The ADIT(Intl.Taxn.), Ahmedabad V. Shri Vijaychandra Chaturbhai Patel, Anand

ITA 1110/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68053 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: U S BHATI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.2650/AHD/2010 A.Y. 2007-08 ADIT (INTL. TXN.) AHMEDABAD. VS SH. VIJAYCHANDRA CHATURBHAI PATEL, C/O M/S. I.S.PATEL &CO LIMDAWALI HOSPITAL, STATION ROAD, ANAND 388001 PAN: AGJPP6166H (APPELLANT) (RESPONDENT) ITA NO.1110/AHD/2012 A.Y. 2008-09 ADIT (INTL. TXN.) AHMEDABAD. VS SH. VIJAYCHANDRA CHATURBHAI PATEL, C/O M/S. I.S.PATEL &CO LIMDAWALI HOSPITAL, STATION ROAD, ANAND 388001 PAN: AGJPP6166H (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R., ASSESSEE(S) BY : SH. U.S. BHATI, AR / // / DATE OF HEARING : 03/12/2013 / DATE OF PRONOUNCEMENT : /12/2013 / O R D E R PER SHRI A. K. GARODIA, ACCOUNTANT MEMBER: 1. BOTH THESE APPEALS ARE FILED BY REVENUE WHICH AR E DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LEARNED CIT(A), GANDHINA GAR DATED 15.06.2010 FOR AY 2007-08 AND DATED 15.02.2012 FOR AY 2008- 09. SINCE THE ISSUE INVOLVED IN BOTH THE YEARS IS COMMON, BOTH ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 2 - THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E. 2. WE FIRST TAKE UP THE APPEAL FOR AY 2007-08 IN IT A NO. 2650/AHD/2010. THE GROUNDS OF APPEAL OF REVENUE AR E AS UNDER: 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLD ING THE PROFIT FROM SHARES OF RS 19,19,338/- AS SHORT TERM CAPITAL GAIN INSTEAD OF TREATING THE SAME AS INCOME FROM B USINESS OR PROFESSION. 2. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FA CT THAT THE ASSESSEE HAS BORROWED FUND FOR FREQUENT TRANSACTION S IN SHARES WHICH SHOWS NOTHING BUT AN ADVENTURE IN TRAD E FOR MAXIMIZING THE PROFIT. 3. BRIEF FACTS IN THIS CASE ARE NOTED BY THE CIT(A) IN PARA NO. 3 & 4 OF HIS ORDER. THESE PARAS FROM THE ORDER OF CIT (A ) ARE REPRODUCED BELOW: 3. AS PER THE ASSESSMENT ORDER, THE APPELLANT HAD DECLARED SHORT TERM CAPITAL GAINS AMOUNTING TO RS 26,39,338/ -. THE ASSESSING OFFICER CALLED FOR DETAILS OF THE APPELLA NTS ACTIVITY WITH RESPECT TO THE SHARE TRADING. AFTER DETAILED ANALY SIS, HE CAME TO THE CONCLUSION THAT THE APPELLANT IS INDULGING IN T HE BUSINESS OF SHARE TRADING AND IT NOT INTO INVESTMENT IN SHARES. THE REASONS WHICH FORMED THE BASIS OF ASSESSING OFFICERS DECIS ION WERE PRIMARILY- ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 3 - I) THE APPELLANT HAS BORROWED FUNDS FOR TRADING IN SHARES. HE HAD PAID INTEREST AMOUNTING TO RS 6,50,000/- AND HI S TOTAL WITHDRAWAL FROM THE OVERDRAFT ACCOUNT HAS BEEN RS 1,11,43,410/-. II) MAJORITY OF THE SHARES PURCHASED USING THESE BO RROWED FUNDS HAVE BEEN SOLD WITHIN A PERIOD OF 12 MONTH. III) THE ASSESSEE HAS OPENED MULTIPLE DEMAT ACCOUNT IN DIFFERENT NAMES. IV) THE AVERAGE PERIOD OF HOLDING SHARES IS LESS T HAN 240 DAYS. V) THE QUANTUM OF PURCHASES AND SALES OF SHARES IS VERY HIGH, AMOUNTING TO RS 4,73,42,056/-. 4. HENCE, IN THE CIRCUMSTANCES, IT WAS HELD THAT T HE APPELLANT IS INVOLVED IN BUSINESS OF SHARES. IN COMING TO THIS DECISION, THE ASSESSING OFFICER HAS REFERRED TO THE DECISION OF S UPREME COURT IN THE CASE OF DALHOUSIE INVESTMENT TRUST VS. CIT 68 I TR 486 AND BOMBAY HIGH COURT IN THE CASE OF ASHOKKUMAR JALAN V S. CIT 187 ITR 316. REFERENCE WAS ALSO MADE TO THE INSTRUCTIO N NO. 1827 OF THE CBDT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND NOW THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND PLACED RELIANCE ON THE FOLLOWING DECISIONS: SR. NO. CASE LAWS 1 ACIT VS. STARLITE SECURITIES, ITA NO. 1113/AHD/2010, ITAT, AHMEDABAD D.O.J. 22.11.2013 ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 4 - 2 ACIT VS. MANOJ KUMAR SAMDARIA (2012) 27 TAXMANN.COM 102 (DELHI ITAT) 3 SMT. HARSHA N. MEHTA VS. DCIT (2011) 43 SOT 332 (MUM. ITAT) D.O.J. 16.07.2010 4 SMT. SADHANA NABERA VS. ACIT ITA NO. 2586/MUM/2009, ITAT, MUMBAI D.O.J. 26.03.2013 5 DCIT VS. MUKESHBHAI BABULAL SHAH (2013) 32 TAXMANN.COM 6 (RAJKOT-ITAT) D.O.J. 08.02.2013 6 DCIT VS. SMT. DEEPABEN AMITBHAI SHAH (2006) 99 ITD 219 (AHM.-ITAT) D.O.J. 25.07.2005 6. AS AGAINST THIS, THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT THE ASSESSEE HAS DECLARED LONG TERM AS WELL AS SHORT TERM CAPITAL GAIN AS PER THE COMPUTATION AVAILABLE ON PAGE 18 OF PAPER BOOK AND RETURN FILED BY THE ASSESSEE FOR THIS ASSESSMENT YEAR WAS ACCEPTED BY THE ASSESS ING OFFICER U/S 143(1) OF THE ACT. HE ALSO SUBMITTED THAT THE COMP UTATION OF INCOME FOR THE PRESENT ASSESSMENT YEAR I.E. AY 2007 -08 IS AVAILABLE ON PAGE 9 OF THE PAPER BOOK. AT THIS JUN CTURE, IT IS POINTED OUT BY THE BENCH TO LEARNED AR OF THE ASSES SEE THAT AS PER THE COMPUTATION OF INCOME AVAILABLE ON PAGE NO. 9 O F PAPER BOOK, THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSE E IS RS 26,49,338/- BUT LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN THE COMPUTATION IS RS NIL. IN REPLY, THE LEARNED A R OF THE ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 5 - ASSESSEE HAD NOTHING TO SAY. HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (A) STORWEL CREDITS & CAPITAL PVT. LTD. VS. ACIT, I TA NO. 5286/MUM/2009 DATED 21.03.2012 (B) SH. VINOD S. SANGHVI VS. ACIT, ITA NO. 3419/MUM /2012 DATED 21.08.2013 (C) SH. KALPESH C. SHAH VS. ACIT, ITA NO. 2818/AHD/ 2011 DATED 31.10.2012 (D) CIT VS. NEERAJ A. SOBTI, ITA NO. 836 OF 2009 DA TED 21.10.2010 (GUJARAT HIGH COURT). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE JUDGMENTS CITED BY BOTH THE SIDES. THE ISSUE IN APPEAL HAS BEEN DECIDED BY THE CIT(A) IN PARA 9 OF HIS ORDER WHICH IS REPRODUCED BELOW FOR R EADY REFERENCE:- THE MATTER HAS BEEN CONSIDERED. THE CRUX OF THE VA RIOUS JUDICIAL DECISIONS AS WELL AS THE INSTRUCTIONS OF THE BOARD ON THE ISSUE, BOTH WHICH HAVE BEEN REFERRED BY THE AUTHORIZED REPRESEN TATIVE AND AS SOME OTHERS IS THAT ONE SINGLE FACTOR WILL NOT GO TO DET ERMINE AS TO WHETHER THE ASSESSEE IS INDULGING IN TRADING OF SHARES OR I S INVOLVED IN INVESTMENT OF SHARES. WHAT IS NEEDED IS TO HAVE A HOLISTIC VIEW AND, IN FACT, THE VIEW CAN AS WELL LEAD TO A SITUATION WHER E A PART OF THE TRANSACTIONS IN SHARES ARE FOR INVESTMENT PURPOSE A ND PART FOR TRADING. IT IS ALSO AN ADMITTED FACT THAT THE AVERAGE HOLDIN G OF SHARES OF 240 DAYS. IN FACT, THERE ARE NOT MORE THAN 5-6 TRANSAC TION WHERE HOLDING IS LESS THAN 100 DAYS. IT IS ALSO SEEN THAT THE APPEL LANT IS NON-RESIDENT AND IS NOT LOCATED HERE. WHEN SEEN IN CONTEXT OF ABOVE SITUATION, THE OBJECTIONS RAISED BY THE ASSESSING OFFICER, IN MY V IEW, DO NOT LEAD TO THE ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 6 - INFERENCE THAT THE APPELLANT BEING INVOLVED IN THE BUSINESS OF HAVING TRADING IN SHARES. MERELY BECAUSE THE TRANSACTIONS ARE LARGE OR ARE BASED ON BORROWED FUNDS, HE DOES NOT BECOME A TRADE R. THE FACT THAT THE ACT ENVISAGES THE SHORT TERM CAPITAL GAIN WITH RESP ECT TO HOLDING OF SHARES FOR LESS THAN ONE YEAR, WOULD OBVIOUSLY MEAN THAT THE MERE FACT OF ASSESSEE HOLDING THE SHARES FOR LESS THAN ONE YE AR CANNOT GO AGAINST HIM. IT WOULD ALSO BE WORTHWHILE TO NOTE THAT THE APPELLANT HAD ALSO DECLARED LONG TERM CAPITAL GAIN AMOUNTING TO RS 36, 16,054/- WHERE THE AVERAGE HOLDING PERIOD WAS 720 DAYS. THEREFORE , ON THE WHOLE, IT DOES APPEAR THAT NOTWITHSTANDING THE QUANTUM OF TRA NSACTION INVOLVED, THE ASSESSEE IS BASICALLY AN INVESTOR AND THEREFORE IN SUCH A SITUATION, THE PROFITS DERIVED FROM THE TRANSACTIONS OF SHARES HAS TO BE TREATED AS CAPITAL GAINS, SHORT TERM OR LONG TERM, AS THE CASE BE. SINCE THERE IS NO OBJECTION TO THE LONG TERM CAPITAL GAIN, THE APPELL ANTS TRANSACTIONS FOR SHORT-TERM SHOULD ALSO BE TREATED AS INVESTMENT . THEREFORE, ASSESSING OFFICER IS DIRECTED TO TREAT THE PROFITS FROM THE SHARES LESS THAN ONE YEAR AS SHORT TERM CAPITAL GAIN, AS PER TH E POSITION DECLARED BY THE ASSESSEE. HENCE THE APPELLANTS GROUND IS A LLOWED. 8. FROM THE ABOVE PARA OF CIT(A), WE FIND THAT THE DECISION IS ON THE BASIS THAT MERELY BECAUSE THE TRANSACTIONS ARE LARG E OR ARE BASED ON BORROWED FUNDS, THE ASSESSEE DOES NOT BECOME A TRAD ER. 9. HE ALSO HELD THAT SINCE THERE IS NO OBJECTION TO THE LONG TERM CAPITAL GAIN, THE ASSESSEES TRANSACTIONS FOR SHORT TERM SHOULD ALSO BE TREATED AS INVESTMENTS. IN THE LIGHT OF THESE F INDINGS OF THE LEARNED CIT(A), WE NOW EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY THE LEARNED DR OF REVENUE. ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 7 - 9.1 THE FIRST JUDGMENT CITED BY THE DR IS THE DECIS ION RENDERED IN THE CASE OF ACIT VS. ACIT VS. STARLITE SECURITIE S (SUPRA). IT WAS HELD BY THE TRIBUNAL THAT CONSIDERING THE VO LUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTION S FOR PURCHASE AND SALES, USE OF BORROWED FUNDS FOR ACQUI SITION OF SHARES AND IN THE TOTALITY OF FACTS OF THAT CASE, T HE ASSESSEE WAS HELD TO BE ENGAGED IN THE BUSINESS OF DEALING I N SHARES AND NOT AS AN INVESTOR. IN THE PRESENT CASE, THE F ACTS ARE THAT FOR SOME OF THE SECURITIES IN WHICH THE ASSESSEE UN DERTOOK THE TRANSACTIONS FOR PURCHASE AND SALE OF SHARES, T HESE WERE TREATED AS BUSINESS INCOME, ALTHOUGH CLAIMED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN. IT IS SEEN THAT THERE ARE REPETITIVE TRANSACTIONS IN THE SAME SCRIPT AND THIS IS ALSO A FACT THAT BORROWED FUNDS WERE USED FOR THE PURPOSE OF PURCHAS ING THE SHARES. IN THE LIGHT OF THESE FACTS, IN OUR CONSID ERED OPINION, THIS TRIBUNALS DECISION CITED BY THE LEARNED DR IS APPLICABLE IN THE PRESENT CASE. 9.2 THE SECOND DECISION CITED BY THE LEARNED DR IS THE DECISION RENDERED IN THE CASE OF ACIT VS. MANOJ KUMAR SAMDAR IA (SUPRA). IN THAT CASE, IT WAS NOTED BY THE AO THAT THE ASSESSEE WAS HAVING INVESTMENT OF RS 1 CRORE IN SHA RES AND THE ASSESSEE HAD TURNOVER OF OVER RS 4 CRORES. FRO M THESE FACTS, IT WAS INFERRED THAT THE ASSESSEE WAS TRADIN G IN SHARES. ANOTHER FACT NOTED BY THE TRIBUNAL IN THAT CASE WAS THAT THE ASSESSEE EARNED ONLY MEAGRE AMOUNT OF DIVIDEND OF RS 21,952/- IN THE YEAR UNDER CONSIDERATION. IN TH E PRESENT CASE, THE ASSESSEE WAS USING BORROWED FUNDS OF RS 1 11.43 ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 8 - LAKHS AND THE ASSESSEE WAS HAVING TURNOVER OF RS 47 3.42 LAKHS. THIS GOES TO SHOW THAT THE FACTS ARE ALMOST IDENTICAL IN THE PRESENT CASE. IT WAS ALSO NOTED THAT IN THE PRESENT CASE, THE ASSESSEE WAS HAVING A MEAGRE AMOUNT OF DI VIDEND INCOME OF RS 26,803/- IN RESPECT OF THOSE SHARES WH ICH WERE HELD BY THE ASSESSEE AS BEING TRADED BY THE ASSESSE E AS PER THE DETAILS AVAILABLE ON PAGE 30 OF THE PAPER BOOK. HENCE, THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS IN T HE CASE OF ACIT VS. MANOJ KUMAR SAMDARIA (SUPRA). IN THAT CAS E, IT WAS HELD THAT THE ASSESSEE IS ENGAGED IN TRADING OF SHARES AND THEREFORE, INCOME IS ASSESSABLE AS BUSINESS INC OME. 10. NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUD GMENTS CITED BY THE LEARNED AR OF THE ASSESSEE. 10.1 WE FIRST EXAMINE THE APPLICABILITY THE JUDGMEN T OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. NEERAJ SOBTI(SUPRA). IN THAT CASE, IT WAS HELD THAT BOTH THE APPELLATE AUTHORITY HAVE RECORDED FINDINGS OF FACTS WHICH IND ICATE THAT THE RELEVANT FACTS AND CIRCUMSTANCES THEREIN DETERM INE THE CHARACTER OF TRANSACTION IN QUESTION TO BE ONE OF C APITAL GAIN AND NOT AN ADVENTURE IN BUSINESS OF TRADE AS CONTEN DED ON BEHALF OF THE REVENUE. IN THAT CASE, THE FACTS ARE NOTED BY HONBLE HIGH COURT IN PARA 9 OF THE JUDGMENT WHERE IT WAS POINTED OUT BY SH. S.N. SOPARKAR, THE LEARNED ADVOC ATE APPEARING ON BEHALF OF THE ASSESSEE THAT THE ASSESS EE HAD PURCHASED SHARES OF VARIOUS COMPANIES BUT THE A.O. HAD TREATED ONLY PURCHASE OF SHARES OF ONE OF THE COMPA NIES I.E. ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 9 - M/S HOME TRADE LTD. AS AN ADVENTURE IN NATURE OF TR ADE ON THIS BASIS THAT THE ASSESSEE HAD OBTAINED A LOAN OF RS 12.50 LAKHS ON INTEREST @ 30%. IT WAS CONTENDED THAT MER ELY BECAUSE THE ASSESSEE HAD OBTAINED LOAN AT HIGH RATE OF INTEREST FOR THE PURPOSE OF PURCHASING THE SHARES, IT WOULD NOT CHANGE THE NATURE OF THE TRANSACTION TO BEING A N ADVENTURE IN THE NATURE OF TRADE. IN THE PRESENT C ASE, THIS IS NOT THE ALLEGATION OF THE A.O. THAT THE ASSESSEE HA D OBTAINED LOAN AT HIGH RATE OF INTEREST AND FOR THIS REASON, THE PURCHASE OF SHARES BY THE ASSESSEE OUT OF BORROWED FUNDS IS IN THE ADVENTURE OF TRADE. HENCE, THIS JUDGMENT OF HONBL E GUJARAT HIGH COURT IS NOT APPLICABLE IN THE FACTS O F THE PRESENT CASE. 10.2 THE SECOND JUDGMENT CITED BY THE LEARNED AR OF THE ASSESSEE IS TRIBUNALS DECISION RENDERED IN THE CAS E OF STORWEL CREDITS & CAPITAL PVT. LTD. VS. ACIT(SUPRA) . IN THAT CASE, ONE OF THE MOST IMPORTANT DISTINGUISHING FACTORS IS THAT THE ASSESSEE IS A LIMITED COMPANY FORMED IN 19 94 WITH THE OBJECT OF MAKING INVESTMENT. IT WAS NOTED BY T HE TRIBUNAL ON PAGE 3 OF THIS ORDER THAT INVESTMENT IN SHARES IS AN INDEPENDENT ACTIVITY OF THE COMPANY AND NOT ITS USUAL TRADE OR BUSINESS. ONE OF THE FACTS NOTED BY THE T RIBUNAL ON THE SAME PAGE IS THIS ALSO THAT THE TRANSACTIONS AR E NOT ENTERED INTO CONTINUOUSLY OR REGULARLY. ONE MORE I MPORTANT FACTOR NOTED BY THE TRIBUNAL IS THAT ALTHOUGH SOME INVESTMENTS WERE MADE BY THE ASSESSEE COMPANY IN TH AT CASE IN SHARES WITH BORROWED FUNDS ALSO, BUT THE THRUST WAS ON ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 10 - UTILIZATION OF OWN SURPLUS FUNDS. IN THE PRESENT C ASE, THE ASSESSEE IS AN INDIVIDUAL AND HENCE THE OBJECTIVE O F MAKING PURCHASE OF SHARES IS NOT DISCERNIBLE FROM ANY DOCU MENTS SUCH AS MEMORANDUM OF ASSOCIATION IN THAT CASE. IT IS ALSO SEEN THAT IN THE PRESENT CASE NOT ONLY A SMALL PART OF SHARES WAS PURCHASED OUT OF BORROWED FUNDS BUT IN FACT A L ARGE PART WAS PURCHASED OUT OF BORROWED FUNDS AND IT COULD NO T BE SHOWN IN THE PRESENT CASE THAT THE THRUST WAS ON UT ILIZATION OF OWN FUNDS. CONSIDERING THESE IMPORTANT DIFFEREN CES IN FACTS, IT IS OUR CONSIDERED OPINION THAT THIS TRIBU NALS DECISION IS ALSO NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 10.3 ANOTHER DECISION OF THE TRIBUNAL CITED BY THE LEARNED AR OF THE ASSESSEE IS THE ONE RENDERED IN THE CASE OF VIN OD S. SANGHVI VS. ACIT(SUPRA). IN THAT CASE, TRIBUNAL HA S FOLLOWED THE DECISION RENDERED IN THE CASE OF TIKUC HAND JOGANI IN ITA NO. 2285/A/2010. PARAS OF THAT TRIBU NAL DECISION ARE REPRODUCED BY THE TRIBUNAL IN THAT ORD ER. IT IS SEEN IN THAT CASE THAT THE PURCHASE OF SHARES WAS E FFECTED OUT OF OWN SURPLUS FUNDS AND THE ASSESSEE WAS A SALARIE D EMPLOYEE. THEREFORE, IT WAS HELD THAT IT CANNOT BE SAID THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN THE SHARES. IN THE PRESENT CASE, THE FACTS ARE DIFFERE NT. THE ASSESSEE IS NOT A SALARIED EMPLOYEE OR ENGAGED IN A NY OTHER VOCATION AND THEREFORE, LEADING TO THE CONCLUSION T HAT THE ASSESSEE CANNOT ENGAGE IN THE BUSINESS OF DEALING I N SHARES. THIS IS ALSO A FACT IN THE PRESENT CASE THAT THE IN VESTMENT IS ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 11 - NOT OUT OF OWN SURPLUS FUND BUT IT IS MAINLY OUT OF BORROWED FUNDS. THEREFORE, IN OUR CONSIDERED OPINION, THIS TRIBUNALS DECISION IS ALSO NOT APPLICABLE IN THE PRESENT CASE . 10.4 THE NEXT DECISION CITED BY THE LEARNED AR OF T HE ASSESSEE IS RENDERED IN THE CASE OF SH. KALPESH SHAH VS. ACIT ( SUPRA). IN THAT CASE, IT WAS HELD BY THE TRIBUNAL THAT THER E IS NO PROVISION IN THE ACT TO INDICATE THAT THE HOLDING P ERIOD OF 30 DAYS IS RELEVANT TO DECIDE WHETHER ANY TRANSACTION IS MADE FOR INVESTMENT OR FOR TRADING. ON THIS BASIS, IT W AS HELD BY THE TRIBUNAL IN THAT CASE THAT THEY HAVE NO HESITAT ION IN HOLDING THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED I N TREATING SURPLUS ARISING OUT OF SHARES HELD FOR THE PERIOD L ESS THAN 30 DAYS AS BUSINESS INCOME INSTEAD OF SHORT TERM CAPIT AL GAIN SHOWN BY THE ASSESSEE. IN THE PRESENT CASE, THIS I S NOT THE BASIS OF THE DECISION OF THE A.O. THAT BECAUSE HOLD ING PERIOD IS LESS THAN 30 DAYS, THE SURPLUS ARISING OUT OF SH ARES WILL BE TREATED AS BUSINESS INCOME AND HENCE, THIS DECISION OF THE TRIBUNAL IS ALSO NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 11. AS PER ABOVE DISCUSSION, WE FIND THAT NONE OF T HE JUDGMENTS CITED BY THE LEARNED AR OF THE ASSESSEE IS APPLICABLE IN THE FACTS OF THE PRESENT CASE WHEREAS AS PER TWO DECISIONS CITED BY THE LEARNED DR OF REVENUE AND DISCUSSED BY US ABOVE, THE ISSUE IN THE PRESENT CASE IS COVERED AGAINST THE ASSESSEE IN THE FACTS O F THE PRESENT CASE. HENCE, RESPECTFULLY FOLLOWING THESE TWO JUDGMENTS C ITED BY LEARNED DR AND CONSIDERING THE FACTS OF THE PRESENT CASE WE HOLD THAT IN THE PRESENT CASE, THE DECISION OF THE LEARN ED CIT(A) IS NOT ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 12 - SUSTAINABLE AND HENCE WE REVERSE THE SAME AND RESTO RE THE ORDER OF THE A.O. 11.1 IN THE RESULT, THE APPEAL OF THE REVENUE IS A LLOWED. 12. NOW WE TAKE UP THE APPEAL FILED BY THE REVENUE FOR AY 2008-09. BOTH THE SIDES AGREED THAT FACTS IN THIS YEAR ARE A LSO SIMILAR AND THEREFORE, IT CAN ALSO BE DECIDED ON SIMILAR LINE. ONLY ONE DIFFERENCE WAS POINTED OUT BY THE LEARNED AR OF THE ASSESSEE THAT A.O. HAS NOT ALLOWED DEDUCTION ON ACCOUNT OF INTERE ST EXPENDITURE AS HAS BEEN ALLOWED BY HIM IN AY 2007-08. HE ALSO SUBMITTED THAT THE CLAIM IN THIS REGARD WAS MADE BY THE ASSES SEE BEFORE CIT(A) ALSO BUT SINCE HE HAS HELD THAT THE GAIN IN QUESTION IS CAPITAL GAIN THIS ASPECT WAS NOT DECIDED BY HIM. 13. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. FOR AY 2007-08, WE HAVE DECIDED THE ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE AS PER PARA N O. 11 ABOVE AND SINCE IT WAS ADMITTED BY BOTH THE SIDES THAT THE FA CTS IN THE PRESENT YEAR ARE IDENTICAL, IN THE PRESENT YEAR ALSO, WE DE CIDE THIS ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE ON S IMILAR LINE. HOWEVER, REGARDING THE ASSESSEES CLAIM FOR ALLOWAB ILITY OF DEDUCTION IN RESPECT OF INTEREST, WE RESTORE THE MA TTER BACK TO THE FILE OF THE A.O. FOR THIS LIMITED PURPOSE OF EXAMIN ING THIS CLAIM OF THE ASSESSEE REGARDING INTEREST EXPENDITURE, AND IF IT IS ESTABLISHED THAT THE INTEREST EXPENDITURE WAS INCURRED FOR ACTI VITY OF DEALING IN SHARES, THEN THE A.O. SHOULD ALLOW DEDUCTION ON ACC OUNT OF INTEREST ITA NO.2650/AHD/2010 & ITA NO. 1110/AHD/2012 SH. VIJAYCHANDRA C. PATEL VS. ADIT(INTL.TXN) AHD FOR A.Y. 2007-08 & 2008-09 - 13 - EXPENDITURE AS PER LAW. WITH THESE OBSERVATIONS, W E REVERSE THE ORDER OF THE CIT(A) IN THIS YEAR ALSO AND RESTORE T HAT OF THE A.O. 13.1 IN THE RESULT, THIS APPEAL IS ALSO ALLOWED IN THE TERMS INDICATED ABOVE. 14. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON THE DATE MENTIONED ON CAPTION PAGE. SD/- SD/- (D.K. TYAGI) JUDICIAL MEMBER ( A.K. GARODIA) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/12/2013 GHANSHYAM MAURYA, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD