPOSED THE CONTENTIONS OF THE LD. D.R. AND SUBMITTED THAT THE ASSESSEE HAS DONE BOTH TRADING IN SHARES AS WELL AS INVESTMENT IN SHA RES. 8. IT IS SUBMITTED THAT WHEREVER THE SHARES WERE DEL IVERED, THE ASSESSEE CONSIDERED IT AS INVESTMENT IN SHARES AND WHEREVER THERE WAS NO DELIVERY OF SHARES, THE ASSESSEE TREATED IT AS TRADING IN SHARE S AND OFFERED THE SAME TO TAXATION. HE EMPHASIZED THAT THIS WAS THE CONSISTE NT PRACTICE FOLLOWED BY THE ASSESSEE IN THE PREVIOUS YEARS AND THE ASSESSING OF FICERS HAVE ACCEPTED THE SAME IN SCRUTINY ASSESSMENTS. HE ARGUED THAT THE A SSESSEE HAS NOT BORROWED ANY FUNDS AND A PERUSAL OF THE HOLDING PER IOD DEMONSTRATES THAT IT IS AS HIGH AS 621 DAYS IN SOME CASES. HE RELIED ON THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 9. RIVAL CONTENTIONS WERE HEARD. ON A CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW S CITED, WE HOLD AS FOLLOWS: THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS BEEN CONSISTENTLY HAVING TWO DIFFERENT PORTFOLIOS ONE OF TRADING OF SHARES A ND THE SECOND OF INVESTMENT IN SHARES. THIS IS A CONSISTENT MANNER IN WHICH TH E ASSESSEE HAS BEEN DECLARING ITS INCOME, AS FAR AS PURCHASE AND SALE O F SHARES ARE CONCERNED. THE ASSESSEE HAS FILED THE PAPER BOOK RUNNING INTO 112 PAGES AND AT PAGE 39 TO 45, THE PERIOD OF HOLDING OF SHARES SCRIP-WISE W AS GIVEN. A PERUSAL OF THE SAME DEMONSTRATES THAT THE ASSESSEE HAS BEEN HOLDIN G SHARES FOR LONG PERIODS. IT IS VERY RARELY THAT SHARES WERE HELD FO R SHORT PERIODS OF LESS THAN ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 10 10 DAYS. IN CERTAIN CASES, THE ASSESSEE HAS HELD SH ARES FOR 621 DAYS, 202 DAYS, 128 DAYS, ETC. IN MANY CASES, THE ASSESSEES PERIOD OF HOLDING IS MORE THAN 30 DAYS. THE ASSESSEE HAS OFFERED TO TAX AS B USINESS INCOME, WHEREVER SHARES WERE PURCHASED AND SOLD WITHOUT DELIVERY AND IN CASES WHERE DELIVERY OF SHARES WERE TAKEN, IT WAS CLASSIFIED AS AN INVES TMENT. A PERUSAL OF THE FACTS, SPECIFICALLY THE PERIOD OF HOLDING DEMONSTRA TES THAT IT CANNOT BE DENIED THAT THE ASSESSEE WAS HAVING AN INVESTMENT PORTFOLI O. THE ASSESSING OFFICER REJECTED THE ENTIRE CLAIM OF THE ASSESSEE AND HELD THAT THE ENTIRE PURCHASE AND SALE OF SHARES WAS TRADING ACTIVITY. THIS CANN OT BE UPHELD SPECIFICALLY WHEN CERTAIN SHARES ARE HELD FOR MORE THAN 200 DAYS . THE ASSESSEE HAS MADE INVESTMENT IN SHARES, AS MANY SHARES WERE HELD FOR LONG PERIODS. 10. THE FIRST APPELLATE AUTHORITY HAS IN OUR VIEW C ORRECTLY APPRECIATED THE FACTS OF THE CASE AND UPHELD THE CONTENTIONS OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS NOT BORROWED ANY FUNDS FOR MAKING INVESTMENTS. IT HAS BOTH STOCK IN TRADE AS WELL AS INVESTMENT OF SHARES . THE INVESTMENT PORTFOLIO HAS BEEN VALUED AT COST. THE ASSESSEE IS CONSISTEN TLY FOLLOWING THIS METHOD OF ACCOUNTING. THE DISTINCTION MAINTAINED BY THE A SSESSEE IS ALSO ACCEPTED BY THE REVENUE IN THE SCRUTINY PROCEEDINGS FOR THE ASS ESSMENT YEAR 2006-07. THE CLASSIFICATION OF THE SHARES ON ITS PURCHASE IN TO INVESTMENTS OR INTOSTOCK IN TRADE, DEMONSTRATES THE INTENTION OF THE PURCHAS ES WHICH IS OF CONSIDERABLE IMPORTANCE IN DECIDING WHETHER THE INCOME FROM PURC HASE AND SALE OF A PARTICULAR SHARES IS BUSINESS INCOME OR CAPITAL GAI NS. 11. THE HONBLE MUMBAI ITAT IN THE CASE OF GOPAL PU ROHIT VS. JCIT 122 TTJ 87 HELD AS FOLLOWS: THE HONBLE TRIBUNAL AFTER ELABORATELY DISCUSSING VARIOUS JUDICIAL PRONOUNCEMENT RELATING TO THE ISSUE, HELD AS UNDER: THUS, THE NATURE OF ACTIVITIES, MODUS OPERAND! OF T HE ASSESSEE, MANNER OF KEEPING RECORDS AND PRESENTATION OF SHARES AS IN VESTMENT AT THE YEAREND WERE SAME IN ALL THE YEARS, AND, HENCE, APPARENTLY, THERE APPEARED NO REASON AS TO WHY THE CLAIMS MADE BY THE ASSESSEE SHOULD NOT B E ACCEPTED. HOWEVER, THE REVENUE AUTHORITIES HAD TAKEN A DIFFERENT VIEW IN T HE YEAR UNDER CONSIDERATION BY HOLDING THAT PRINCIPLE OF RES JUDICATA WAS NOT A PPLICABLE TO THE ASSESSMENT ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 11 PROCEEDINGS. THERE COULD NOT BE ANY DISPUTE ON THIS ASPECT, BUT THERE IS ALSO ANOTHER JUDICIAL THOUGHT THAT THERE SHOULD BE UNIFO RMITY IN TREATMENT AND CONSISTENCY UNDER THE SAME FACTS AND CIRCUMSTANCES AND IT WAS ALREADY FOUND THAT FACTS AND CIRCUMSTANCES WERE IDENTICAL, EVEN T HOUGH A DIFFERENT STAND HAD BEEN TAKEN BY THE REVENUE AUTHORITIES. IN THAT VIEW OF THE MATTER, THE ACTION OF THE REVENUE AUTHORITIES IN DISALLOWING THE CLAIM OF THE ASSESSEE IN THE RELEVANT YEAR NEEDED VERIFICATION. IN THE PROCESS TO FIND TH E ANSWER, IT WAS NOTED THAT THERE WAS A CHANGE IN THE SCHEME OF TAXATION RELATI NG TO SHORT-TERM CAPITAL GAINS AND LONG-TERM CAPITAL GAINS. THROUGH THE FINA NCE ACT, 2004, THE LEGISLATURE IMPOSED SECURITIES TRANSACTION TAX ON THE SALE AND PURCHASE OF SHARES AND OTHER DERIVATIVE TRANSACTIONS AND, SIMULTANEOUSLY, THE LE GISLATURE EXEMPTED LONG-TERM CAPITAL GAIN UNDER SECTION 10(38) FROM THE LEVY OF TAX AND ON SHORT-TERM CAPITAL GAIN, A CONCESSIONAL RATE OF TAX I.E., 10 P ER CENT HAS BEEN LEVIED SUBJECT TO THE CONDITION THAT TRANSACTIONS RESULTIN G INTO THIS TYPE OF GAIN MUST HAVE SUFFERED SECURITIES TRANSACTION TAX. THAT-WAS THE FIRST YEAR OF SUCH CHANGE AND, HAVING REGARD TO THE QUANTUM OF GAINS, THIS SC HEME OF TAXATION ONLY MUST HAVE PROMPTED THE REVENUE AUTHORITIES TO TAKE A DIF FERENT VIEW ON THE SAME TYPES OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN EARLIER YEARS. THE LEGISLATIVE CHANGE OF THIS NATURE, WHEREBY NO CHANG E HAD BEEN MADE IN RESPECT OF NATURE AND MODUS OPERAND! OF SUCH SHARE TRANSACTIONS, RESULTING INTO ANY ADVANTAGE COULD NOT BE TAKEN AWAY BY THE R EVENUE AUTHORITIES IN THAT MANNER AND IN THOSE CIRCUMSTANCES, PRINCIPLE OF CON SISTENCY, THOUGH IT IS AN EXCEPTION TO THE PRINCIPLE OF RES JUDICATA MU ST BE APPLIED HERE, FT IS FURTHER SO BECAUSE THE PAYMENT OF SECURITIES TRANSA CTION TAX IS MANDATORY, I.E., WHETHER AN ASSESSEE EARNS THE PROFIT OR NOT O R SUFFERS A LOSS AND BY IMPOSITION OF SUCH TAX, THE LEGISLATURE HAS NOT GIV EN ANY BENEFIT TO A CLASS OF TRANSACTIONS AS A WHOLE THOUGH IT MAY RESULT INTO A N APPARENT BENEFIT TO INDIVIDUAL(S) ENTERING INTO THOSE TRANSACTIONS. THU S, IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, ON THE BASIS OF PRINCIPLE OF CONSISTENCY ALONE, THE ACTION OF THE REVENUE AUTHORITIES WAS LI ABLE TO BE QUASHED. IT WAS ORDERED ACCORDINGLY AND THE ASSESSING OFFICER WAS D IRECTED TO ACCEPT THE CLAIMS OF ASSESSEE IN REGARD TO SHORT-TERM CAPITAL GAIN AN D LONG-TERM CAPITAL GAIN. FURTHER, ON THE BASIS OF MERITS ALSO, IN VIEW OF TH E RATIO OF THE DECISION OF SARNATH INFRASTRUCTURE (P.) LTD.'S CASE, 120 777 (LUCK.) 216 IT WAS HELD THAT THE DELIVERY BASED TRANSACTION SHOULD BE TREATED AS OF THE NATURE OF INVESTMENT TRANSACTIONS AND PROFIT IF THEREFROM SHO ULD BE TREATED AS SHORT- TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN DEPENDI NG UPON THE PERIOD OF HOLDING. THE REVENUE HAD ALSO HELD THAT PRESENTATION IN THE BOOKS OF ACCOUNT WAS NOT CONCLUSIVE WHICH MAY BE TRUE TO SOME EXTENT, BU T IT IS THE MOST CRUCIAL SOURCE OF GATHERING INTENTION OF THE ASSESSEE AS RE GARDS THE NATURE OF TRANSACTION AND, IN LAW, IT IS ALSO SO, I.E., SUCH PRESENTATION REFLECTS, PRIMA FACIE, A. VIEW OF THE ASSESSEE ON A PARTICULAR SUBJECT AND THIS PRINCIPLE WAS EFFECTIVELY APPLICABLE IN A SITUATION LIKE THAT AS COMPARED TO A SITUATION WHERE NATURE OF EXPENDITURE OR INCOME IS DIFFERENT IN THE BOOKS OF ACCOUNT AND IN THE RETURN OF INCOME FILED BY THE ASSESSEE WHEREIN THE SPECIFIC P ROVISIONS OF THE ACT HAVE TO ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 12 BE CONSIDERED OVER SUCH PRESENTATION AND IF THERE E XIST NO SPECIFIC PROVISIONS, THEY ARE THE COMMERCIAL PROFITS WHICH HAVE TO BE TA XED AND EVEN IN THAT SITUATION, THE ASSESSEE MAY BE FOUND TO BE JUSTIFIE D IN GIVING DIFFERENT TREATMENT IN THE BOOKS OF ACCOUNT AS COMPARED TO RE TURN OF INCOME BECAUSE OF COMMERCIAL CONSIDERATIONS OR ACCOUNTING REQUIREM ENTS. HENCE, THERE WAS NO SUBSTANCE IN THE FINDING OF THE REVENUE AUTHORITIES IN THE FACTS OF THE INSTANT CASE. THE REVENUE AUTHORITIES HAD ALSO HELD THAT BORROWED FUNDS WERE UTILIZED FOR MAKING SUCH INVESTMENTS WHEREAS I N EARLIER YEARS, INTEREST ON SUCH LOANS HAD BEEN ALLOWED AS BUSINESS EXPENDITURE AGAINST PROFIT ON SHARE TRADING TRANSACTIONS SHOWN AS BUSINESS INCOME AND IN THE YEAR UNDER CONSIDERATION ALSO, NO NEXUS BETWEEN THE INTEREST B EARING FUNDS AND INVESTMENT HAD BEEN ESTABLISHED AND, HENCE, FOR THI S REASON ALSO, THERE WAS NO MERIT IN TREATING THE LONG-TERM CAPITAL GAIN AND SH ORT-TERM CAPITAL GAIN AS BUSINESS PROFITS. [PARA 8.4] , IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE ASSESSEE'S CLAIM OF SHORT-TERM CAPITAL GAIN AND LONG-TERM CAPITAL ON SH ARE TRANSACTIONS WHERE THE DELIVERY HAD BEEN TAKEN OR GIVEN AND SECURITIES TRA NSACTION TAX HAD BEEN PAID, WAS LIABLE TO BE ACCEPTED. ACCORDINGLY, THE ORDERS OF REVENUE AUTHORITIES WERE TO BE REVERSED. 5.5 THIS VIEW OF HONOURABLE TRIBUNAL IS ENDORSED BY MUMBAI HIGH COURT IN CIT VS GOPAL PUROHIT 336 ITR 287 (BOM). THE HIGH COURT HEL D AS UNDER: (A) THE TRIBUNAL HAS CORRECTLY APPLIED THE PRINCIPL E OF LAW IN ACCEPTING THE POSITION THAT IT IS OPEN TO AN ASSESSEE TO MAINTAIN TWO SEPA RATE PORTFOLIOS, ONE RELATING TO INVESTMENT IN SHARES AND ANOTHER RELATING TO BUSINE SS ACTIVITIES INVOLVING DEALING IN SHARES. DELIVERY BASED TRANSACTIONS WERE RIGHTLY TREATED AS BEING IN THE NATURE OF INVESTMENT TRANSACTIONS GIVING RISE TO CAPITAL G AINS. (B) THE TRIBUNAL CORRECTLY ACCEPTED THE POSITION TH AT THOUGH THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED, THERE OUGHT TO BE UNIFOR MITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE ID ENTICAL. THE TRIBUNAL HAS NOTED THAT THE ASSESSEE HAS FOLLOWED A CONSISTENT P RACTICE IN REGARD TO THE NATURE OF THE ACTIVITIES, THE MANNER OF KEEPING REC ORDS AND THE PRESENTATION OF SHARES AS INVESTMENT AT THE END OF THE YEAR IN A LL THE YEARS AND THERE IS NO JUSTIFICATION FOR A DIFFERENT VIEW BEING TAKEN BY T HE A O. (C) THE TRIBUNAL APPLIED THE CORRECT PRINCIPLE IN H OLDING THAT WHILE ENTRIES IN THE BOOKS OF ACCOUNT ALONE ARE NOT CONCLUSIVE IN DETERM INING THE NATURE OF INCOME, IT DOES HAVE A BEARING. 5.6 DEPARTMENT'S SLP AGAINST THRS- DECISION IS DISM ISSED BY THE HONOURABLE APEX COURT VIDE ORDER DATED 15,11.2010 ,THUS ENDORSING THE DEC ISION OF MUMBAI HIGH COURT. I AM OF THE CONSIDERED OPINION THAT THE FACTS OF THE PRE SENT CASE ARE SIMILAR TO THAT OF GOPAL PUROHIT CASE AND HENCE THE RATIO OF THE HONOU RABLE TRIBUNAL AS ENDORSE BY ITA NO.169/VIZAG/2012 & CO NO.14/VIZAG/2012 SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., KAKINADA 13 HONOURABLE MUMBAI HIGH COURT AND SUPREME COURT IS S QUARELY APPLICABLE TO THE CASE ON HAND. 12. THE LD. CIT(A) HAS IN OUR VIEW, CORRECTLY APPRE CIATED THE FACTS OF THE CASE. WE UPHOLD HIS FACTUAL FINDING. EVEN ON THE GROUND OF CONSISTENCY WE UPHOLD THE ORDER OF THE LD. CIT(A). 13. IN THE RESULT, WE DISMISS THE APPEAL OF THE REVENUE. THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS INF RUCTUOUS. PRONOUNCED IN THE OPEN COURT ON 30 TH JULY14 SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 30 TH JULY, 2014 COPY TO 1 THE ACIT, CIRCLE-1, KAKINADA 2 M/S. SRI R.K.R. INVESTMENTS SERVICES PVT. LTD., 2- 225/1, PAPER MILLS ROAD, YEDITHA. 3 THE CIT, VISAKHAPATNAM 4 THE CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM