KAMALA VENKATARAMANI, MUMBAI V. ACIT CIR 21(3), MUMBAI

CO 202/MUM/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5997 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROHT PER R K
• Assessee Lawyers: MAYUR KISNATWALA
• Keywords: Business income; Rule of consistency

Judgement Text

1 ITA NO.149/MUM/2010 & CO NO.202/M/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI A AA A BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI R V EASWAR, PRESIDENT & SHRI R V EASWAR, PRESIDENT & SHRI R V EASWAR, PRESIDENT & SHRI R V EASWAR, PRESIDENT & SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM ITA NO. ITA NO. ITA NO. ITA NO. 149/MUM/2010 149/MUM/2010 149/MUM/2010 149/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2006 2006 2006 2006- -- -07 0707 07) )) ) THE ASST COMMR OF INCOME TAX CIR 21(3), MUMBAI VS SMT KAMALA VENKAT RAMANI MR HITESH DOSHI, ETERNIA A/1602B 7B ANJANEYA CHS LTD HIRANANDANI GARDENS, POWAI MUMBAI 76 ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) & && & CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010 SMT KAMALA VENKAT RAMANI MR HITESH DOSHI, ETERNIA A/1602B 7B ANJANEYA CHS LTD HIRANANDANI GARDENS, POWAI MUMBAI 76 VS THE ASST COMMR OF INCOME TAX CIR 21(3), MUMBAI ( (( (CROSS OBJECTOR CROSS OBJECTOR CROSS OBJECTOR CROSS OBJECTOR) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAKPK3120D AAKPK3120D AAKPK3120D AAKPK3120D A SSESSEE BY SHRI MAYUR KISNATWALA REVENUE BY SHRI DURGESH SUMROHT PER R K PANDA, PER R K PANDA, PER R K PANDA, PER R K PANDA, AM AMAM AM THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 29.10 .2009 OF THE CIT(A)-32, MUMBAI RELATING TO ASSESSMENT YEAR 2006-07. 2 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 21,64,772/- WHICH CO NSISTS OF INCOME FROM HOUSE PROPERTY, OTHER SOURCES AND CAPITAL GAINS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO SHOW CAUSE AS TO WHY 2 ITA NO.149/MUM/2010 & CO NO.202/M/2010 THE INCOME FROM CAPITAL GAIN SHOULD NOT BE TREATED AS HER BUSINESS INCOME. THE ASSESSEE SUBMITTED THAT SHE WAS A SALARIED EMPLOYEE WORKING WITH M/S POLARIS LIMITED AND LEFT HER JOB TO CONCENTRATE MORE TOWARD S THE EDUCATION OF HER DAUGHTERS. THE SHARES AND MUTUAL FUNDS ARE PURCHAS ED BASICALLY WITH AN INTENTION TO DERIVE DIVIDEND INCOME. FURTHER, THE SALE/PURCHASE OF SHARES DURING THE CURRENT FINANCIAL YEAR IS PURELY DELIVERY BASED AND SHARES HAVE BEEN SOLD WITHOUT OBTAINING DELIVERY. ACCORDINGLY, IT WAS SUB MITTED THAT THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN DECLARED B Y THE ASSESSEE SHOULD BE ACCEPTED. 2.1 HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED FROM THE CHART SHOW ING SHORT TERM CAPITAL GAIN THAT DURING THE FINANCIAL YEAR 2005-06, THE ASSESSE E HAS MADE 198 TRANSACTIONS STARTING FROM 15 TH APRIL 2005 TO 31.3.2006 AND HAS EARNED A SHORT TER M CAPITAL GAIN OF RS. 19,29,867/-. SHE HAS ALSO EARNED LONG T ERM CAPITAL GAIN OF RS. 55,85,578/- AND HAS MADE 97 TRANSACTIONS BEGINN ING FROM 4.4.2005 TO 9.3.2006. THE INTENTION OF THE ASSESSEE IS EVIDENT FROM THE NUMBER OF TRANSACTIONS DURING THE YEAR WHICH COMBINED TOGETHE R COMES TO 295 TRANSACTIONS. THE ASSESSING OFFICER HELD THAT IF T HE STOCK EXCHANGE FUNCTIONS FOR 230 DAYS IN A YEAR EXCLUDING SATURDAYS, SUNDAYS AND PUBLIC HOLIDAYS, IT IS OBVIOUS THAT THE ASSESSEE IS TRADING ON A DAILY BAS IS. FROM THE FREQUENCY OF TRANSACTIONS, HE WAS OF THE OPINION THAT THE ASSESS EE IS INTERESTED IN MAKING PROFIT BASED ON THE PRICE DIFFERENCE BETWEEN PURCHA SE AND SALE PRICE. IN CASE SHE WAS AN INVESTOR SHE WOULD BE PRINCIPALLY INTERE STED IN HOLDING THE SHARES FROM THE POINT OF VIEW OF DIVIDEND WHICH IS NOT THE CASE WITH HER. THE ASSESSEE IS CARRYING ON THE TRADING ON A REGULAR BASIS. THE ASSESSEE HAS LEFT HER JOB IN 3 ITA NO.149/MUM/2010 & CO NO.202/M/2010 POLARIS LTD AND IS STAYING AT HOME DOING PART TIME JOB AND HER MAJOR SOURCE OF INCOME IS NOW DEALING IN SHARES. HER TWO OTHER INCO MES ARE MINISCULE AS COMPARED TO HER INCOME FROM TRADING IN SHARE, WHICH IS ONLY RS. 2169/- AS INCOME FROM HOUSE PROPERTY AND RS.3,35,236/- AS INCOME FROM OTHER SOURCES. THE FREQUENCY AS WELL AS THE INCOME GEN ERATED BY WAY OF SALE OF SHARES POINT TO THE FACT THAT THE ASSESSEE IS DOING BUSINESS IN SHARES RATHER THAN INVESTING IN SHARES AND THE INTENTION OF THE ASSESS EE IS TO DERIVE PROFIT FROM SALE OF SHARES RATHER THAN DIVIDEND INCOME AS CLAIMED BY HER. THE AO ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE SALE AND PU RCHASE OF SHARES ARE PURELY DELIVERY BASED ON THE GROUND THAT UNDER THE PRESENT REGULATIONS, SHARES ARE TO BE HELD IN DE-MAT FORM AND ANY PERSON DESIROUS OF E ITHER INVESTING OR TRADING IN SHARES CAN OPEN ONE OR MORE DE-MAT ACCOUNTS WITH DE POSITORY PARTICIPANTS/BANKS AND ALSO SELL THE SHARE, AS SUCH SHARES ARE HELD IN ELECTRONIC FORM. HE ACCORDINGLY TREATED THE AMOUNT OF RS. 75, 15,445/- DECLARED BY THE ASSESSEE UNDER SHORT TERM AND LONG TERM CAPITAL GAIN AS BUSINESS INCOME. 2.2 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASS ESSEE IS ENGAGED IN THE ACTIVITY OF MAKING INVESTMENTS IN EQUITY SHARES AND NOT TRADING IN EQUITY SHARES. IT WAS SUBMITTED THAT THE ASSESSEE HAS BEEN INVESTI NG HER MONEY EARNED FROM SAVINGS INTO SHARES SINCE 1993. THE ASSESSEE HAS BE EN SELLING HER INVESTMENTS SINCE THE LAST COUPLE OF YEARS AND HAS BEEN CONSIST ENTLY OFFERING THEM AS CAPITAL GAINS. THE LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAIN DECLARED DURING THE AYS 2004-05 AND 2005-06 WERE ACCEPTED BY THE DE PARTMENT. IT WAS SUBMITTED THAT DURING THE AY 2004-05 THERE WAS A SC RUTINY ASSESSMENT AND THE ASSESSING OFFICER HAS ACCEPTED THE INCOME FROM INVE STMENTS AS LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE. VARIOUS DECISIONS 4 ITA NO.149/MUM/2010 & CO NO.202/M/2010 WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) TO SU BSTANTIATE THE CLAIM OF THE ASSESSEE THAT THE INCOME FROM LONG TERM AND SHORT T ERM CAPITAL GAIN SHOWN BY THE ASSESSEE SHOULD BE ACCEPTED. 2.3 IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSES SEE HAS BEEN REGULARLY TREATING PURCHASE OF SHARES AS INVESTMENTS. REFERRI NG TO PAST SIX YEARS TAX RETURNS, IT WAS SUBMITTED THAT THE SAME CLEARLY EST ABLISHED THAT THE PURCHASE AND SALE OF SHARES WERE TREATED AS INVESTMENT BY TH E ASSESSEE. REFERRING TO THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS GOPAL PUROHIT REPORTED IN 228 CTR 582, IT WAS SUBMITTED THAT RULE OF CONSISTENCY SHOULD BE FOLLOWED. IT WAS SUBMITTED THAT FREQUENCY AND MAGN ITUDE OF TRANSACTIONS ARE NOT THE DECISIVE FACTOR FOR TREATING THE SHORT TERM C APITAL GAIN AND LONG TERM CAPITAL GAIN AS BUSINESS INCOME. IT WAS SUBMITTED THAT P ERIOD OF HOLDING FOR SUFFICIENTLY LONG PERIOD IS ENOUGH TO JUSTIFY THE C APITAL GAIN. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS NOT BORROWED FUNDS FOR INVESTING IN SHARES AND ALL THE INVESTMENTS MADE BY THE ASSESSEE ARE OUT OF HER OWN SAVINGS. IT WAS BROUGHT TO THE NOTICE OF THE CIT(A) THAT OUT OF LO NG TERM CAPITAL GAIN AMOUNTING TO RS.55,85,578/-, LONG TERM CAPITAL GAIN AMOUNTI NG TO RS. 34,79,090/- IS FROM SALE OF IFLEX SHARES, WHICH WERE BOUGHT IN THE YEA R 1992 BY THE ASSESSEE UNDER PRIVATE PLACEMENT AT PAR VALUE. IT WAS SUBMI TTED THAT MERELY QUITTING THE JOB SHOULD NOT BE THE BASIS FOR TREATING SALE OF IN VESTMENTS AS BUSINESS INCOME. FINALLY, IT WAS SUBMITTED THAT THE TREATMENT GIVEN BY THE ASSESSING OFFICER IS BASED ON ASSUMPTION AND GUESS WORK AND HE HAS NOT APPLIED HIS MIND AND THE SAME IS AN ATTEMPT TO MAXIMIZE TAX REVENUES. 5 ITA NO.149/MUM/2010 & CO NO.202/M/2010 3 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE CIT(A) HELD THAT BOTH THE AO AND THE ASSESSEE HAVE TAKEN EXTREME VIE WS. WHILE, THE ASSESSING OFFICER HAS TREATED THE ASSESSEE AS A TRADER AND HA S TREATED ALL THE TRANSACTIONS (SHORT TERM AS WELL AS LONG TERM) AS BUSINESS INCOM E, THE ASSESSEE HAS CLAIMED TO BE AN INVESTOR AND HAS TREATED ALL HER TRANSACTI ONS AS INVESTMENT TRANSACTIONS AND THEREBY OFFERED GAIN ON SALE OF SHARES AS CAPIT AL GAINS. ACCORDING TO HIM, NEITHER SEEMS TO BE A CORRECT VIEW. AFTER ANALYSIN G THE DATA, HE CAME TO THE CONCLUSION THAT THIS IS A CASE OF INVESTOR CUM TRAD ER WHERE THE ASSESSEE, AT TIMES TRIES HER HAND AT TRADING IN SHARES. 3.1 REFERRING TO THE CBDT CIRCULAR, HE HELD THAT TH E ASSESSEE CAN BE BOTH AN INVESTOR AS WELL AS A TRADER. REFERRING TO VARIOUS FACTORS WHICH ARE AVAILABLE FROM THE DATA FURNISHED BY THE ASSESSEE BEFORE HIM, HE W AS OF THE OPINION THAT ALTHOUGH THE ASSESSEE IS MAINLY AN INVESTOR, THE FA CTORS LIKE TURNOVER OF SHARES IN LESS THAN 30 DAYS IN RESPECT OF SECONDARY MARKET T RANSACTIONS ETC., POINTS TO THE FACT THAT THE ASSESSEE IS ALSO A TRADER. HE, A CCORDINGLY DIRECTED THE AO TO TREAT THE SURPLUS/LOSS ON SALE OF SHARES HELD FOR L ESS THAN 30 DAYS IN RESPECT OF SECONDARY MARKET PURCHASE AND SALES AS BUSINESS INC OME/LOSS AND TO TREAT THE SURPLUS/LOSS ON SALE OF SHARES HELD FOR MORE THAN 3 0 DAYS AS SHORT TERM CAPITAL GAINS/LOSS. HE, FURTHER DIRECTED THE AO TO ACCEPT THE ENTIRE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE ON SALE OF SHARES A ND GIVE EXEMPTION U/S 10(38). 4 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE REVENU E HAS FILED APPEAL WITH THE FOLLOWING GROUNDS: 6 ITA NO.149/MUM/2010 & CO NO.202/M/2010 ITA NO. 149/MUM/2010 ITA NO. 149/MUM/2010 ITA NO. 149/MUM/2010 ITA NO. 149/MUM/2010 ( (( (BY THE BY THE BY THE BY THE R RR REVENUE EVENUE EVENUE EVENUE) )) ) I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A) HAS ERRED IN TREATING THE BUSINESS INCOME ON ACCOUN T OF TRADING IN SHARES AS SHORT TERM CAPITAL GAINS BY APPLYING THE SHARE HOLDING PERIOD FOR SHORT TERM CAPITAL GAIN AS MORE THAN 30 DAYS BU T LESS THAN 1 YEAR. II) THE LD CIT(A) WHILE PROVIDING RELIEF TO THE ASSESSE E HAS TAKEN 30 DAYS AS HOLDING PERIOD OF SHARES TO DISTINGUISH BETWEEN TRA DING AND INVESTMENT WHICH IS ARBITRARY AND NOT IN CONSONANCE WITH THE C BDT VIDE ITS INSTRUCTION NO. 1827 DATED 31.8.1989 SUPPLEMENTED W ITH CBDT CIRCULAR NO.4 OF 2007 DATED 15.6.2007 III) THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO RESTORED. 4.1 THE ASSESSEE HAS FILED CROSS OBJECTION WITH THE FOLLOWING GROUNDS: CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010 CROSS OBJECTION NO. 202/MUM/2010(BY THE ASSESSEE) (BY THE ASSESSEE) (BY THE ASSESSEE) (BY THE ASSESSEE) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN CONFIRMING THE DECISION OF THE ASSESSING OFFICER I N HOLDING THAT THE SHARES HELD FOR LESS THAN 30 DAYS BE TREATED AS BUS INESS INCOME. 5 THE LD COUNSEL FOR THE ASSESSEE, REFERRING TO THE CROSS OBJECTION FILED BY THE ASSESSEE SUBMITTED THAT THERE IS A DELAY OF 89 DAYS IN FILING OF THE CROSS OBJECTION. REFERRING TO THE AFFIDAVIT FILED BY THE ASSESSEE, EXPLAINING THE DELAY IN FILING OF THE CO, HE SUBMITTED THAT THE CIT(A) HAD GIVEN SUFFICIENT RELIEF TO THE ASSESSEE. ON RECEIPT OF NOTICE, SHE APPROACHED THE COUNSEL TO DEFEND HER BEFORE THE TRIBUNAL AGAINST THE APPEAL FILED BY THE REVENU E. AT THAT TIME ONLY THE COUNSEL ADVISED HER TO FILE THE CO. THEREFORE, THE DELAY IN FILING OF THE CO WAS NOT INTENTIONAL. REFERRING TO A NUMBER OF DECISION S, HE REQUEST THE BENCH TO CONDONE THE DELAY. 5.1 THE LD DR ON THE OTHER HAND OBJECTED CONDONATI ON OF DELAY IN FILING OF THE CO. 7 ITA NO.149/MUM/2010 & CO NO.202/M/2010 6 AFTER HEARING BOTH THE PARTIES AND CONSIDERING TH E TOTALITY OF THE FACTS OF THE CASE, THE DELAY IN FILING OF THE CO IS CONDONED . 7 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN CASE OF LONG TERM CAPITAL GAIN, THE PERIOD OF HOLDING OF SHARES IS SUBSTANTIA LLY LONG. REFERRING TO PAGE 77 TO 80 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE PERIOD OF HOLDING OF THE SHARES FOR THE NUMBER OF MONTHS WHICH VARIES FROM 14 MONTHS TO 134 MONTHS. SO FAR AS THE SHORT TERM CAPITAL GAIN IS CO NCERNED, HE SUBMITTED THAT THERE ALSO THE PERIOD OF HOLDING IS SUBSTANTIALLY L ONG. FURTHER, THE SHARES HAVE BEEN VALUED AT COST. IN THE PAST ALSO SUCH INCOME H AS BEEN ASSESSED AS SHORT TERM CAPITAL GAIN. THIS IS THE ONLY YEAR IN WHICH T HE REVENUE TREATS THIS AS BUSINESS INCOME. HE SUBMITTED THAT EVEN AFTER SCRUT INY ASSESSMENT IN THE YEAR 2006-07, IN WHICH THE ASSESSING OFFICER TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME, THE ASSESSING OFFICER IN THE SUB SEQUENT ASSESSMENT YEARS HAS ACCEPTED SUCH INCOME AS SHORT TERM CAPITAL GAIN. HE SUBMITTED THAT THE ASSESSEE HAS NEITHER BORROWED ANY MONEY FOR INVESTM ENT IN SHARES NOR THERE IS ANY INFRASTRUCTURAL FACILITY OR STAFF TO DO SUCH IN VESTMENT IN A SYSTEMATIC MANNER. 7.1 REFERRING TO THE DECISION OF THE COORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF NAGINDAS P SHETH (HUF) VIDE ITA NO.961/MUM/ 2020 AND 1836/MUM/2020 ORDER DATED5.4.2011, HE SUBMITTED THAT UNDER IDENTI CAL FACTS AND CIRCUMSTANCES, THE TRIBUNAL HAS HELD THAT TRANSACTION OF PURCHASE AND SALE OF SHARES HAS TO BE CONSIDERED AS INVESTMENT AND PROFIT THEREON HAS TO BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. THE FACTS OF THE INSTANT CAS E ARE IDENTICAL TO THE FACTS IN THE CASE OF NAGINDAS P SHETH (HUF) (SUPRA) WHERE THE CI T(A) HAS ALSO HELD THE SHARES HELD FOR MORE THAN 30 DAYS AS SHORT TERM CA PITAL GAIN AND LESS THAN 30 8 ITA NO.149/MUM/2010 & CO NO.202/M/2010 DAYS AS BUSINESS INCOME. APPEALS WERE FILED BY BO TH THE PARTIES AND THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE AND AL LOWED THE APPEAL FILED BY THE ASSESSEE. THEREFORE, FOLLOWING THE SAME RATIO, THE APPEAL FILED BY THE REVENUE SHOULD BE DISMISSED AND THE CO FILED BY THE ASSESSE E SHOULD BE ALLOWED. 7.2 THE LD DR, ON THE OTHER HAND SUPPORTED THE ORDE R OF THE ASSESSING OFFICER. 8 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT T HAT THE ENTIRE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN DECLARED BY THE ASS ESSEE HAS BEEN TREATED AS BUSINESS INCOME BY THE ASSESSING OFFICER. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK, WE FIND THE ASSESSE E HAS DECLARED LONG TERM CAPITAL GAIN ON SHARES WHICH HAVE BEEN HELD BY HER FOR A PERIOD STARTING FROM 14 MONTHS TO 134 MONTHS. SIMILARLY, AS REGARDS THE I NCOME FROM SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE, WE FIND THE PERIOD O F HOLDING VARIES FROM 1 DAY TO 343 DAYS. WE FIND THE LONG TERM CAPITAL GAIN AND SH ORT TERM CAPITAL GAINS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE A SSESSING OFFICER IN THE SCRUTINY ASSESSMENT IN ASSESSMENT YEAR 2004-05, A FACT BROUGHT ON RECORD BY THE CIT(A) AND NOT OBJECTED TO BY THE REVENUE. FU RTHER, THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE THAT IN THE EARLIER YEARS , THE ASSESSING OFFICER HAS ACCEPTED THE SHORT TERM AND LONG TERM CAPITAL GAINS SHOWN BY THE ASSESSEE AND EVEN IN THE SUBSEQUENT YEARS ALSO SUCH INCOME HAS BEEN ACCEPTED BY THE REVENUE AND ONLY DURING THE ASSESSMENT YEAR 2006-0 7 THE ASSESSING OFFICER HAS TAKEN A DIFFERENT VIEW COULD NOT BE CONTROVERTED BY THE LD DR. 9 ITA NO.149/MUM/2010 & CO NO.202/M/2010 9 WE FIND UNDER IDENTICAL FACTS AND CIRCUMSTANCES, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF NAGINDAS P SHETH (HUF) ( SUPRA) IN PARA 7 OF THE ORDER HAS HELD AS UNDER: 7. WE HAVE HEARD THE LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE AS WELL AS LEARNED DR IN THIS REGARD AND C AREFULLY PERUSED THE RECORD. THE ISSUE AS TO WHETHER PROFIT ARISING OUT OF PURCHASE AND SALE OF SHARES IS ASSESSABLE TO TAX UNDER THE HEAD CAPITAL GAINS OR BUSINESS INCOME IS A VEXED QUESTION DEPENDING ON FACTS AND CIRCUMSTANCES OF EACH CASE, BASED UPON THE PRINCIPLES SET OUT BY VAR IOUS JUDICIAL PRECEDENTS. IN THE INSTANT CASE, IT IS NOT IN DISPU TE THAT THE ASSESSEE WAS HOLDING THE SHARES IN ITS BOOKS AS AN INVESTOR. LE ARNED CIT(A) OBSERVED THAT THE ASSESSEE DID NOT HAVE ANY OFFICE OR ADMINI STRATION SET UP AND THE SOURCE OF ACQUISITION OF SHARES WAS OUT OF OWN FUND S AND FAMILY FUNDS. HE FURTHER NOTICED THAT THERE WAS NOT A SINGLE INSTANC E WHERE THE ASSESSEE HAD SQUARED-UP TRANSACTIONS ON THE SAME DAY WITHOUT TAKING DELIVERY OF THE SHARES. LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, PLACED BEFORE US A COPY OF THE ORDER OF THE ASSESSING OFFI CER IN RESPECT OF THE ASSESSMENT YEAR 2007-2008 TO SUBMIT THAT SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSING OFFICER ACCEPTED THE NATURE OF TRANSACTIO NS AS INVESTMENT IN THE SUBSEQUENT YEAR IN HIS ORDER DATED 20-10-2009. IN O THERWORDS, BOTH FOR THE EARLIER YEAR AND SUBSEQUENT YEAR ASSESSING OFFI CER ACCEPTED, IN THE SCRUTINY ASSESSMENT PROCEEDINGS, THAT THE ASSESSEE IS AN INVESTOR. SUCH BEING THE CASE, MERELY BECAUSE ASSESSEE TRANSACTED IN 158 SHARES THAT SHOULD NOT BE TAKEN AS A SOLE CRITERION TO COME TO THE CONCLUSION THAT ASSESSEE IS A TRADER IN SHARES. IT IS NOT IN DISPUT E THAT IN THE BOOKS OF ACCOUNTS ASSESSEE HAS DECLARED THE SHARES AS AN INV ESTMENT AND THE FINDING OF THE LEARNED CIT(A) THAT ONLY OWN FUNDS W ERE UTILISED FOR PURCHASE OF SHARES WAS NOT CONTRADICTED BY THE LEAR NED DR. IT WAS ALSO HIGHLIGHTED BY THE LEARNED CIT(A) THAT ASSESSEE HAD NOT INDULGED IN ANY SQUARING-UP OF THE TRANSACTIONS ON THE SAME DAY. ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES, IN THE INSTANT CASE, DESERVES TO BE CONSIDE RED AS INVESTMENT AND PROFIT THEREON HAS TO BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. 10 SINCE THE FACTS OF THE INSTANT CASE ARE IDENTIC AL TO THE FACTS IN THE CASE OF NAGINDAS P SHETH (HUF) (SUPRA), THEREFORE, FOLLOWIN G THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE HOLD THAT TRAN SACTIONS OF PURCHASE AND SALE 10 ITA NO.149/MUM/2010 & CO NO.202/M/2010 OF SHARES BY THE ASSESSEE, IN THE INSTANT CASE, HAS TO BE TREATED AS INVESTMENT AND PROFIT THEREON HAS TO BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE ACCORDINGLY DISMISSED AND THE GROUNDS RAISED BY TH E ASSESSEE IN THE CO ARE ALLOWED. 11 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CO FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 27 TH ,DAY OF APRIL 2011. SD/- SD/- ( (( ( R V EASWAR R V EASWAR R V EASWAR R V EASWAR ) )) ) PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 27 TH ,APRIL 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI