Gurukukh J Sukhwani, Pune V. DCIT, Pune

ITA 1033/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79790 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Assessee Lawyers: VIPIN GUJARATHI
• Keywords: Business income; Question of law; Penny stocks

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1033/PN/2012 (A.Y: 2005-06) GURUMUKH J SUKHWANI SUKHWANI NIVAS, PLOT NO.350, ROAD NO.3, SINDH HOUSING SOCIETY, AUNDH, PUNE 411007 PAN: ACEPS8693K APPELLANT VS. DCIT, CENTRAL CIRCLE 1(1), PUNE RESPONDENT APPELLANT BY : SHRI VIPIN GUJARATHI RESPONDENT BY : SMT. M.S . VERMA DATE OF HEARING: 24.04.2014 DATE OF ORDER : 30.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEAL)-I, [IN SHORT CIT(A)] PUNE, DATED 07.11.2011 FOR A.Y. 2005-06 ON THE FOLLOWING GROUNDS. 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HONOURABLE CIT(A) ERRED IN CONFIRMING THE TREATMENT OF THE LONG TERM CAPITAL GAIN OF RS.11,84,070/- ON SAL E OF SHARES OF AS PROFITS AND GAINS OF THE APPELLANT ON THE GROUNDS THAT THE ASSESSEE IS TRADING IN SHARES WITH OUT APPRECIATING THE FACTS OF THE CASE AND WITHOUT GIVI NG ANY JUSTIFIABLE REASONS. THE HONOURABLE CIT(A) ERRED IN RELYING ON THE APPEAL ORDER PASSED BY THE CIT(A) (HIS PREDECESSOR) IN THE CASE OF THE APPELLANT FOR THE ASSESSMENT YEAR 2006-07. THE APPELLANT HEREBY PRAYS THAT THE LONG TERM CAPITAL GAIN OF RS.11,84,070/-MA Y PLEASE BE RESTORED AND ADDITION AS NORMAL BUSINESS INCOME MAY PLEASE BE DELETED. 2 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HONOURABLE CIT (APPEALS) ERRED IN CONFIRMING THE TREATMENT OF THE SHORT TERM CAPITAL GAIN OF RS.12,32,868/- ON SALE OF SHARES OF AS PROFITS AND GAINS OF THE APPELLANT ON THE GROUNDS THAT THE APPELLANT IS TRADING IN SHARES WITHOUT APPRECIATING THE FACTS OF THE CASE AND WITHOUT GIVING ANY JUSTIFIABLE REASONS. TH E HONOURABLE CIT(A) ERRED IN RELYING ON THE APPEAL OR DER PASSED BY THE CIT(A) IN THE CASE OF THE APPELLANT F OR THE ASSESSMENT YEAR 2006-07. THE APPELLANT HEREBY PRAYS THAT THE SHORT TERM CAPITAL GAIN OF RS.12,32,868/- MAY PLEASE BE RESTORED AND ADDITION AS NORMAL BUSINESS INCOME MAY PLEASE BE DELETED. 3) THE APPELLANT HEREBY RESERVE THE RIGHT TO ADD, AMEN D, DELETE OR RAISE ANY ADDITIONAL GROUND/GROUNDS OF AP PEAL ON OR BEFORE THE HEARING OF APPEAL OR DURING THE CO URSE OF APPEAL HEARING. 2. THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS OF 11,84,070/- AND SHORT TERM CAPITAL GAINS OF 12,32,868/- FROM SHARE TRANSACTIONS. ACCORDING TO THE ASSESSING OFF ICER, THERE ARE APPARENTLY NO TRANSACTIONS IN PENNY STOCKS IN THIS ASSESSMENT ORDER. THE DISAGREEMENT EXISTS IN RESPECT OF HEAD UNDER WHICH INCOME FROM SHARES TO BE ASSESSED. THE PREDECESSOR OF CIT(A) IN ASSESSEES OWN CASE, HAS DECIDED THE ISSUE AGAINST THE ASSESSEE FOR A.Y. 2006-07, WHEREIN, THE SIMILAR STAND OF ASS ESSEE WAS NOT ACCEPTED AND THE APPEAL OF ASSESSEE WAS DISMISSED. AS THE FACTS AND CIRCUMSTANCES OF THE ISSUE WERE SAME, RELYING O N THE DISCUSSION ON THE AFORESAID ORDER OF CIT(A) AND FOL LOWING THE SAME REASONING, THE CIT(A) HAS CONFIRMED THE ORDER OF ASSESSING OFFICER, WHO HAS HELD THAT INCOME ARISING FROM SHAR E TRANSACTIONS IS TO BE TREATED AS BUSINESS INCOME. WE FIND THAT ITAT, PUNE BENCH IN ITA NO.79/PN/2011 IN ASSESSEES OWN CASE F OR A.Y. 2006-07 HAS HELD AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THERE IS NO GAINSAYING THAT THE QUESTION OF ASCERTA INING WHETHER SALE AND PURCHASE OF SHARES IN QUESTION IS LIABLE TO BE TAXED AS CAPITAL GAINS OR BUSINESS INCOME IS A M IXED QUESTION OF LAW AND FACT; AND, EACH CASE IS LIABLE TO BE DECIDED HAVING REGARD TO ITS OWN FACTUAL MATRIX. 3 NEVERTHELESS, IT IS ALSO AN ACCEPTED POSITION THAT THERE IS A PLETHORA OF JUDICIAL PRONOUNCEMENTS ON SUCH ISSUES WHICH PROVIDE GUIDING PRINCIPLES IN ORDER TO DETERMINE TH E DISPUTE IN A PARTICULAR CASE. IN THE PRESENT CASE, IT IS Q UITE EVIDENT THAT THE MAIN STREAM OF INCOME OF THE ASSESSEE IS B Y WAY OF SHARE OF PROFITS FROM THE PARTNERSHIP FIRMS WHERE H E IS A PARTNER BECAUSE IN THE YEAR UNDER CONSIDERATION ASS ESSEE HAS RECEIVED HIS SHARE OF PROFITS FROM THE PARTNERS HIP FIRMS OF RS.6,35,00,310/-, WHICH IS QUITE SUBSTANTIAL IN COMPARISON TO THE OTHER INCOMES DECLARED IN THE RET URN OF INCOME. THEREFORE, FACTUALLY SPEAKING, WE DO NOT F IND ANY JUSTIFICATION FOR ASSERTION MADE BY THE CIT(A) IN P ARA 5.3 OF HIS ORDER TO THE EFFECT THAT MAJOR INCOME EARNED BY THE APPELLANT IS OUT OF TRANSACTIONS OF SALE AND PURCHA SE OF SHARES ONLY .. . 9. ANOTHER ASPECT WHICH HAS WEIGHED WITH THE LOWER AUTHORITIES IS THAT ASSESSEE HAS DECLARED CERTAIN I NCOME FROM THE DEALING IN SHARES AS BUSINESS INCOME ALS O. IN THE PAST YEARS ALSO THE SAID SITUATION PREVAILED. IN P ARA 5.2 OF THE IMPUGNED ORDER, THE CIT(A) HAS NOTED THAT DURIN G THE YEAR UNDER CONSIDERATION, ASSESSEE HAS ADMITTED RS.24,00,527/- AS SPECULATION PROFITS AND IN THE PR ECEDING ASSESSMENT YEAR ASSESSEE HAD IN-FACT SPECULATION LO SS OF RS.1,79,823/- ON SALE OF SHARES. SO HOWEVER, IN SO FAR AS THE IMPUGNED INCOME ON SALE AND PURCHASE OF SHARES (I.E. LONG TERM AND SHORT TERM CAPITAL GAIN OF RS.15,53,8 44/- AND 66,60,887/- RESPECTIVELY) ARE CONCERNED, IT HAS BEE N DECLARED BY THE ASSESSEE AS CAPITAL GAINS ON THE PR EMISE THAT THE SAME HAS BEEN EARNED AS AN INVESTOR AND NO T AS A TRADER. IN-PRINCIPLE, THERE CANNOT BE A DISPUTE TO THE PROPOSITION THAT IT IS OPEN FOR AN ASSESSEE TO TRA DE IN THE SHARES AS WELL AS TO INVEST IN THE SHARES AND WHE REVER THE SHARES ARE HELD AS INVESTMENT THEN THE INCOME ARISI NG ON THE SALE OF SUCH SHARES IS LIABLE TO BE ASSESSED AS LONG TERM OR SHORT CAPITAL GAINS, DEPENDING ON THE PERIOD OF HOLDING OF SHARES. THE SAID PROPOSITION HAS BEEN RECOGNIZED B Y THE CBDT IN ITS CIRCULAR DATED 15.06.2007 (SUPRA) AND H AS ALSO BEEN UPHELD BY THE HONBLE BOMBAY HIGH IN THE CASE OF GOPAL PUROHIT (SUPRA). THEREFORE, THE PRESENCE OF CERTAIN TRANSACTIONS UNDERTAKEN BY THE ASSESSEE AS A TRADIN G ACTIVITY CANNOT IPSO FACTO LEAD TO A CONCLUSION THA T FOR THE IMPUGNED TRANSACTIONS ALSO, ASSESSEE WAS ACTING AS A TRADER. NO DOUBT THE DECLARATION OF BUSINESS INC OME FROM CERTAIN TRANSACTIONS BY THE ASSESSEE WOULD LEAD TO A NATURAL QUESTION AS TO WHETHER THE OTHER TRANSACTIONS OF SA LE AND PURCHASE WHICH ARE CLAIMED TO BE CARRIED OUT AS AN INVESTOR, ARE REALLY SO? FOR THE SAID PURPOSE THE TRANSACTIONS OF SALE AND PURCHASE CONSIDERED BY THE ASSESSEE TO BE IN NATURE OF AN INVESTMENT ACTIVITY GIVING RISE 4 TO INCOME BY WAY OF CAPITAL GAINS, ARE LIABLE TO BE EXAMINED INDEPENDENTLY. 10. THE ASSESSING OFFICER HAS EXTRACTED A PORTION O F THE STATEMENT OF THE ASSESSEE RECORDED DURING THE SURVE Y 14.06.2006, AND ON THAT BASIS HE HAS CONCLUDED THAT ASSESSEE WAS ENGAGED IN THE TRADING OF SHARES. WE FIND IT APPROPRIATE TO REPRODUCE HEREINAFTER THE EXTRACT OF ASSESSEES STATEMENT WHICH HAS BEEN RELIED UPON BY THE ASSESSING OFFICER :- Q.2 PLEASE EXPLAIN THE QUANTUM OF TRADING AND THE INCOME EARNED BY YOU FROM YOUR BUSINESS OF SHARE TRADING? ANS. OFF HAND I CANNOT GIVE YOU THE EXACT FIGURE B UT I MUST HAVE TRADED IN AROUND 100 SCRIP'S. THE NET PRO FIT EARNED BY ME DURING THE YEAR 2005-06 WAS AROUND RS.80-85 LAKHS. SIMILARLY, WE EARNED GOOD PROFITS I N THE SHARES TRADED IN THE NAMES OF MY OTHER FAMILY MEMBERS. FOR EXACT DETAILS, I SHALL HAVE TO REFER T O THE BOOKS OF ACCOUNTS. Q.3 WHO ARE YOUR SHARE BROKERS AND WHY DID YOU CHOOSE THEM TO BE YOUR SHARE BROKERS? ANS. MY SHARE BROKERS ARE : (I) RIFCO (II) KOTAK SECURITIES (III) SAJJAD SECURITIES (IV) KAYMET (V) ANGEL SECURITIES APART FROM THE ABOVE NAMED BROKERS, I DO NOT HAVE A NY OTHER SHARE BROKER AT PRESENT. I CHOSE THEM AS MY S HARE BROKERS BECAUSE THEY ARE MEMBERS OF BSE / NSE AND THEY ARE DIRECT BROKERS, I.E. THEY ARE NOT SUB-BROK ERS. THEY ENJOY A GOOD REPUTATION. MOREOVER SINCE THEY ARE NOT SUB BROKERS, THEY CHARGE A LESS COMMISSION. Q.4 SINCE WHEN ARE YOU TRADING IN SHARES? DURING THIS PERIOD, WHO ELSE WERE YOUR SHARE BROKER? ANS. I AM TRADING IN SHARES SINCE 1980-81. THERE H AVE BEEN MANY SHARE BROKERS DURING THIS TIME PERIOD. I DO NOT REMEMBER ALL THEIR NAMES. Q.5 PLEASE EXPLAIN THE WHOLE PROCESS INVOLVED IN YO UR SHARE TRADING BUSINESS. ANS. WE KEEP IN A VERY FREQUENT TOUCH WITH OUR BROK ERS. WE MAKE TELEPHONE CALLS TO THEM ALMOST 3-4 TIMES A DAY TO KEEP A TRACK OF THE MOVEMENT OF SCRIPS. AS PER T HE SITUATION IN MARKET, WE DECIDE TO EITHER SELL OR PU RCHASE 5 A CERTAIN SCRIP. IF I HAVE TO PURCHASE A SCRIP I AS K MY BROKER TO DO SO. THE BROKERS BUY THE SCRIPS FOR ME AND SEND A BILL. FOR PURCHASE, THE SAID SCRIPT GETS TRANSFERRED TO THE DEMAT ACCOUNT OF THE BROKER. WHE N I MAKE HIM THE PAYMENTS, HE TRANSFERS THESE SHARES FR OM HIS DEMAT ACCOUNT TO MINE. SIMILARLY, WHEN I ASK TH E BROKER TO SELL SOME SCRIPS OWNED BY ME, HE DOES SO AND INFORMS ME. THEREAFTER, I TRANSFER THOSE SCRIPS FRO M MY DEMAT ACCOUNT TO THAT OF MY BROKER. I RECEIVE A CHE QUE FROM MY BROKER AGAINST THE SALES MADE. 11. ON THIS ASPECT, THE LEARNED COUNSEL SUBMITTED THAT QUESTIONS THAT WERE PUT TO THE ASSESSEE WERE LEADI NG QUESTIONS INASMUCH AS ASSESSEE BEING A NON-PROFESSI ONAL WOULD NOT UNDERSTAND THE DIFFERENCE BETWEEN BUSINE SS OF SHARE TRADING AND INVESTMENT IN SHARES. IT WAS POINTED OUT THAT BY WAY OF QUESTION NO.2, THE ASSESSING OFF ICER REQUIRED THE ASSESSEE TO EXPLAIN THE QUANTUM OF TRA DING AND THE INCOME EARNED FROM THE BUSINESS OF SHARE TRADIN G BY PRESUMING THAT ASSESSEE WAS INDULGING IN BUSINESS O F SHARE TRADING. AT NO STAGE, THE ASSESSEE WAS PUT A QUEST ION AS TO WHETHER HE WAS INDULGING IN SALE AND PURCHASE OF SH ARES AS AN INVESTOR OR AS A TRADER IN SO FAR AS THE PRE SENT TRANSACTIONS ARE CONCERNED. WE HAVE EXAMINED THE AFORESAID ASPECT AND FIND THAT THE QUESTIONS PUT BY THE ASSESSING OFFICER AND THE REPLIES OF THE ASSESSEE M ERELY SPEAK ABOUT THE MECHANICS OF THE SALE AND PURCHASE OF SHARES BEING CARRIED OUT BY THE ASSESSEE. IN-FACT, WHETHER AN ASSESSEE CARRIES OUT SALE AND PURCHASE OF SHARES AS AN INVESTOR OR AS A TRADER, THE MECHANICS OF SALE AND PURCHASE WOULD BE SIMILAR. IN-FACT, THE QUESTIONS PUT TO THE ASSESSEE CLEARLY SHOW THAT IT WAS FAR FROM THE MIND OF THE ASSESSING OFFICER THAT ASSESSEE WAS DECLARING INCOM E ON SALE AND PURCHASE OF SHARES AS CAPITAL GAINS ALSO , OTHERWISE THE ASSESSEE WOULD HAVE BEEN PUT TO QUEST ION. THUS, THE ANSWERS TO THE QUESTIONS PUT TO THE ASSES SEE DURING THE SURVEY ACTION, CANNOT BE THE SOLE BASIS FOR THE ASSESSING OFFICER TO SAY THAT THE IMPUGNED CAPITAL GAINS ARE TO BE ASSESSED AS BUSINESS INCOME. IN ANY CASE, TH E ANSWERS TO THE QUESTIONS PUT BY THE ASSESSING OFFIC ER DOES HELP TO CONCLUDE EITHER WAY. THE OTHER POINT RAISE D BY THE ASSESSING OFFICER IS THAT IN THE PAST, ASSESSEE HAS SHOWN PROFIT ON SALE TRANSACTIONS AS BUSINESS PROFITS. O STENSIBLY, WE HAVE ALREADY EXAMINED THE AFORESAID ASPECT IN EA RLIER PARAS AND FOUND THAT ASSESSEE HAS DUAL PORTFOLIO, N AMELY, ONE THAT OF INVESTOR AND ANOTHER OF TRADER IN SHARE S. NOW, COMING BACK TO THE TRANSACTIONS OF SALE AND PURCHAS E OF SHARES FOR THE YEAR UNDER CONSIDERATION WHICH HAVE BEEN OFFERED TO TAX AS LONG TERM AND SHORT TERM CAPITAL GAINS. AT PAGE 1 OF THE PAPER BOOK IS THE SUMMARY OF SALE AND 6 PURCHASE TRANSACTIONS. THE TOTAL NUMBER OF TRANSAC TIONS OF SHARES PURCHASED ARE 173 AND THE TOTAL NUMBER OF SC RIPTS INVOLVED ARE 93. THE TOTAL TRANSACTIONS OF SALE DU RING THE YEAR ARE 347 INVOLVING 93 SCRIPTS. OUT OF THE SAME , IN RESPECT OF LONG TERM CAPITAL GAIN THE TOTAL NUMBER OF SALE TRANSACTIONS ARE 25 AND THE TOTAL NUMBER OF SCRIPTS ARE 22 AND WE FIND THAT THE SHARES HAVE BEEN HELD FOR A FA IRLY LONG PERIOD OF TIME. AT PAGES 3 TO 4 OF THE PAPER BOOK IS PLACED A SUMMARY OF THE TRANSACTIONS GIVING RISE TO LONG TER M CAPITAL GAIN AND WE FIND THAT THE PERIOD OF HOLDING RANGES FROM ONE TO FIVE YEARS, AS POINTED OUT BY THE LEARNED COUNSE L FOR THE ASSESSEE. FOR INSTANCE IN THE CASE OF ADLABS FILMS LTD. 2000 SHARES WERE PURCHASED ON 19.12.2003 WHICH WERE SOLD ON 05.05.2006 THEREBY REFLECTING A HOLDING PER IOD OF 502 DAYS. IN THE CASE OF ESCORTS LTD. 1000 SHARES WERE PURCHASED ON 27.11.2003 AND SOLD ON 20.03.2006 THER EBY GIVING A HOLDING OF PERIOD OF 844 DAYS. EVEN IN RE LATION TO THE SALE OF HDFC LTD. AND HFCL SHARES THE HOLDING P ERIOD RANGES FROM 410 DAYS TO 498 DAYS. SIMILARLY, WITH RESPECT TO THE INDUSLAND BANK THE HOLDING PERIOD RANGES FRO M 1687 TO 1755 DAYS. OTHER TRANSACTIONS ALSO REFLECT A SU BSTANTIAL HOLDING PERIOD. THEREFORE, CONSIDERING THE PERIOD OF HOLDING, WE DO NOT FIND ANY REASON TO SAY THAT INVESTMENT IN SUCH SHARES WAS MADE BY THE ASSESSEE WITH THE INTENTION OF TRADING IN SHARES. WE ARE COMING TO THE AFORESAID PREMISE ALSO FOR THE REASON THAT THE ASSESSEE HAS MADE SUCH INVESTMENTS OUT OF OWN SOURCES WITH NO BORROWINGS A ND ALSO BECAUSE OF THE FACT THAT THERE IS NOTHING TO S AY THAT ASSESSEE HAS ANY FORMAL PARAPHERNALIA WHICH WOULD S HOW THAT THERE WAS ANY INTENTION OF TRADING. THE DEPIC TION IN THE BALANCE SHEET OF SUCH SHARES AS INVESTMENTS O VER THE PERIOD OF TIME IS ALSO REFLECTIVE OF ASSESSEES INT ENTION OF BEING AN INVESTOR IN SUCH SHARES. THEREFORE CONSID ERING THE FACTUAL MATRIX AND THE AFORESAID DISCUSSION IN SO F AR AS THE INCOME OF RS.15,53,844/- DECLARED AS LONG TERM CAPI TAL GAIN IS CONCERNED, WE ARE UNABLE TO UPHOLD THE ASSERTION OF THE REVENUE THAT SUCH TRANSACTIONS WERE IN THE NATURE O F BUSINESS. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. 12. NOW, IN SO FAR AS THE TRANSACTIONS GIVING RISE TO SHORT TERM CAPITAL GAINS IS CONCERNED, THE FACTUAL MATRIX THEREIN IS AS FOLLOWS. AT PAGES 5 TO 21 OF THE PAPER BOOK IS PLACED THE DETAILS OF SUCH TRANSACTIONS. THE TOTAL NUMBER OF TRANSACTIONS ARE 322 INVOLVING 71 SCRIPTS. THE LEA RNED COUNSEL AT THE TIME OF HEARING POINTED OUT THAT INA SMUCH AS 294 TRANSACTIONS OF SALE, THE PERIOD OF HOLDING WAS MORE THAN 30 DAYS AND FOR THE BALANCE OF THE TRANSACTION S, THE PERIOD OF HOLDING WAS LESS THAN 30 DAYS. IN THE PR ESENT CASE, ASSESSEE IS ENGAGED IN THE ACTIVITY OF SPECUL ATION IN SHARES, WHICH IS A BUSINESS ACTIVITY. CONSIDERED I N THIS 7 BACKGROUND, IT IS DIFFICULT TO ACCEPT THE PLEA OF T HE ASSESSEE THAT EVEN IN TRANSACTIONS WHICH INVOLVE SMALL PERIO D OF HOLDING OF SHARES PRIOR TO SALE, THE SAME HAVE BEEN UNDERTAKEN AS AN INVESTOR. SUCH LIKE TRANSACTIONS ARE INDEED AKIN TO TRADING IN SHARES. 13. HOWEVER, IT IS A VEXED QUESTION TO LAY DOWN AN ABSOLUTE YARDSTICK ON THE BASIS OF PERIOD OF HOLDING OF SHAR ES TO DETERMINE WHETHER THE SAME IS TO BE ASSESSED AS A BUSINESS INCOME OR CAPITAL GAINS, ESPECIALLY IN THE PRESENT CASE WHEN ASSESSEE IS MAINTAINING DUAL PORTFOLIO, I .E. AS AN INVESTOR AS WELL AS A TRADER IN SHARES. AT THE TIME OF HEARING, THE LEARNED COUNSEL HAS REFERRED TO A DECI SION OF THE AHMADABAD BENCH OF THE TRIBUNAL IN THE CASE OF SUGAMCHAND C SHAH VS. ACIT, 139 TTJ 610 (AHD) TO EMPHASIZE THAT IN A SOMEWHAT SIMILAR SITUATION, THE TRIBUNAL HELD THAT THE PROFIT ON SALE OF SHARES HEL D FOR MORE THAN 30 DAYS BUT LESS THAN ONE YEAR BE TREATED AS S HORT TERM CAPITAL GAIN WHEREAS PROFIT ON SALE OF SHARES HELD FOR LESS THAN 30 DAYS WAS LIABLE TO BE TREATED AS BUSI NESS INCOME. THE LEARNED COUNSEL SUBMITTED THAT THE BE NCH MAY CONSIDER THE AFORESAID PRECEDENT. WE ARE CONSC IOUS THAT THE THRESHOLD OF 30 DAYS CONSIDERED BY THE COO RDINATE BENCH, CANNOT BE CONSIDERED AS AN ABSOLUTE RULE, BU T THE INSTANT CASE BEING A CASE WHERE ASSESSEE IS A TRADE R AS WELL AS AN INVESTOR IN SHARES, SOME YARDSTICK HAS TO BE DEVISED TO DISTINGUISH BETWEEN TRADING AND INVESTMENT ACTIV ITY. FOR THE SAID PURPOSE, WE ARE INCLINED TO GO BY THE YARD STICK DEVISED BY THE AHMADABAD BENCH OF THE TRIBUNAL IN T HE CASE OF SUGAMCHAND C SHAH (SUPRA), WHICH IS BASED O N THE PERIODICITY OF HOLDING. THUS, FOLLOWING THE NORM A DOPTED BY OUR CO-ORDINATE BENCH IN THE CASE OF SUGAMCHAND C S HAH (SUPRA), WE HOLD THAT SO FAR AS THE PRESENT CASE IS CONCERNED WHERE THE SHARES HAVE BEEN HELD FOR MORE THAN 30 DA YS THE PROFIT ON SALE THEREOF BE TREATED AS SHORT TERM CAP ITAL GAIN AND FOR THE SHARES HELD FOR LESS THAN 30 DAYS THE P ROFIT ON SALE THEREOF BE TREATED AS BUSINESS INCOME. IN THI S CONTEXT, THE LEARNED COUNSEL HAS REFERRED TO THE SUMMARY OF TRANSACTIONS OF SHORT TERM CAPITAL GAIN PLACED AT P AGE 21 OF THE PAPER BOOK. AS PER THE SUMMARY, THE DETAILS AR E AS UNDER :- SCRIPTS SALES PURCHASE SUMMARY SHORT TERM PROFIT-HOLDING MORE THAN 30 DAYS 666,990 47,250,872 40,510,270 6,740,600 SHORT TERM PROFIT-HOLDING LESS THAN 30 DAYS 62,548 3,342,916 3,004,616 338,300 SUB TOTAL 729,538 50,593,788 43,514,886 7,078,900 LESS: BROKERAGE 412,730 LESS: INT ON DELAYED PAYMENT 5,283 6,660,887 8 14. IN VIEW OF THE AFORESAID, THE ASSESSING OFFICER IS DIRECTED TO REWORK THE SHORT TERM CAPITAL GAINS ON THE BASIS OF SHARES WHICH HAVE BEEN HELD FOR MORE THAN 30 DAY S AND UPTO ONE YEAR; AND, THE BALANCE OF THE PROFIT BE AS SESSED AS BUSINESS INCOME. THUS, ON THIS ASPECT ASSESSEE PAR TLY SUCCEEDS. 15. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET-ASI DE AND THE ASSESSING OFFICER IS DIRECTED TO RE-WORK THE TOTAL INCOME AS PER OUR AFORESAID DISCUSSION. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 2.1 FACTS BEING SIMILAR, SO FOLLOWING THE SAME REAS ONING, THE ISSUE OF LONG TERM CAPITAL GAIN IS DECIDED IN FAVOU R OF ASSESSEE WHILE THE ISSUE OF SHORT TERM CAPITAL GAIN IS PARTL Y ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO REWORK THE TOT AL INCOME AS PER AFORESAID DISCUSSION. 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 30 TH OF APRIL, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH APRIL, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE