SURESH CHANDRA LAXMAN PRASAD MATHUR, MUMBAI V. ACIT CIR 6(3), MUMBAI

CO 234/MUM/2009

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5996 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAHUA SARKAR
• Assessee Lawyers: DI LIP J THAKKAR
• Keywords: Business income; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP AND SMT. ASHA VIJAYARAGHAV AN, JM I.T.A.NO.3097/MUM/2009 ASSESSMENT YEAR: 2005-06 THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 6(3), R.NO.522,5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. SURESH CHANDRA MATHUR, 6, MANSHA BUILDING, 11, UNION PARK, KHAR (WEST), MUMBAI 400 052. PAN: AADPM 3783 H (APPELLANT) (RESPONDENT) C.O.NO.234/MUM/2009 (ARISING OUT OF I.T.A.NO.3097/MUM/2009) ASSESSMENT YEAR: 2005-06 M/S. SURESH CHANDRA MATHUR, 6, MANSHA BUILDING, 11, UNION PARK, KHAR (WEST), MUMBAI 400 052. PAN: AADPM 3783 H VS. THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 6(3), R.NO.522,5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) REVENUE BY : MS. MAHUA SARKAR ASSESSEE BY : SHRI DILIP J. THAKKAR & SHRI RAJESH P. SHAH O R D E R PER P.M. JAGTAP, AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-VI, MUMBAI, DAT ED 27.02.2009 FOR THE ASSESSMENT YEAR 2005-06, AND THE SAME IS BEING DISP OSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEING C.O. NO. 234/ MUM/2009. 2. IN THE SOLITARY GROUND RAISED IN ITS APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN TREATING THE PROFIT ARISING TO THE ASSESSEE FROM THE SALE OF SHARES AS SHORT-TERM AND LONG TERM CAPITAL GAIN AS AGAINST BUSINESS INCOME AS HELD BY THE ASSESSING OFFICER. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.10.20 05 DECLARING TOTAL INCOME OF RS.22,46,924/- WHICH WAS COMPRISING OF LONG TERM AN D SHORT TERM CAPITAL GAINS FROM SALE OF SHARES BESIDES INCOME FROM HOUSE PROPE RTY, SALARY AND CONSULTANCY ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 2 FEES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER TO FURNISH THE FOLLOWING D ETAILS: WITH 44AB REPORT, NO P&L ACCOUNT AND BALANCE SHEET HAS BEEN FILED, PRODUCE THE SAME WHILE CALCULATING THE PROFIT & GAINS FROM SHARE TRA NSACTIONS, TELL SPECIFICALLY THE TREATMENT OF STT PAID, BROKERAGE, BANK CHARGES AND OTHER INCIDENTAL EXPENSES APPLICABILITY OF SECTION 94(7) & 94(8) OF THE ACT, SOURCES OF INVESTMENT IN SHARES HOW DIFFERENTIATE BETWEEN STOCK-IN-TRADE AND INVEST MENT IS BEING MADE AND AT WHAT POINT OF TIME WHY TRANSACTION IN SHARES SHOULD NOT BE CONSIDERED AS BUSINESS OF ASSESSEE, AS VOLUME AS WELL AS NO. ARE HUGE. DETAILS OF CALCULATION IF, TRANSACTION IN SHARES C ONSIDERED AS BUSINESS OF ASSESSEE. INTENTION/MOTIVE OF ASSESSEE FOR PURCHASING/SELLING OF SHARES. IN SPITE OF SEVERAL OPPORTUNITIES GIVEN BY THE ASSE SSING OFFICER, THE ASSESSEE DID NOT FURNISH THE AFORESAID DETAILS REQUIRED BY THE A SSESSING OFFICER. IN THE ABSENCE OF THE SAID DETAILS, THE ASSESSING OFFICER PROCEEDE D TO COMPLETE THE ASSESSMENT EX-PARTE, UNDER SECTION 144 TO THE BEST OF HIS JUDG MENT ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. IN THE ASSESSMENT SO COMPLETED UNDER SECTION 144, THE ASSESSING OFFICER HELD FOR THE FOLLOWING REASON S GIVEN IN PARAS 5 & 6 OF THE ASSESSMENT ORDER THAT THE TRANSACTION OF PROJECTS A ND SALE OF SHARES MADE BY THE ASSESSEE CONSTITUTED A BUSINESS ACTIVITY AND THE PR OFIT ARISING FROM THE SAID TRANSACTIONS WAS HIS BUSINESS INCOME AND NOT CAPITA L GAIN : (I) IT IS WELL SETTLED LAW THAT EVEN A SINGULAR TRANSAC TION OF PURCHASE AND SALE COULD BE IN THE NATURE OF TRADE. BUT HERE THE ASSESSEE HAS CONTINUOUSLY AND SYSTEMATICALLY CARRIED OUT THE ACT IVITY OF TRADING IN SHARES OVER THE PERIOD OF ONE YEAR; (II) THE ASSESSEE HAS BORROWED FUNDS TO FUND HIS ACTIVIT Y FOR PURCHASE AND SALE OF SHARES. THE PRESENCE OF BORROWED FUNDS IMPA RT THE ACTIVITY THE COLOUR OF TRADE RATHER THAN INVESTMENT. (III) THE ASSESSEE HAS NOT FURNISHED ANY REASON FOR PURCH ASE NETITHER HAS HE FURNISHED THE REASON FOR SALE. IN THE ABSENCE OF A DEFINITIVE REASON ON THE PART OF ASSESSEE WHAT CAN BE GAUGED FROM THE FA CTS IS THAT THE ASSESSEE HAS BOUGHT AND SOLD DEPENDING ON THE VOLAT ILITY OF THE MARKET. THIS BEHAVIOUR RESEMBLES THAT OF THE TRADER. (IV) AUDITOR IN ITS AUDIT REPORT HAS CLEARLY MENTIONED T HAT[ ASSESSEE IS IN SPECULATION BUSINESS IN SHARES AND INSTRUMENTS, AND NO WHERE MENTIONED THAT ASSESSEE IS A INVESTOR; (V) NO BALANCE SHEET OR P&L ACCOUNT WAS ATTACHED BY THE ASSESSEE NEITHER WITH BOOKS OF RETURN OF INCOME, NOR DURING ASSESSME NT PROCEEDINGS TO ASCERTAIN THE CHARACTERIZATION OF SECURITIES IN ITS BOOKS; ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 3 (VI) EVEN OTHERWISE[ THE RECORDING IN THE BOOKS OF ACCOU NTS IS ILLUMINATORY BUT IT IS NOT SACROSANCT. THE INCOME FROM THE SAME CAN BE ASSESSED AS BUSINESS INCOME DEPENDING ON THE FACTS AND CIRCUMST ANCES OF THE CASE. HONBLE APEX COURT IN THE CASE OF KARANPURA DEVELOP MENT CO.LTD. V. CIT (1962) 44 ITR 362, HAS CLEARLY HELD THAT SUBSTANCE OF TRANSACTION SHOULD PREVAIL OVER ITS FORM GIVEN BY THE ASSESSEE. IN TH IS HONBLE COURT HAS RULED THAT ALTHOUGH COMPANY WAS FORMED WITH SPECIFI C OBJECT OF ACQUIRING PROPERTIES NOT LEASING THEM, BUT LATER ON STARTED, SUBSTANTIALLY GIVING THE PROPERTIES ON LEASE, THEREFORE, SAME MUS T BE CONSIDERED AS ITS INCOME ONLY, THE RATIO OF THIS CASE ARE CLEARLY APP LICABLE IN OUR CASE, AN ASSESSEE ALTHOUGH FORMED WITH DIFFERENT MOTIVE, BUT LATER ON, BY SEEING THE HIGHER PROFITABILITY IN THE SHARE TRANSACTIONS, HAS STARTED, SHARES TRANSACTIONS SUBSTANTIALLY. THEREFORE, IN LIGHT OF ABOVE APEX COURT DECISION IT BECOME CLEAR THAT NOW, ASSESSEES SUBST ANTIAL BUSINESS, EITHER CHECKED THROUGH NOS. OR THROUGH VOLUME, OR THROUGH PROFITABILITY, OR THROUGH CAPITAL USED, IS SHARES TRANSACTION ONLY. (VII) COMMODITIES AND SCRIPS, AS HELD BY ROYAL COMMISSION OF ENGLAND ARE NORMALLY THE SUBJECT MATTER OF TRADING AND VERY EX CEPTIONALLY THE SUBJECT OF INVESTMENT. (VIII) USUALLY THE PROFITS ON THIS PROPERTY HAVE BEEN REAL IZED IN A VERY SHORT DURATION; (IX) ASSESSEE WAS NOT HAVING ANY OTHER SUBSTANTIAL ACTIV ITY AS DISCUSSED ALREADY WHILE DEALING WHAT IS THE BUSINESS OF ASSESSEE. (X) ASSESSEE IS ALSO DEALING IN SPECULATIVE TRANSACTIO N, HAVING THE HUGE VOLUME OF RS.755,51,284/-. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 144, AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND AS STATED BY THE LEARNED CIT(A) IN HIS IMPUGNED ORDER, SOME ADDITION AL EVIDENCE WAS FILED BY THE ASSESSEE BEFORE HIM. THE SAID ADDITIONAL EVIDENCE W AS FORWARDED BY THE LEARNED CIT(A) TO THE ASSESSING OFFICER SEEKING THE LATTER S OPINION THEREON. IN THE REMAND REPORT SUBMITTED TO THE LEARNED CIT(A), THE ASSESSING OFFICER DISPUTED THE APPLICABILITY OF CBDT CIRCULAR NO. 4 OF 2007 DATED 15.6.2007, TO THE FACTS OF THE ASSESSEES CASE. HE SUBMITTED THAT THE SAID CIRCUL AR WAS OF NO HELP TO THE ASSESSEES CASE. AFTER TAKING INTO CONSIDERATION TH E REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AS WELL AS THE SUBMISSIONS MA DE ON BEHALF OF THE ASSESSEE BEFORE HIM, THE LEARNED CIT(A) DIRECTED THE ASSESSI NG OFFICER TO TREAT THE PROFIT ARISING TO THE ASSESSEE FROM THE TRANSACTION OF SHA RES AS CAPITAL GAINS FOR THE FOLLOWING REASONS GIVEN IN PARA 4.1 TO 4.3.: 4.1 IN THE REMAND REPORT, THE A.O. HAS REPORTED T HAT THE CONTENTION OF THE APPELLANT THAT BOARD CIRCULAR NO.4 OF 2007 DATE D 15.06.2007 IS IN FAVOUR OF THE ASSESSEE IS NOT CORRECT. ACCORDING T O THE CIRCULAR, THE ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 4 ASSESSEE CAN HAVE TWO PORTFOLIOS FOR INVESTMENT AND STOCK IN TRADE SEPARATELY. HOWEVER, THIS CIRCULAR DOES NOT HELP T HE ASSESSEE IN ANY WAY. 4.2 THE A.R. SUBMITTED THAT IT IS NOT CORRECT TO SA Y THAT THE ASSESSEE HAS CONDUCTED BUSINESS FOR EARNING LONG TERM AND SHORT TERM CAPITAL GAIN. THE ASSESSEE IS A DIRECTOR OF THE COMPANY AND MOST OF T HE TIME IS BUSY WITH COMPANYS WORK. THE INVESTMENT IN SHARES IS DONE F OR DIVIDEND AND CAPITAL GAIN. THE SHARES ARE HELD AS INVESTMENT AND NOT STO CK IN TRADE. IN THE BOARDS CIRCULAR THE CRITERIA HAS BEEN LAID DOWN WH ETHER THE SHARES ARE HELD AS STOCK IN TRADE THEN IT IS TO BE TREATED AS BUSINESS INCOME BUT WHEN THE STOCK IN TRADE IS HELD AS INVESTMENT THEN INCOM E IS TO BE TAXED U/S.45 TO 54. HE SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE SHARES AS INVESTMENT AND HE HAS NO INTENTION TO TRADE IN THE SHARES PURCHASED BY HIM. HOWEVER, DUE TO FLUCTUATION IN MARKET, THE AM OUNT OF TRANSACTION HAS INCREASED BUT THE VOLUME IS NOT THAT HIGH. HE RELIE D ON THE DECISION OF I.T.A.T MUMBAI IN THE CASE OF JANAK RANGWALLA (11 S OT 627) WHEREIN IT WAS HELD THAT MERE MAGNITUDE OF TRANSACTION IS NOT MATERIAL FOR DETERMINING THE NATURE OF INCOME. THERE IS NO BASIS FOR TREATING THE ASSESSEES INCOME AS BUSINESS INCOME FOR THE ASSESS ING OFFICER. HE ALSO RELIED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF S. RAMAAMIRTHAM (306 ITR 239) WHEREIN IT WAS HELD THAT THE ASSESSEE HAD BEEN MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR TRAD ING IN SHARES AND INVESTMENT IN SHARES. THE ASSESSEE WAS CARRYING ON THE BUSINESS ONLY ON THE NAME OF THE COMPANY AND THE SURPLUS EARNED FROM THE COMPANY HAD BEEN SHOWN AS BUSINESS INCOME. THE PAYMENTS FOR THE SHARES HAD BEEN DONE BY THE ASSESSEE IN HIS PERSONAL ACCOUNT. FURTH ER, IT WAS FOUND THAT THE ASSESSEE HAD BEEN HOLDING SHARES FOR A LONG TIM E AND HAD BEEN UTILIZING THE SURPLUS FUNDS ONLY THE INVESTMENTS. IN EARLIER YEARS ALSO, THE ASSESSEE HAD BEEN SHOWING ONLY CAPITAL GAINS ON SIM ILAR TRANSACTIONS AND THAT WAS ACCEPTED BY THE REVENUE. THE INTENTION OF THE ASSESSEE WAS RELEVANT TO DETERMINE WHETHER HE WAS CARRYING ON TH E BUSINESS IN SHARES OR INVESTMENTS. ON THE FACTS BOTH THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL HAD CORRECTLY HELD THAT THE SURPLUS DERIVE D FROM THE SALE OF SHARES HAD TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS. THE FINDING WAS BASED ON VALID MATERIALS AND EVIDENCE AND THE ORDER OF TH E TRIBUNAL WAS NOT A PERVERSE ONE WARRANTING INTERFERENCE. THE A.R. FURT HER SUBMITTED THAT THE CASE LAW CITED BY THE A.O. ARE BASED ON THE OLD LAW S AND ARE MORE THAN 30 YEARS OLD. THE CASE LAWS ARE BASED ON THE DIFFERENT FACTS AND THE LAW PREVAILING IN THOSE YEARS. 4.3 RESPECTFULLY FOLLOWING THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF JANAK RANGWALLA (11 SOT 627) AND ALSO ON THE DECISI ON OF MADRAS HIGH COURT IN THE CASE OF S. RAMAAMIRTHAM (306 ITR 239), I FIND THAT THE ASSESSEE IS NOT DOING ANY BUSINESS BUT ONLY SELLING THE INVESTMENT WHICH HE HAS PURCHASED AND DEPENDING ON THE PERIOD OF HOLDIN G, SHOWN THE LONG TERM AND SHORT TERM CAPITAL GAIN. THE BOARDS CIRCU LAR ALSO GIVES GUIDELINES TO DETERMINE THE NATURE OF THE INCOME FROM SALE OF STOCK-IN-TRADE OR INVESTMENT. IT HAS BEEN LAID DOWN THAT INTENTION IS MATERIAL IN DETERMINING THE NATURE OF INCOME. IN THIS CASE, THE ASSESSEE HA S SHOWN INVESTMENT AND THERE IS NO EVIDENCE THAT HE HAS REGULAR DEALING IN STOCK IN TRADE. FOR CONDUCTING BUSINESS THE ASSESSEE HAS TO DEVOTE MOST OF HIS TIME AND ENERGY TO THE TRADE. IN THIS CASE IT IS SEEN THAT T HE ASSESSEE IS A DIRECTOR OF A COMPANY AND MOST OF HIS TIME IS DEVOTED TO THE AC TIVITIES OF THE COMPANY. HENCE, I DIRECT THE A.O. TO TREAT THE INCO ME OF THE ASSESSEE AS SHORT TERM AND LONG TERM CAPITAL GAIN AS DISCLOSED BY THE APPELLANT. THIS GROUND OF APPELLANT IS ALLOWED. ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 5 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) GIV ING RELIEF TO THE ASSESSEE ON THIS ISSUE AS ABOVE, THE REVENUE HAS PREFERRED T HIS APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE INVOLVED IN THE PRESE NT CASE IS WHETHER THE PROFIT ARISING TO THE ASSESSEE FROM THE TRANSACTION IN SHA RES IS CHARGEABLE TO TAX AS CAPITAL GAIN OR BUSINESS INCOME AND THAT WOULD DEPE ND ON THE INTENTION OF THE ASSESSEE BEHIND HOLDING THE SHARES WHETHER AS INVES TMENT OR STOCK IN TRADE. THIS INTENTION OF THE ASSESSEE HAS TO BE GATHERED F ROM THE RELEVANT FACTS OF THE CASE AND THERE ARE CERTAIN GUIDELINES WHICH ARE LAI D DOWN IN VARIOUS JUDICIAL PRONOUNCEMENTS WHICH COULD BE APPLIED TO THE FACTS OF THE GIVEN CASE TO ASCERTAIN THE INTENTION OF THE ASSESSEE. SUCH GUIDELINES HAVE BEEN SUMMARIZED BY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF SARNAT H INFRASTRUCTURE (P) LTD. V. ACIT (2009) 120 TTJ (LUCKNOW) 216, AFTER TAKING INT O CONSIDERATION THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THIS ISSUE, AS FOLLOWS: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE T IME OF PURCHASE OF THE SHARES FOR ANY OTHER ITEM. THIS CAN BE FOUND OUT FR OM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHE THER IT IS TREATED AS STOCK IN TRADE OR INVESTMENT? WHETHER SHOWN IN OPEN ING/CLOSING STOCK OR SHOWN SEPARATELY AS INVESTMENT OR NON-TRADING ASSET ? (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID IN TEREST THEREON. NORMALLY, MONEY IS BORROWED TO PURCHASE GOODS FOR T HE PURPOSES OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. (3 ) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DISPOSAL IN THAT PARTICULAR ITEM ? IF PURCHASE AND SALE ARE FREQUENT, OR THERE ARE SUBSTANTIAL TRANSACTIONS IN THAT ITEM, IT WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE P URCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADI NG OR INVESTING (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREA S LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT): (4) WHETHER PUR CHASE AND SALE IS FOR REALIZING PROFIT OR PURCHASES ARE MADE FOR RETENTIO N AND APPRECIATION IN ITS VALUE. FORMER WILL INDICATE INTENTION OF TRADE AND LATTER, AN INVESTMENT. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY D IVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMME RCIAL MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET? IF THE ITEMS IN QUESTIO N ARE VALU8ED AT COST, IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE T HEY ARE VALUED AT COST OR MARKET VALUE OR NET REALIZABLE VALUE (WHICHEVER IS LESS), IT WILL INDICATE[ THAT ITEMS IN QUESTION ARE TREATED AS STOCK IN TRAD E.(6) HOW THE COMPANY ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 6 (ASSESSEE) IS AUTHORIZED IN MEMORANDUM OF ASSOCIAT ION./ARTICLES OF ASSOCIATION? WHETHER FOR TRADE OR FOR INVESTMENT? I F AUTHORIZED ONLY FOR TRADE, THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY? AND VIC E VERSA.(7) IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHOW THAT[ HIS HOLDI NG IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT IN THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS. IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTIC ULAR ITEM IS HELD AS INVESTMENT FOR SAY, STOCK IN TRADE), THEN ONUS WOUL D SHIFT TO REVENUE TO PROVE THAT APPARENT IS NOT REAL.(8) THE MERE FACT O F CREDIT OF SALE PROCEEDS OF SHARES FOR FOR THAT MATTER ANY OTHER ITEM IN QUE STION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHA SE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEM IN QUESTION) FOR INVESTMENT.(9) ONE HAS TO FIND OUT WH AT ARE THE LEGAL REQUISITES FOR DEALING AS A TRADER IN THE ITEM IN QUESTION AND WHETHER THE ASSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREME NTS, IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM? WHETHER IT HAD SUCH AN INTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM)SINCE BEGINN ING OR WHEN PURCHASES WERE MADE? (10) IT IS PERMISSIBLE AS PER CBDTS CIR CULAR NO. 4 OF 2007 OF 15 TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLI OS, ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR BOTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. (1 1) NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EFFECT OF SEVERAL FACTORS HAS TO BE SEEN. 8. IT IS OBSERVED THAT IN THE PRESENT CASE, THE ASSESS ING OFFICER HAD NO OCCASION TO APPLY THE AFORESAID GUIDELINES TO ASCER TAIN THE EXACT INTENTION OF THE ASSESSEE TO PURCHASE AND HOLD THE SHARES IN THE ABS ENCE OF THE RELEVANT DETAILS FURNISHED BY THE ASSESSEE IN SPITE OF SUFFICIENT OP PORTUNITY. HE, THEREFORE, PROCEEDED TO DECIDE THIS ISSUE TO THE BEST OF HIS J UDGMENT ON THE BASIS OF WHATEVER FACTS AVAILABLE ON RECORD BEFORE HIM. ALT HOUGH SOME DETAILS AND DOCUMENTS WERE STATED TO BE FURNISHED BY THE ASSESS EE BEFORE THE LEARNED CIT(A), THERE IS NOTHING IN THE IMPUGNED ORDER OF THE LEARN ED CIT(A) TO SHOW THAT THE SAME WERE SUFFICIENT TO ASCERTAIN THE INTENTION OF THE ASSESSEE BY APPLYING THE CRITERIA/GUIDELINES LAID DOWN IN THIS REGARD. EVEN THE OPERATIVE PORTION OF THE LEARNED CIT(A)S IMPUGNED ORDER DOES NOT THROW ANY LIGHT ON THE RELEVANT FACTS OF THE CASE, INASMUCH AS, HE HAS NOT DISCUSSED THESE F ACTS IN THE LIGHT OF THE CRITERIA LAID DOWN IN VARIOUS JUDICIAL PRONOUNCEMENTS TO ASC ERTAIN THE INTENTION OF THE ASSESSEE. AT THE TIME OF HEARING BEFORE US EVEN THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT REBUT/CONTROVERT THIS POSITION. WE, THEREFORE, DEEM IT FAIR AND ITA NO.3097/M/2009 & CO NO. 234/M/09 SHRI SURESH CHANDRA MATHUR 7 PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH AFTER APPLYING VARIOUS CRITERIA/GUIDELINES LAID DOWN IN THE CASE OF S ARNATH INFRASTRUCTURE (P) LTD. (SUPRA) TO THE FACTS OF THE CASE. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE RELEVANT DETAILS AND DOCUMENTS REQUIRED BY THE ASSE SSING OFFICER FOR THIS PURPOSE. 9. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNS EL FOR THE ASSESSEE HAS SOUGHT PERMISSION OF THE BENCH TO WITHDRAW THE CROS S OBJECTION FILED BY THE ASSESSEE. ACCORDINGLY, THE PERMISSION IS GRANTED A ND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS WITHDRAWN. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES, WHEREAS THE CROSS OBJECTION OF THE ASSES SEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF APRIL, 2011. SD. SD. (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED THE _27 TH APRIL, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT, CITY -6, MUMBAI. 4. THE CIT(A)-VI, MUMBAI 5. THE DR E BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI