Nanduri Tejaswy, Hyderabad V. ACIT, Circle-6(1), Hyderabad

ITA 1112/HYD/2013

• Counselvise Citation: 111222514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: Capital asset; Business income; Depreciation; Opportunity of being heard; Rule of consistency; Date of conversion; Fair market value; Speculation loss
• Section: 44AD; 45(2); 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1112/HYD/2013 ASSESSMENT YEAR 2007-2008 NANDURI TEJASWY HYDERABAD PAN ACNPN3831F VS. ACIT, CIRCLE 6(1) HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1110 & 1111/HYD/2013 ASSESSMENT YEARS 2007-2008 & 2008-2009 SMT. NANDURI SOBHA RANI, HYDERABAD. PAN ABEPN6221B VS. THE DCIT, CIRCLE 6(1) HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.1240/HYD/2013 ASSESSMENT YEAR 2010-2011 THE DCIT, CIRCLE 6(1) HYDERABAD. VS. SMT. SOBHA RANI NANDURI HYDERABAD 500 082 PAN ABEPN6221B (APPELLANT) (RESPONDENT) FOR REVENUE : MR. RAJAT MITRA FOR ASSESSEE : MR. SAMUEL NAGADESI DATE OF HEARING : 16.02.2015 DATE OF PRONOUNCEMENT : 20.03.2015 ORDER PER P.M. JAGTAP, A.M. THESE FOUR APPEALS, ONE FILED IN THE CASE OF SRI NANDURI TEJASWY AND THREE FILED IN THE CASE OF SMT. NANDURI SOBHARANI, INVOLVE A COMMON ISSUE AND THE SAME THER EFORE, 2 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE APPEAL FILED IN THE CASE OF SRI NANDURI TEJ ASWY IS THE APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 BEIN G ITA.NO.1112/HYD/2013 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-IV, HYDERABAD DATED 27.05.2013. OUT OF T HE THREE APPEALS FILED IN THE CASE OF SMT. NANDURI SOBHARANI , TWO APPEALS BEING ITA.NO.1110/HYD/2013 AND 1111/HYD/201 3 ARE THE APPEALS OF THE ASSESSEE WHICH ARE DIRECTED AGAINST THE ORDERS OF THE LD. CIT(A)-IV, HYDERABAD DATED 27.05. 2013 FOR A.YS. 2007-08 AND 2008-09 WHILE THE REMAINING THIRD APPEAL BEING ITA.NO.1240/HYD/2013 IS THE APPEAL OF THE REV ENUE FOR A.Y. 2010-2011 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-IV, HYDERABAD DATED 28.06.2013. 3. THE SOLITARY COMMON ISSUE INVOLVED IN THESE FOU R APPEALS IS WHETHER THE PROFIT ARISING TO THE ASSESS EES FROM SHARE TRANSACTIONS IS CHARGEABLE TO TAX UNDER THE H EAD SHORT TERM CAPITAL GAINS AS CLAIMED BY THE ASSESSEE OR U NDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AS HELD BY THE ASSESSING OFFICER. IN A.YS. 2007-08 AND 2008-09 , THE LD. CIT(A) HAS UPHELD THE ACTION OF THE A.O. IN TREATIN G SUCH PROFIT AS BUSINESS INCOME OF THE ASSESSEES WHILE IN A.Y. 2 010-2011, THE LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESS EE THAT THE SAME IS CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAI N. 3.1. THE MATERIAL FACTS RELEVANT TO THE ISSUE INVO LVED IN THESE APPEALS IN SO FAR AS THE CASE OF SMT. NANDURI SOBHARANI FOR A.Y. 2007-08 IS CONCERNED ARE AS FOLLOWS. THE A SSESSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF ADV ERTISING AGENCY UNDER THE NAME AND STYLE OF HER PROPRIETARY CONCERN 3 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. M/S. SOBHA ADVERTISING SERVICE. THE RETURN OF INCOM E FOR A.Y. 2007-08 WAS FILED BY HER ON 31.10.2007 DECLARING TO TAL INCOME OF RS.16,16,35,317. IN THE SAID RETURN, THE PROFIT OF RS.2,29,92,072 ARISING FROM THE SALE OF SHARES AMOU NTING TO RS.29,55,40,930 WAS DECLARED BY THE ASSESSEE UNDER THE HEAD SHORT TERM CAPITAL GAIN. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THIS CLAIM OF THE ASSESSEE WAS EXAMINE D BY THE A.O. ON SUCH EXAMINATION, HE FOUND THAT THE FREQUEN CY OF BUYING AND SELLING OF SHARES OF THE ASSESSEE WAS VE RY HIGH, THE PERIOD OF HOLDING OF MANY SHARES WAS VERY LESS AND THE HIGH VOLUME OF TURNOVER WAS ON ACCOUNT OF FREQUENCY OF TRANSACTIONS INVOLVING HUGE VOLUMES. HE ALSO FOUND THAT ALTHOUGH THE MODE OF TRADE WAS DELIVERY BASED, THE PERIOD OF HOLDING IN SOME SCRIPS WAS A FEW DAYS ONLY AND THER E WERE MULTIPLE TRANSACTIONS IN THE SAME SCRIPS. HE ALSO N OTED THAT THE ASSESSEE IN SOME OF THE SCRIPS HAD RE-ENTERED T HE MARKET FOR TAKING THE ADVANTAGE OF MARKET FLUCTUATIONS AND IT WAS THE CASE OF REPETITIVE TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN THE SAME SCRIPS. HAVING REGARD TO ALL THESE FINDING S RECORDED BY HIM, THE A.O. HELD THAT THE ASSESSEE WAS A TRADE R IN SHARES AND NOT INVESTOR AND THE PROFIT ARISING FROM THE TR ANSACTIONS OF PURCHASE AND SALE OF SHARES WAS BROUGHT TO TAX BY H IM IN HER HANDS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IN THE ASSESSMENT COMPLETED UNDER SECTI ON 143(3) VIDE ORDER DATED 15.12.2009. 4. AGAINST THE ORDER PASSED BY THE A.O. UNDER SECT ION 143(3) FOR A.Y. 2007-08 TREATING THE PROFIT ARISING FROM THE TRANSACTIONS IN SHARES AS HER BUSINESS INCOME, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO UPHELD T HE ACTION OF THE A.O. AFTER HAVING FOUND THAT THE HUGE TURNOVER IN SHARES 4 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. WAS ACHIEVED BY THE ASSESSEE ONLY ON ACCOUNT OF FRE QUENT BUYING AND SELLING OF A LARGE NUMBER OF SCRIPS IN L ARGE VOLUMES AND THAT THE INTENTION OF THE ASSESSEE AS JUDGED FR OM THE VOLUMES, FREQUENCY AND REGULARITY OF THE TRANSACTIO NS UNDERTAKEN IN THE SYSTEMATIC AND ORGANIZED MANNER W AS TO TRADE IN THE SHARES AND NOT INVEST IN SHARES. ACCOR DINGLY, THE APPEAL OF THE ASSESSEE ON THIS ISSUE WAS DISMISSED BY THE LD. CIT(A) IN THE FIRST ROUND VIDE HIS APPEAL ORDER DAT ED 13.01.2011. 4. AGAINST THE ORDER OF THE LD. CIT(A), APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE TRIBUNAL AND A FTER EXAMINING THE RELEVANT ASPECTS OF THE CASE IN THE L IGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS, THE TRIBUNAL VIDE ITS ORDER DATED 02.07.2012 IN ITA.NO.332/HYD/2011 REMITTED TH E MATTER BACK TO THE LD. CIT(A) WITH THE FOLLOWING DI RECTIONS : 29. THEREFORE, WE ARE OF THE OPINION THAT THE VIEW TAKEN BY THE REVENUE AUTHORITIES CANNOT BE OUTRIGHT WHEN THERE ARE NO FINDING ON VARIOUS ASPECT OR CRIT ERIA SET BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF BSV RAJU (SIC) SUPRA. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDERS TO THE FILES OF THE CIT(A) ON THIS ISSUE, AND DIRECT HIM DEFINE THE HIGH FREQUENCY WIT H THE HELP OF THE COMPARABLE CASES ON HAND. ASSESSEE IS ALSO DIRECTED TO ASSIST THE CIT(A) IN THIS REGARD. IF NEEDED, HE MAY FILE ANY FRESH DOCUMENTS BEFORE THE CIT(A) THAT WOULD HELP THE CIT(A) TO COME TO THE CORRECT CONCLUSIONS. ON THE ISSUE OF APPLICABILITY OF THE A PEX COURT'S JUDGMENT IN THE CASE OF GOPAL PUROHIT SUPRA , THERE IS NO ADEQUATE DATA BEFORE US AT LEAST IN THE CASE OF ASSESSEE-TEJESWY. CIT(A) IS DIRECTED TO EXAMINE THE. APPLICABILITY OF THE SAID CASE AFTER OBTAINING ADEQ UATE AND RELEVANT DATA. CIT(A) IS A/SO DIRECTED TO EXAMINE EACH OF THE CRITERIA SET BY VARIOUS COURTS IN VARIO US CASES INCLUDING THE CRITERION OF 'DOMINANT INTENTIO N'. IT GOES WITHOUT SAYING THAT THE CIT(A) SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE 5 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. ASSESSEES WITHOUT FAIL. ACCORDINGLY, THE ASSESSEES' GROUNDS ON THIS ISSUE ARE ADJUDICATED PRO-TANTO. 4.1. AS PER THE DIRECTIONS OF THE TRIBUNAL, THE LD . CIT(A) RE-EXAMINED THE ISSUE IN THE LIGHT OF DECISI ON OF THE HONBLE A.P. HIGH COURT IN THE CASE OF PVS. RAJU VS . ADDL. CIT 340 ITR 75 AND IN THE CASE OF SPECTRA SHARES AND SC RIPS LTD., VS. CIT ITTA.NO.512 OF 2011 AND ITTA.NO.17 OF 2012 DATED 21.02.2013. ON SUCH EXAMINATION, HE SUMMARIZED VARI OUS FACTORS ENUMERATED BY THE HONBLE A.P. HIGH COURT I N THE CASE OF PVS RAJU (SUPRA) WHICH WEIGHED WITH THE LOWER AU THORITIES IN COMING TO THE CONCLUSION THAT THE SHARES IN QUES TION CONSTITUTED STOCK-IN-TRADE AND NOT INVESTMENT AS UN DER : A) THE FREQUENCY OF BUYING AND SELLING OF SHARES BY T HE APPELLANTS WERE HIGH; B) THE PERIOD OF HOLDING WAS LESS; C) THE HIGH TURNOVER WAS ON ACCOUNT OF FREQUENCY OF TRANSACTIONS AND NOT BECAUSE OF HUGE INVESTMENT; D) THE ASSESSEES HAD DEALT IN DELIVERY TRADING PURELY WITH THE INTENTION OF MAKING QUICK PROFITS ON A HUGE TUR NOVER; E) THE PERIOD OF HOLDING OF A MAJORITY OF THE STOCK WA S BETWEEN ONE TO SEVEN DAYS; F) IN MOST OF THE TRANSACTIONS, THE ASSESSEES DID NOT EVEN HOLD ON TO AT LEAST SOME PART OF THE HUGE PURCHASES AND HAD ENGAGED IN THE SAME SCRIPS FREQUENTLY ; G) THE INTENTION OF THE ASSESSEES IN BUYING SHARES WAS NOT TO DERIVE INCOME BY WAY OF DIVIDEND ON SUCH SHARES BUT TO EARN PROFITS ON THE SALE OF THE SHARES; H) THE ASSESSEES HAD INDULGED IN MULTIPLE TRANSACTIONS OF LARGE QUANTITIES WITH VERY HIGH PERIODICITY. THESE PERIODIC TRANSACTIONS SELECTING THE TIME OF ENTRY A ND EXIT IN EACH SCRIP CALLED FOR REGULAR DIRECTION AND MANAGEMENT WHICH WOULD INDICATE THAT IT WAS IN THE 6 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. NATURE OF TRADE; I) REPEATED TRANSACTIONS, COUPLED WITH THE SUBSEQUENT CONDUCT OF THE ASSESSEES TO RE-ENTER THE MARKET, IN ORDER TO TAKE ADVANTAGE OF MARKET FLUCTUATIONS LENT THE F AVOUR OF TRADE TO SUCH TRANSACTIONS; J) THE ASSESSEES WERE PURCHASING AND SELLING THE SAME SCRIPS REPEATEDLY AND WERE SWITCHING FROM ONE SCRIP TO ANOTHER; K) THE DOMINANT IMPRESSION LEFT ON THE MIND WAS THAT T HE ASSESSEES HAD NOT INVESTED IN SHARES; L) MERE CLASSIFICATION OF THESE SHARE TRANSACTIONS AS INVESTMENT IN THE ASSESSEE'S BOOKS OF ACCOUNT WAS N OT CONCLUSIVE; M) THE INTENTION OF THE ASSESSEES AT THE TIME OF PURCH ASE WAS ONLY TO SELL THE SHARES IMMEDIATELY AFTER PURCH ASE; N) FREQUENCY OF PURCHASE AND SALE OF SHARES SHOWED THA T THE ASSESSEES NEVER INTENDED TO KEEP THESE SHARES A S INVESTMENT; AND O) IT IS ONLY FOR THE PURPOSE OF CLAIMING BENEFIT OF LOWER RATE OF TAX UNDER SECTION 111A OF THE ACT THAT THEY HAD CLAIMED CERTAIN SHARES TO BE INVESTMENT THOUGH THES E TRANSACTIONS WERE ONLY IN THE NATURE OF TRADE. 18. THE COURT NOTED THEREAFTER AS FOLLOWS : 'IT IS EVIDENT FROM THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL THAT THE VOLUMINOUS SHARE TRANSACTIONS WERE IN THE ORDINARY LINE OF THE APPELLANTS' BUSINESS; PURCHASE OF SHARES BY THEM WAS NOT FOR THE PURPOSE OF EARNING DIVIDEND BUT WIT H THE DOMINANT INTENTION OF RESALE IN ORDER TO EARN PROFITS; THE PROFIT MADE BY THEM IS NOT OF MERE ENHANCEMENT OF VALUE OF THE SHARES, BUT IS A PROFIT MADE IN THE CARRYING ON OF A BUSINESS SCHEME OF PROFIT MAKING; HUGE VOLUME OF SHARE TRANSACTIONS, T HE REPETITION AND CONTINUITY OF THE TRANSACTIONS, GIVE THEM A FLAVOUR OF 'TRADE' ; THE MAGNITUDE, FREQUENCY 7 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. AND THE RATIO OF SALES TO PURCHASES ON THE TOTAL HOLDINGS IS EVIDENCE THAT THE APPELLANTS HAD NOT PURCHASED THE SHARES AS AN INVESTMENT, BUT WITH THE INTENTION TO TRADE IN SUCH SCRIPS. 4.2. THE LD. CIT(A) THEN ANALYSED THE DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF SPECTRA SHAR ES & SCRIPS P. LTD., (SUPRA) AND FOUND THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN THAT CASE WERE HELD TO BE GIV ING RISE TO CAPITAL GAINS AND NOT BUSINESS INCOME ON THE BASIS OF THE FOLLOWING FACTORS : A. THE ASSESSEE HAD NOT BORROWED ANY FUNDS AND HAD INVESTED IN SHARES WITH ITS OWN FUNDS B. CLOSING STOCK WAS VALUED AT COST, NOT AT 'COST OR MARKET VALUE, WHICHEVER IS LOWER' C. THE ASSESSEE HAD EARNED SUBSTANTIAL DIVIDEND D. 99% OF GAINS RETURNED BY THE ASSESSEE WAS LONG TERM AND ONLY 1% WAS SHORT TERM. E. THE ASSESSEE HAD NEVER DEALT IN FUTURES, DERIVATIVE S AND OPTIONS. F. THE TRANSACTIONS WERE ALL DELIVERY BASED, EXCEPT FO R- TRANSACTIONS IN ONE SCRIP FOR WHICH THE ASSESSEE FURNISHED A REASONABLE EXPLANATION. G. THE ASSESSEE WAS REGISTERED AS NBFC WITH RBI. H. THE ASSESSEE HAD NEVER CLAIMED SET OFF OF LOSSES FR OM SALE OF INVESTMENTS. I. THE LARGE TURNOVER OF THE ASSESSEE COULD NOT BE HEL D AGAINST IT WITHOUT CONSIDERING THE PERIOD OF HOLDIN G OF THE SHARES. J. THE MERE FACT THAT THE ASSESSEE WAS MONITORING THE STOCK MARKET AND HAVING AN ADMINISTRATIVE SET UP WAS NOT A FACTOR AGAINST THE ASSESSEE. 8 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. K. THE PRINCIPLES OF RES JUDICATA WAS APPLIED TO THE ASSESSEE. IN VIEW OF THE ABOVE FACTS, THE HIGH COURT HELD THA T THE HIGH TURNOVER AND FREQUENCY OF TRANSACTIONS IN THE CASE OF SPECTRA SHARES WAS NOT A RELEVANT FACTOR. 4.3. AFTER HAVING ANALYSED THE DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF PVS RAJU (SUPRA) AND SPEC TRA SHARES & SCRIPS P. LTD., (SUPRA), THE LD. CIT(A) NARRATED RELEVANT FACTS AND FIGURES INVOLVED IN THE CASE OF THE ASSESSEE AS UNDER : 37. JUDGED BY THIS PARAMETER, THE FIGURES IN THE APPELLANT'S CASE ARE AS FOLLOWS : OPENING STOCK TURNOVER NO. OF TRANSACTIONS CLOSING STOCK 2,24,13,531 29,55,40,930 174 1,04,17,569 BOTH THE OPENING AND CLOSING STOCK ARE AT RELATIVEL Y MODEST FIGURES VIS-A-VIS THE TURNOVER. THE APPELLAN T'S CAPITAL, AS REFLECTED IN THE OPENING STOCK, IS A ME RE 7.6 % OF THE TURNOVER. IN OTHER WORDS, THE PORTFOLIO HAD BEEN CHURNED MORE THAN 13 TIMES DURING THE YEAR. THIS SHOWS THAT THE TURNOVER IS ATTRIBUTABLE TO THE HIGH FREQU ENCY OF TRANSACTION AND NOT TO THE CAPITAL OF THE ASSESSEE. 38. IN PARA 26 OF ITS ORDER, THE ITAT HAD ALSO NOTED THAT THE APPELLANT HAD EARNED RS.2,38,408 AS DIVIDEND AND IT WAS NOT KNOWN AS TO WHAT PART OF IT WAS RELATED TOT EH IMPUGNED SHORT TERM CAPITAL ASSETS. THE ITAT DIRECTED THAT INFORMATION BE OBTAINED ON THIS ISSUE . ACCORDINGLY, THE AR SUBMITTED THE FOLLOWING DETAILS OF THE DIVIDEND RECEIVED BY THE APPELLANT: DIVIDEND ON SHORT TERM SHARES RS.1,29,150 DIVIDEND ON LONG TERM SHARES RS.1,09,250 TOTAL RS.2,38,408 39. THE AR SUBMITTED THAT DIVIDENDS ARE SUBJECT TO RECOMMENDATIONS BY THE BOARD OF DIRECTORS AND THAT IT 9 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. WAS NOT NECESSARY THAT ALL THE COMPANIES WHOSE SCRIPS WERE HELD BY THE APPELLANT EARNED DIVIDEND, AND THA T THE INVESTORS COULD REALIZE THE SAME FROM THE MARKE T BY SELLING THE SCRIPS PERIODICALLY. 40. WHAT IS RELEVANT IN THIS CONTEXT IS THAT THE AP PELLANT HAS RECEIVED DIVIDEND INCOME OF A MERE RS.1,29,158 FROM A TURNOVER OF RS.29,55,40,930 AND AN INVESTMEN T OF RS. 2,24,13,531. THE RATIO OF DIVIDEND TO TURNOV ER SHOWS THAT THIS INCOME WAS NOT THE AIM AND MOTIVE O F THE APPELLANT IN MAKING THIS 'INVESTMENT'. IT FOLLO WS THAT THE APPELLANT INTENDED TO EARN PROFIT FROM HER INVESTMENT BY 'SELLING THE SCRIPS PERIODICALLY', AS THE AR HIMSELF HAS PUT IT. 41. THE INTENTION OF THE APPELLANT CAN ALSO BE DISCERNED FROM A COMPARISON OF THE LONG TERM INVESTMENTS AND GAINS ON THE ONE HAND WITH THE SHOR T TERM 'INVESTMENTS' AND GAINS ON THE OTHER. THE APPELLANT ENTERED INTO SALES IN 3 SCRIPS WITH 7 TRANSACTIONS WITH A SALES FIGURE OF RS.34,06,020/- TO MAKE A LONG TERM CAPITAL LOSS OF RS.11,52,164. THE NUMBER OF SCRIPS, TRANSACTIONS AND THE TURNOVER, AL L ARE MUCH LESS AS COMPARED TO THE SHORT TERM TRANSACTION S. THE INTENTION OF THE APPELLANT AS REVEALED FROM, TH E RATIO OF LONG TERM TO SHORT TERM HOLDINGS AND TRANSACTIONS SHOWS A HEAVILY DISTINCT BIAS TOWARDS SELLING THE SHARES IN THE SHORT TERM RATHER THAN HO LDING ON TO THEM AS LONG TERM INVESTMENTS. TURNOVER NO. OF TRANSACTIONS NO. OF SCRIPS SHORT TERM 29,55,40,930 174 50 LONG TERM 34,06,020 7 3 4.4. HAVING REGARD TO THE FACTS AND FIGURES AS INVOLVED IN THE CASE OF THE ASSESSEE AND KEEPING IN VIEW THE VARIOUS GUIDELINES LAID DOWN BY THE HONBLE A.P . HIGH COURT IN THE CASE OF PVS RAJU (SUPRA) AND SPECTRA S HARES & SCRIPS P. LTD., (SUPRA), THE LD. CIT(A) IDENTIFIE D THE FACTORS WHICH WEIGHED IN FAVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE AS UNDER : 10 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 42. TO SUM UP, THE FACTORS WHICH WEIGH IN FAVOUR OF THE APPELLANT ARE AS FOLLOWS: A) THE SHARES WERE CLASSIFIED AS INVESTMENT IN THE BOOKS OF ACCOUNT. B) THE TRANSACTIONS WERE ACTIVELY DELIVERY BASED AN D THE ASSESSEE HAD NOT DEALT IN FURTHER DERIVATIVES AND O PTIONS. C) THE ASSESSEE HAD NOT USED BORROWED FUNDS FOR THE PURPOSE OF INVESTMENT. 43. ON THE OTHER HAND, THE FACTORS WHICH LEAD TO BE CONCLUSION THAT THE APPELLANT HAD DONE TRADING IN T HE SHARES ARE AS FOLLOWS : A) THE FREQUENCY OF BUYING AND SELLING OF SHARES W AS HIGH. B) THE PERIOD OF HOLDING WAS LESS IN A LARGE NUMBE R OF SCRIPS. C) THE HIGH TURNOVER WAS ON ACCOUNT OF FREQUENCY O F TRANSACTIONS AND NOT BECAUSE OF HUGE INVESTMENT. D) THE INTENTION OF THE ASSESSEES IN BUYING SHARES WAS NOT TO DERIVE INCOME BY WAY OF DIVIDEND ON SUCH SHA RES BUT TO EARN PROFITS ON THE SALE OF THE SHARES E) THE ASSESSEES HAD INDULGED IN MULTIPLE TRANSACT IONS OF LARGE QUANTITIES WITH VERY HIGH PERIODICITY. THESE PERIODIC TRANSACTIONS SELECTING THE TIME OF ENTRY AND EXIT I N EACH SCRIP CALLED FOR REGULAR REPEATED TRANSACTIONS, COU PLED WITH THE SUBSEQUENT CONDUCT OF THE ASSESSEES TO RE- ENTER THE MARKET, IN ORDER TO TAKE ADVANTAGE OF MARKET FLUCTUATIONS LENT THE FAVOUR OF TRADE TO SUCH TRANS ACTIONS. F) FREQUENCY OF PURCHASE AND SALE OF SHARES SHOWED THAT THE ASSESSEES NEVER INTENDED TO KEEP THESE SHARES A S INVESTMENT ; AND H) 99% OF THE TRANSACTIONS WERE SHORT TERM AND ONL Y 1 % WERE LONG TERM. SIMILARLY, 90% OF THE GAIN WAS SHOR T TERM AND ONLY 10% WAS LONG TERM (TAKING THE FIGURES IN ABSOLUTE TERMS AND IGNORING THE PROFIT/LOSS NATURE. 11 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 4.5. AFTER TAKING INTO CONSIDERATION ALL THE ABOVE FACTORS INVOLVED IN THE CASE OF THE ASSESSEE FOR A. Y. 2007- 2008 IN THE LIGHT OF DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF PVS RAJU (SUPRA) AND SPECTRA SHARES & S CRIPS P. LTD., (SUPRA), THE LD. CIT(A) HELD THAT THE ASSE SSEE WAS ENGAGED IN TRADING IN SHARES AND THE PROFIT ARISING THEREFROM WAS CHARGEABLE TO TAX IN HER HANDS AS BUS INESS INCOME AS RIGHTLY HELD BY THE ASSESSING OFFICER. 4.6. FOR A.Y. 2008-2009, A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF THE ASSESSEE NAMELY SMT. NA NDURI SOBHARANI AND WHILE DECIDING THE SAME ON SIMILAR LI NE AS FOR A.Y. 2007-08 IN THE LIGHT OF RELEVANT DECISIONS OF THE HONBLE A.P. HIGH COURT IN THE CASE OF PVS RAJU (SU PRA) AND SPECTRA SHARES & SCRIPS P. LTD., (SUPRA), THE L D. CIT(A) SUMMARISED THE FACTORS WHICH WEIGHED, IN FAV OUR OF THE ASSESSEE AND AGAINST THE ASSESSEE VIDE PARAS 38 AND 39 OF THE IMPUGNED ORDER AS UNDER : 38. TO SUM-UP, THE FACTORS WHICH WEIGH IN FAVOUR O F THE APPELLANT ARE AS FOLLOWS : A) THE SHARES WERE CLASSIFIED AS INVESTMENT IN THE BOOKS OF ACCOUNT. B) THE APPELLANT HAD NOT DEALT IN FURTHER DERIVATI VES AND OPTIONS. C) THE ASSESSEE HAD NOT USED BORROWED FUNDS FOR TH E PURPOSE OF INVESTMENT. 39. ON THE OTHER HAND, THE FACTORS WHICH LEAD TO B E CONCLUSION THAT THE APPELLANT HAD DONE TRADING IN T HE SHARES ARE AS FOLLOWS : A) THE FREQUENCY OF BUYING AND SELLING OF SHARES WAS HIGH. 12 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. B) THE PERIOD OF HOLDING WAS LESS IN A LARGE NUMBE R OF SCRIPS. C) THE HIGH TURNOVER WAS ON ACCOUNT OF FREQUENCY O F TRANSACTIONS AND NOT BECAUSE OF HUGE INVESTMENT. D) THE INTENTION OF THE ASSESSEE IN BUYING SHARES WAS NOT TO DERIVE INCOME BY WAY OF DIVIDEND ON SUCH SHARES BUT TO EARN PROFITS ON THE SALE OF THE SHARE S. E) THE ASSESSEE HAD INDULGED IN MULTIPLE TRANSACTI ONS OF LARGE QUANTITIES WITH VERY HIGH PERIODICITY. THE SE PERIODIC TRANSACTIONS SELECTING THE TIME OF ENTRY A ND EXIT IN EACH SCRIP CALLED FOR REGULAR REPEATED TRANSACTIONS, COUPLED WITH THE SUBSEQUENT CONDUCT O F THE ASSESSEES TO RE-ENTER THE MARKET, IN ORDER TO T AKE ADVANTAGE OF MARKET FLUCTUATIONS LENT THE FAVOUR OF TRADE TO SUCH TRANSACTIONS. D) FREQUENCY OF PURCHASE AND SALE OF SHARES SHOWED THAT THE ASSESSEES NEVER INTENDED TO KEEP THESE SHARES AS INVESTMENT; AND E) 99.7% OF THE TRANSACTIONS WERE SHORT TERM AND ONLY 0.3% WERE LONG TERM. SIMILARLY, 99% OF THE GAI N WAS SHORT TERM AND ONLY 1% WAS LONG TERM (TAKING THE FIGURES IN ABSOLUTE TERMS AND IGNORING THE PROFIT/LOSS NATURE). F) THE APPELLANT HAD ENTERED INTO SEVERAL INTRA- DAY TRANSACTIONS. 4.7. AFTER TAKING INTO CONSIDERATION ALL THE ABOVE FACTORS IN THE CASE OF THE ASSESSEE FOR A.Y. 2008-0 9 IN THE LIGHT OF DECISIONS OF A.P. HIGH COURT IN THE CASE O F PVS RAJU AND SPECTRA SHARES & SCRIPS P. LTD., (SUPRA), THE LD. CIT(A) HELD THAT THE ASSESSEE NAMELY SRI NANDURI TE JASWY WAS ALSO ENGAGED IN TRADING IN SHARES AND THE PROFI T ARISING THEREFROM WAS CHARGEABLE TO TAX IN HIS HAND S AS BUSINESS INCOME AS RIGHTLY HELD BY THE ASSESSING OF FICER. 13 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 5. A SIMILAR ISSUE AROSE ALSO IN THE CASE OF OTHER ASSESSEES NAMELY SRI NANDURI TEJASWY AND WHEN THE SAME WAS REMITTED BACK BY THE TRIBUNAL TO THE FILE OF LD. CIT(A) WITH A SIMILAR DIRECTION AS GIVEN IN THE CAS E OF SMT. NANDURI SOBHARANI, THE LD. CIT(A) RE-EXAMINED THE I SSUE AS PER THE DIRECTIONS OF THE TRIBUNAL IN THE LIGHT OF DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF PVS. RAJU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD., ( SUPRA). ON SUCH RE-EXAMINATION, HE IDENTIFIED THE FACTORS W HICH WEIGHED IN FAVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE IN PARAS 4.2 AND 4.3 OF HIS IMPUGNED ORDER PASSED IN THE CASE OF SHRI NANDURI TEJASWI AS UNDER : 42. TO SUM UP, THE FACTORS WHICH WEIGH IN FAVOUR OF THE APPELLANT ARE AS FOLLOWS: A. THE ABOVE WERE CLASSIFIED AS INVESTMENT IN THE BOOKS OF ACCOUNT. B. THE ASSESSEE HAD NOT USED BORROWED FUNDS FOR TH E PURPOSE OF INVESTMENT. 43. ON THE OTHER HAND, THE FACTORS WH ICH LEAD TO BE CONCLUSION THAT THE APPELLANT HAD DONE TRADING IN T HE SHARES ARE AS FOLLOWS : A. THE FREQUENCY OF BUYING AND SELL ING OF SHARES WAS HIGH. B. THE PERIOD OF HOLDING WAS LESS IN A LARGE NUMBER OF SCRIPS. C. THE HIGH TURNOVER WAS ON ACCOUNT OF FREQUENCY OF TRANSACTIONS AND NOT BECAUSE OF HUGE INVESTMENT. D. THE INTENTION OF THE ASSESSEES IN BUYING SHARES WAS NOT TO DERIVE INCOME BY WAY OF DIVIDEND ON SUCH SHARES BUT TO EARN PROFITS ON THE SALE OF THE SHARES E. THE ASSESSEES HAD INDULGED IN MULTIPLE TRANSACTIONS OF LARGE QUANTITIES WITH VERY HIGH PERIODICITY. THESE PERIODIC TRANSACTIONS SELECTING THE TIME OF ENTRY AND EXIT IN EACH SCRIP CALLED FOR 14 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. REGULAR REPEATED TRANSACTIONS, COUPLED WITH THE SUBSEQUENT CONDUCT OF THE ASSESSEES TO RE-ENTER THE MARKET, IN ORDER TO TAKE ADVANTAGE OF MARKET FLUCTUATIONS LENT THE FAVOUR OF TRADE TO SUCH TRANSACTIONS. F. FREQUENCY OF PURCHASE AND SALE OF SHARES SHOWED THAT THE ASSESSEES NEVER INTENDED TO KEEP THESE SHARES AS INVESTMENT; AND 99% OF THE TRANSACTIONS WERE SHORT TERM AND ONLY 1 % WERE LONG TERM. SIMILARLY, 90% OF THE GAIN WAS SHORT TERM AND ONLY 10% WAS LONG TERM (TAKING THE FIGURES IN ABSOLUTE TERMS AND IGNORING THE PROFIT/LOSS NATURE). G. THE APPELLANT HAD ENGAGED IN TRADING IN COMMODITIES, FUTURES AND DERIVATIVES. H. THE APPELLANT HAD RE-ENTERED THE MARKET TO TAKE ADVANTAGE OF MARKET FLUCTUATIONS. 5.1. AFTER TAKING INTO CONSIDERATION ALL THE ABOVE FACTORS OF THE CASE OF THE ASSESSEE IN THE LIGHT OF DECISIONS OF A.P. HIGH COURT IN THE CASE OF PVS RAJU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD. (SUPRA), THE LD. CI T(A) HELD THAT THE ASSESSEE NAMELY SRI NANDURI TEJASWY W AS ALSO ENGAGED IN TRADING IN SHARES AND THE PROFIT AR ISING THEREFROM WAS CHARGEABLE TO TAX IN HIS HANDS AS BUS INESS INCOME AS RIGHTLY HELD BY THE ASSESSING OFFICER. 5.2. IN THE CASE OF SMT. NANDURI SOBHARANI, A SIMILAR ISSUE AGAIN AROSE IN A.Y. 2010-2011 WHEN TH E A.O. TREATED THE ASSESSEE AS TRADER IN SHARES AND BROUGH T TO TAX PROFIT ARISING FROM SHARE TRANSACTIONS AMOUNTIN G TO RS.5,95,78,652 AS BUSINESS INCOME OF THE ASSESSEE A S AGAINST SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSE SSEE. WHEN THE MATTER REACHED TO THE LD. CIT(A), HE DECID ED THE SAME IN FAVOUR OF THE ASSESSEE ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE PROFIT ARISING FROM SHARE TRANSAC TIONS WAS CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAIN. W HILE DOING SO, THE LD. CIT(A) DID NOT TAKE INTO ACCOUNT THE 15 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR A.YS. 2007-08 AND 2008-09 WHEREIN A SIMILAR ISSUE W AS DECIDED AGAINST THE ASSESSEE. FOR THE CONCLUSION DR AWN IN FAVOUR OF THE ASSESSEE IN A.Y. 2010-2011, THE LD. C IT(A) TOOK NOTE OF THE FOLLOWING FACTORS WHICH, ACCORDING TO HIM, WERE IN FAVOUR OF THE ASSESSEE AND SUFFICIENTLY DEMONSTRATED THAT THE ASSESSEE WAS AN INVESTOR IN S HARES AND NOT THE TRADER. A. THE ASSESSEE HAD NOT BORROWED ANY FUNDS AND MADE INVESTMENTS WITH HER OWN FUNDS. B. CLOSING STOCK IS VALUED AT COST, NOT AT 'COST OR MA RKET VALUE WHICHEVER IS LOWER'. C. REGARDING THE FREQUENCY OF PURCHASE AND SALE OF SHA RES, THE ASSESSEE HAD ONLY ONE PURCHASE DURING THE ENTIR E YEAR RELATING TO SHORT TERM CAPITAL GAINS AND THE SALES WERE MADE IN ONLY 24 DAYS DURING THE ENTIRE PERIOD, BASED ON THE FACTS IT IS EVIDENT THAT WHEN THERE IS ONLY ONE PURCHASE TRANSACTION DURING THE PERIOD, WE CANN OT FINALISE THAT THE FREQUENCY OF PURCHASE AND SALE OF SHARES IS HIGH. D. THE INTENTION OF THE APPELLANT IS VERY CLEAR FROM T HE FACT THAT THE SALES WERE DISCLOSED AS INVESTMENTS IN THE BOOKS OF ACCOUNT WHICH WERE AUDITED BY CHARTERED ACCOUNTA NT U/S 44AB OF THE I.T.ACT, 1961 AND ALSO BASED ON THE FACT THAT THE SHARES WERE HELD ON AN AVERAGE FOR 275 DAY S IN RESPECT OF SHORT TERM CAPITAL GAINS. E. THE ASSESSEE MADE THE SALES ONLY IN 24 DAYS DURING THE ENTIRE PERIOD RELATING TO THE SHORT TERM SHARES. F. THE ASSESSEE EARNED DIVIDEND INCOME. G. THE TRANSACTIONS WERE ALL DELIVERY BASED. H. THE SHARES WERE CLASSIFIED AS INVESTMENTS IN THE BO OKS OF ACCOUNTS. I. THE PERIOD OF HOLDING IN THE CASE OF SHORT TERM CAP ITAL GAINS WAS 275 DAYS ON AVERAGE J. THE ASSESSEE ENTERED INTO ONLY ONE PURCHASE TRANSAC TION THROUGHOUT THE YEAR. K. THE APPELLANT HAD NEVER ENTERED INTO INTRA-DAY TRANSACTIONS. 16 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 6. THE ISSUE RELATING TO THE DETERMINATION OF HEAD OF INCOME UNDER WHICH PROFIT ARISING FROM THE SHARE TRANSACTIONS IS TO BE TAXED IN THE HANDS OF THE ASS ESSEE THUS WAS DECIDED BY THE LD. CIT(A) AGAINST THE ASSE SSEE IN THE CASE OF SMT. NANDURI SOBHARANI FOR A.YS. 2007-0 8 AND 2008-09 AS WELL AS IN THE CASE OF SRI NANDURI TEJAS WY FOR A.Y. 2007-08. AGGRIEVED BY THE SAME, BOTH THE ASSES SEES HAVE PREFERRED THE PRESENT APPEALS BEFORE THE TRIBU NAL. IN A.Y. 2010-2011, A SIMILAR ISSUE HOWEVER WAS DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE IN THE CAS E OF SMT. NANDURI SOBHA RANI. AGGRIEVED BY THE SAME, THE REVE NUE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING BEFORE US, LD. COUNSEL FOR THE ASSESSEE RAISED VARIOUS CONTENTIONS IN SUPP ORT OF ASSESSEES CASE THAT THE PROFIT ARISING FROM THE SH ARE TRANSACTIONS IS CHARGEABLE TO TAX IN THEIR HANDS AS SHORT TERM CAPITAL GAIN AND NOT BUSINESS INCOME. IN THIS REGARD, HE REFERRED TO THE RELEVANT CASE LAWS AS WELL AS TH E PROVISIONS OF THE ACT AND PUT-FORTH THE FOLLOWING PROPOSITIONS : 1. IN GOPAL PUROHIT THE BOMBAY HIGH COURT HELD THAT THE JOBBING TRANSACTIONS NOT DELIVERY BASED ARE THE TRANSACTIONS IN SHARES CONSTITUTING BUSINESS. IN TH AT CONTEXT THE PROPOSITION THAT THE ASSESSEE CAN HAVE INVESTMENT PORTFOLIO AND ALSO A TRADING PORTFOLIO W AS LAID DOWN. 2. IN PVS RAJU THE ASSESSEES IN THE PAST HOLDING SHAR ES AS STOCK IN TRADE AND THE SAME IS AN ADMITTED POSITION AND THEY STARTED TREATING THE SAME AS INVESTMENT TO ENABLE TO APPLY THE LOWER RATE OF TAX UNDER SECTION 111A AFTER THE AMENDMENT. EARLIER IT IS AN ADMITTED POSITION THAT THE ASSESSEE'S WANTED TO COMPUTE BUSINESS INCOME TAKING THE BENEFIT OF ALL 17 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. EXPENSES UNDER SECTION 28 TO 44AD INCLUDING DEPRECIATION IF ANY, AND ALSO CIRCUMVENT THE RESTRICTION ON THE BENEFIT OF SET OFF AND CARRY FOR WARD OF SHORT TERM CAPITAL LOSS. NOW THE ASSESSEE'S CANN OT TAKE U TURN AND SAY A DIFFERENT STORY. 3. THE ISSUE OF FREQUENCY, VOLUME, MAGNITUDE OR THE VALUATION AT COST OR NET REALIZABLE VALUE OR AT COS T AND TREATMENT IN THE BOOKS IS RELEVANT IF IT IS FIRST T IME THE ASSESSEE DEALING IN SHARES IF SO, THE INTENTION, TREATMENT GIVEN IN THE BOOKS AND VALUATION IS RELEV ANT TO BE CONSIDERED. WHERE AS IF ASSESSEE HAS ALREADY DEAL IN SHARES AND SECURITIES WHETHER THEY ARE CAPI TAL ASSETS ARE STOCK IN TRADE IN TO BE MANIFESTED BY TH E FACTS IN THE BOOKS, CONVERSION OR TREATMENT BY HIM AS STOCK IN TRADE AS CONTEMPLATED IN THE DEFINITION OF 'TRANSFER' IN DEFINITION OF SECTION 2(47) AND THE M ODE OF COMPUTATION AS SPECIFIED IN SECTION 45(2). GIVEN THE BEHAVIOUR IN THE PAST ACCEPTED BY THE REVENUE N O ADVERSE INFERENCE CAN BE DRAWN WHEN ALL OTHER THING S REMAINS CONSTANT AND THE VOLUME, FREQUENCY AND MAGNITUDE IS IN THE PROCESS OF MITIGATION OF THE 'INVESTMENT RISK' FALLING ON THE INVESTMENTS. AS TH E ASSESSEE CONTINUOUSLY DEMONSTRATING ITS INTENTION AND TREATMENT AS INVESTOR IN SUCH A CASE THE PRINCI PLE OF RES JUDICATA APPLIES. 4. THE PROPOSITIONS LAID DOWN IN SPECTRA SHARES & SCRIPS APPLIES IN THE INSTANT CASE. 5. KIND ATTENTION IS DRAWN TO THE PROVISIONS OF INCOME TAX ACT, 1961 IN TREATING SHARES AS 'CAPITAL ASSETS ', SHORT-TERM CAPITAL ASSETS AND LONG-TERM CAPITAL ASSETS AND TREATMENT OR RESTRICTIONS IMPOSED ON SET OFF AND CARRY FORWARD OF LOSSES IN RESPECT OF THE S AME. ALSO, THE PROVISIONS OF EXPLANATION TO SECTION 73A TREATS THAT IN THE CASE OF A COMPANY OTHER THAN A COMPANY WHOSE TOTAL INCOME MAINLY CONSISTING OF INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES (THESE WORDS ARE SUBSTITUTED FOR 'INVESTMENT COMPANY') THA T PART OF THE BUSINESS OF THE COMPANY CONSISTING PURCHASE AND SALE OF SHARES IS A SPECULATION BUSINESS. THUS, IN CASE OF A COMPANY OTHER THAN SPECIFIED COMPANY THE LOSS ARISING FROM PURCHASE AN D 18 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. SALE OF SHARES IS A SPECULATION LOSS AND SHALL BE ALLOWED TO SET OFF AGAINST THE PROFITS ARISING FROM THE SPECULATION BUSINESS. 6. THE INDIVIDUAL WHO CAN CLAIM AND DEMONSTRATE THAT HE IS NOT AN INVESTOR BUT A TRADER IN SHARES CAN ON LY GET THE BENEFIT OF DEDUCTION UNDER SECTION PART IV OF CHAPTER III INCLUDING DEPRECIATION WHILE COMPUTING INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINES S OR PROFESSION' AND ALSO CAN GET THE LOSS LABELLED A S BUSINESS LOSS TO OVERCOME THE RESTRICTIONS APPLICAB LE TO SET OFF AND CARRY FORWARD OF SHORT TERM CAPITAL LOSSES ARISING OUT OF TRANSFER OF SHARES AND SECURI TIES IN A PERIOD LESS THAN 12 MONTHS THE RATE TO TAX BEI NG SAME IN CASE OF BUSINESS INCOME AND SHORT TERM CAPITAL GAINS I.E., 30%. 7. PROVISIONS OF SECTION 111A WAS AMENDED TO PROVIDE A LOWER RATE OF TAX FOR THE SHORT TERM CAPITAL GAINS ONLY AND NOT BUSINESS PROFITS THAT TO ONLY THE TRANSACTI ONS ON WHICH SIT (SECURITIES TRANSACTION TAX) IS PAID. IN THE INSTANT CASE THE ASSESSEE CONSISTENTLY EVEN PRI OR TO AMENDMENTS TO SECTION 111A WAS DEMONSTRATING THAT HE WAS AN INVESTOR AND NEVER CHANGED THE SAME ONLY FOR THE PURPOSE OF TAKING THE BENEFIT OF LOWER RATE OF TAX ASSESSEE CLAIMED IN THE IMPUGNED YEARS AS INVESTOR UNLIKE IN THE PAST THAT HE IS TRADER. IN F ACT IT IS REVENUE WHIMSICALLY ATTRIBUTING CONTRASTS TO THE REAL AND APPARENT POSITION OF THE ASSESSEE AS AN INVESTOR AND COLOURING HIM AS A TRADER WHICH IS NOT CORRECT. 8. IF THE ASSESSEE IS HOLDING A POSITION ESTABLISHED A S INVESTOR OR TRADER THE SAME CANNOT BE ALTERED BY TH E REVENUE, BUT IF THE ASSESSEE ALTERS HIS POSITION TH E REVENUE CAN APPLY VARIOUS TESTS AS PRONOUNCED TO PLACE THE ASSESSEE IN REAL POSITION. IN SUCH CASE O F ALTERATION, ASSESSEE WHO IS HOLDING CAPITAL ASSETS CAN ALTER HIS POSITION BY CONVERTING THE CAPITAL ASSET INTO STOCK IN TRADE OR BY TREATMENT OF CAPITAL ASSET INT O STOCK IN TRADE IN SUCH CASE IT IS THE DUTY OF THE REVENUE TO TAX HIM AS PRESCRIBED IN PROVISIONS OF SECTION 45(2) I.E., TAXING HIM IN THE YEAR IN WHICH THE STOCK IN TRADE WAS SOLD OR OTHERWISE TRANSFERRED BY HIM THE INCOME IS CHARGEABLE TO TAX TAKING THE FAIR MARKET VALUE AS ON THE DATE OF CONVERSION OR 19 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. TREATMENT AS STOCK IN TRADE AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF THE CAPITAL ASSET. 9. IN VIEW OF THE WIDE SPREAD DIVERSITY IN THE FACTS O F THE CASES DECIDED AND RELIED UPON TRANSPOSING ONE PROPOSITION ON THE OTHER IT IS SUBMITTED THAT ONE SHOULD REMEMBER THE SUPREME COURT'S OBSERVATIONS: SUSHIL SURI VS. CBI & ANR (2011) 8 SCR 1 - THE SUPREME COURT REPEATEDLY HELD THAT WHILE APPLYING A RATIO, THE COURT MAY NOT PICK OUT A WORD OR SENTENC E FROM THE JUDGMENT DIVORCED FROM THE CONTEXT IN WHIC H THE SAID QUESTION AROSE FOR CONSIDERATION. EVEN ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN THE CONCLUSIONS IN TWO CASES AND BLINDLY PLACING RELIANCE ON A DECISION IS NEVER PRO PER. THE SUPREME COURT QUOTED THE WORDS OF LORD DENNING IN HARYANA FINANCIAL CORPORATION VS. JAGADAMBA OIL MILLS & ANR (2002) 3 SCC 496 ' EACH CASE DEPENDS ON ITS OWN FACTS, AND A CLOSE SIMILARI TY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH, BECAUSE EVEN A SINGLE SIGNIFICANT DETAIL MAY ALTER THE ENTI RE ASPECT. IN DECIDING SUCH CASES, ONE SHOULD AVOID TEMPTATION TO DECIDE CASES (AS SAID BY CARDOZO) BY MATCHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECIDE THEREFORE, ON WHICH SIDE OF A LI NE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE I S NOT ALL DECISIVE.' SEE ALSO CIT VS. SUN ENGINEERING (P) L.TD., 198 ITR 297 (SC). 10. IN THE INSTANT CASE ALSO IT IS TO BE SEEN THAT THE TEST LAID DOWN IN GOPAL PUROHIT IS APPLICABLE TO THE EXT ENT OF TREATING THE SHARE TRANSACTION OF THE NATURE OF JOBBING TRANSACTIONS NOT INVOLVING DELIVERY, THE PV S RAJU IS APPLICABLE IN CASES WHERE THE ASSESSEE PREVIOUSLY CLAIMED AS TRADER IN SHARES, AND OTHER CASES HAS THEIR OWN PECULIAR FACTS AND CIRCUMSTANCES. IN THE SCHEDULAR SYSTEM OF TAXATION WHAT STATUTE SAYS AND HOW STATUTE TAXES IS THE SOLE CRITERIA AS LONG AS THE WORDS OF THE STATUTE ADMITS NO AMBIGUITY JUDGES OR JUDICIAL AUTHORITIES SHOULD REF RAIN FROM DEVELOPING A PARALLEL LAW BY ADDING WORDS AND SENTENCES TO THE LAW THAT ADMITS NO AMBIGUITY AND ALSO MIXING UP THE PROPOSITIONS RENDERED IN DIFFERE NT FACTS AND CIRCUMSTANCES IN DIVORCED FACTS AND ALSO MATCHING THE COLOUR OF THE CASES BY REVERSE 20 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. ENGINEERING THE FACTS IS NOT PERMISSIBLE. 7.1. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ISSUE RELATING TO THE HEAD OF IN COME UNDER WHICH PROFIT FROM SHARE TRANSACTIONS IS CHARG EABLE TO TAX IS REQUIRED TO BE DECIDED CONSIDERING THE FA CTS AND CIRCUMSTANCES INVOLVED IN EACH CASE AND AN OVERALL VIEW IS REQUIRED TO BE TAKEN CONSIDERING THE RELEVANT FACTS IN TOTALITY IN THE LIGHT OF CRITERIAS LAID DOWN IN VAR IOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF H ONBLE A.P. HIGH COURT IN THE CASE OF PVS. RAJU (SUPRA) AN D SPECTRA SHARES & SCRIPS P. LTD., (SUPRA). IN THIS R EGARD, HE HIGHLIGHTED THE RELEVANT FACTS INVOLVED IN THE CAS E OF THE ASSESSEE AS UNDER : A) ASSESSEE IS NOT CARRYING ON ANY BUSINESS IN SHARES AND SECURITIES OR NOT SET UP ANY SUCH BUSINESS IN T HE IMPUGNED PREVIOUS YEARS. THERE IS NO CONVERSION OF SHARES IN TO STOCK IN TRADE OR SUCH TREATMENT GIVEN BY THE ASSESSEE. CONSISTENTLY ASSESSEE MAINTAINING A PORTFOLIO ON INVESTMENT ACCOUNT AND THE TRANSACTION S ARE ALSO ON THE SAME ACCOUNT. B) THE TREATMENT BY THE ASSESSEE IS IN CONSISTENT WITH EARLIER YEARS AND THERE IS NO CHANGE EITHER IN THE INTENTION OR TREATMENT GIVEN IN THE BOOKS. C) ALWAYS VALUED INVESTMENT AT COST AND NOT COST OR NE T REALIZABLE VALUE WHICHEVER IS LESS AS APPLICABLE TO STOCK IN TRADE. D) THE PERIOD OF HOLDING 12 MONTHS IS A RESTRICTION TO TREAT THE CAPITAL ASSET BEING SHARES AND SECURITIES AS LONG TERM CAPITAL ASSET COVERS AN OPEN ENDED PERIOD OF ONE DAY ALSO. E) CHANGES IN INVESTMENT PORTFOLIO TO PREVENT CAPITAL DEPRECIATION AND TAKING OCCASIONAL APPRECIATION CANNOT CHANGE THE ASSET INTO STOCK IN TRADE, ABSENC E A BUSINESS, CONVERSION OR TREATMENT AS SUCH. 21 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. F) WHERE THE ASSESSEE IS IN THE BUSINESS OF SHARES AND SECURITIES, EVEN THE VALUATION OF STOCK IN TRADE OF SHARES AND SECURITIES HELD FOR MORE THAN 12 MONTHS HAS ALSO TO BE VALUED AT COST OR NET REALIZABLE VAL UE WHICHEVER IS LESS. ABSENCE THE APPLICATION OF SAID VALUATION PRINCIPLE WHERE THE INVESTMENTS ARE CONSISTENTLY VALUED AT COST THERE IS NO ROOM FOR REVENUE TO PUSH THE ASSESSEE AS ASSESSEE TRADING IN SHARES. G) MORE THE INVESTMENT RISK IN THE MARKET CREATED BY VOLATILITY IN THE MARKET THAT ARISES OUT OF THE SYSTEMATIC OR UNSYSTEMATIC FACTORS EVEN THE INVESTO R IS ALSO REQUIRED TO MANIPULATE HIS PORTFOLIO BY ALTERATIONS THROUGH BUYING FOR TAKING PROFIT AND SELLING FOR PROFIT TAKING OR STOPPING THE LOSS MAY HAPPEN IN HIGH FREQUENCY IN MORE VOLATILE MARKET LI KE BSE, THEN THAT FREQUENCY WITH WHICH INVESTMENTS ARE ALTERED REGULARLY IN THE PORTFOLIO AND RESULTANT GA IN TAKEN ON REALIZING THE APPRECIATION IN THE CAPITAL COST OF THE ASSET SHALL NOT BE TREATED AS BUSINESS PROFI T, ABSENCE BUSINESS OR INTENTION OF THE ASSESSEE TO CA RRY ON BUSINESS AND DEMONSTRATED AS SUCH. H) SHARES AND SECURITIES IF ACQUIRED FOR THE PURPOSE EARNING DIVIDEND CONSTITUTES 'INVESTMENT' IS A WRON G NOTION. ANY ASSET IS ACQUIRED FOR EARNING INCOME AN D APPRECIATION OF ITS VALUE. LIKE THAT SHARES AND SECURITIES ARE ACQUIRED TO GET RETURN BY WAY OF DIVIDEND OR SECURITIES FOR EARNING FIXED INCOME OR VARIABLE INCOME. THE MOMENT THEY FAIL TO EARN SUCH INCOME THERE IS A THREAT TO CAPITAL APPRECIATION AN D INVESTOR MAY FACE DEPRECIATION IN THE VALUE OF INVESTMENTS. SUBSTITUTION BY ALTERATION OF SHARES A ND SECURITIES OR TRANSFERRING THEM TO ANOTHER MORE RIS K BEARING INVESTOR IN THE MARKET IS COMMON ATTRIBUTES OF DEALINGS IN SHARES BY THE INVESTORS. I) IN THE INSTANT CASE ALL THE FUNDAMENTAL FACTORS SUC H AS CAPITAL ASSETS, WITH OWN FUNDS, DEMONSTRATING THEM AS INVESTMENTS YEAR AFTER YEAR CONSISTENTLY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, CONSISTENTLY VALUING THE PORTFOLIO AT COST ONLY NOT RESORTING VALUATION PRINCIPLE OF COST OR MARKET VALUE WHICHEV ER IS LESS THE PRINCIPLE APPLICABLE TO THE VALUATION O F 22 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. TRADING ASSETS AND NOT CHARGING THE DECREASE/ INCREASE IN THE VALUE OF STOCK IN THE PROFIT AND LO SS ACCOUNT AND THE PURCHASE AND SALE OR THE FREQUENCY OF PURCHASE AND SALE OF SHARES AND SECURITIES AS CAPITAL ASSETS CANNOT DETERMINE OR DRAW AN IMPUTATION THAT ASSESSEE IS DOING BUSINESS IN SHARE S AND SECURITIES. WHEN ALL OTHER THINGS REMAINS CONSTANT THE TEST OF FREQUENCY, VOLUME OR MAGNITUDE IS A REDUNDANT FACTOR BETWEEN TRADER AND INVESTOR WHILE DEALING WITH SHARES AND SECURITIES EXCEPT THE INTENTION, TREATMENT GIVEN IN THE BOOKS AND VALUATI ON PRINCIPLE APPLIED ARE THE DECIDING FACTORS. J) ALL THE DECISIONS RENDERED SO FAR ARE TO BE CONSIDE RED IN THEIR PECULIAR FACTS AND TO BE HARMONIZED AND NO T TO BE REVERSE ENGINEERED. 7.2. KEEPING IN VIEW OF THE ABOVE FACTS INVOLVED I N THE CASE OF THE ASSESSEE, LD. COUNSEL FOR THE ASSES SEE CONTENDED THAT THE FACTORS ARE HEAVILY IN FAVOUR OF THE ASSESSEES CLEARLY DEMONSTRATING THAT THEY ARE INVES TORS IN SHARES AND NOT THE TRADERS. HE CONTENDED THAT IF AL L THESE FACTS ARE TAKEN INTO CONSIDERATION IN THE LIGHT OF CRITERIA LAID DOWN IN THE RELEVANT JUDICIAL PRONOUNCEMENTS, IT BECOMES CLEAR THAT THE TRANSACTIONS IN SHARES WERE ENTERED INTO BY BOTH THE ASSESSEES AS INVESTORS AND THE PROFIT ARISING FROM SUCH TRANSACTIONS WAS CHARGEABL E TO TAX IN THEIR HANDS AS SHORT TERM CAPITAL GAIN AND N OT BUSINESS INCOME. 8. LEARNED D.R. ON THE OTHER HAND STRONGLY RELIED ON THE IMPUGNED ORDERS OF THE LD. CIT(A) FOR A.YS. 2007- 08 AND 2008-09 IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE AND SUBMITTED THAT THE FINDINGS/OBSERVATIONS RECORDED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER AR E SUFFICIENT TO SHOW THAT BOTH THE ASSESSEES WERE IND ULGING INTO THE SHARE TRANSACTIONS AS TRADERS AND NOT AS 23 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. INVESTORS. HE SUBMITTED THAT THE WELL CONSIDERED AN D WELL REASONED DECISION RENDERED BY THE LD. CIT(A) IN ASS ESSEES CASE FOR A.YS. 2007-08 AND 2008-09 HOWEVER, HAS NOT BEEN TAKEN INTO CONSIDERATION BY HIS SUCCESSOR WHIL E DECIDING A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN A.Y. 2010-2011. LEARNED D.R. VEHEMENTLY CHALLENGED THE O RDER OF THE LD. CIT(A) FOR A.Y. 2010-2011 BY RAISING THE FOLLOWING ARGUMENTS : 1. THE FIRST PRINCIPLE THAT EMERGES FR O M A PERUSAL OF THE CBDT INSTRUCTION NO.1827 DAT ED 31. 8 .1 989 AND CIR C ULAR NO . 4 OF 200 7 DATED 15.6.2007 AS WELL AS THE VARIOUS JUDICIAL DECISIONS ON THE ISSUE THAT THERE CAN BE NO HARD AND FAST RULE FOR ARRIVING AT A CONCLUSION IN A SITUATION OF THIS KIND AND THAT EACH CASE TURNS ON ITS OWN FACTS . IN THE CASE OF CIT V SUT L E J C OTTON MI LLS AGEN C Y LTD . 100 ITR 706 (SC) , THE COURT HELD 'THE PRINCIPLES UNDERLYING THE DISTINCTION BETWEEN A CAPITAL SALE AND AN ADVENTURE IN THE NATURE OF TRADE WERE EXAMINED BY THIS COURT IN G . VENKATASWAM I NAIDU & CO . V S. C O M M ISS IO N ER : OF INCOM E - TAX, WHERE THIS COURT SAID THAT THE CHARACTER OF A TRANSACTION CANNOT BE DETERMINED SOLELY ON THE APPLICATION OF ANY ABS T RACT RU L E, PRINCIPLE OR TEST BUT MUST DEPEND UPON ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. ULTIMATELY, IT IS A MATTER OF FIRST IMPRESSION WITH THE COURT WHETHER A PARTICULAR TRANSACTION IS IN THE NATURE OF TRADE OR NOT. I T HAS BEEN SAID THAT A SINGLE PLUNGE MAY BE ENOUGH PROVIDED IT IS SHOWN TO THE SATISFACTION OF THE COURT THAT THE PLUNGE IS MADE IN THE WATERS OF THE TRADE; BUT MERE PURCHASE/ SALE OF SHARES - IF THAT IS ALL THAT IS INVOLVED IN THE PLUNGE - MAY FALL SHORT OF ANYTHING IN THE NATURE OF TRADE. WHETHER IT IS IN THE NATURE OF TRADE WILL DEPEND ON THE FACTS AND CIRCUMSTANCES.' 24 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 2. ALTHOUGH IN THE CASE OF SPECTRA SHARES & SC RI PS P V T. LTD V CIT (ITTA NO. 512 OF 2011 & ITTA NO . 177 OF 2012 (AP) DTD.21.2.201 3 ), RELIED UPON BY THE ASSESSEE, THE HIGH COURT HELD THAT THE TRANSACTIONS OF PURCHASE AND SALES OF SHARES HAD RESULTED IN CAPITAL GAINS AND NOT BUSINESS INCOME, BUT THE HIGH TURNOVER AND FREQUENCY OF TRANSACTIONS WAS NOT A RELEVANT FACTOR IN THE SAID CASE. 3. IN THE CASE OF CIT V GOPA L PUROH IT [ 20 1 1] 33 6 I TR 2 8 7 (BO M ), RELIED UPON BY THE ASSESSEE, BOTH OF THE ITAT AND THE HIGH COURT RECOGNIZE THE BASIC PROPOSITION THAT ENTRIES IN THE BOOKS ALONE ARE NOT CONCLUSIVE IN DETERMINING THE NATURE OF INCOME. FOLLOWING THIS VIEW, IT CAN BE HELD THAT THE FACT THAT THE ASSESSEE HAS TREATED THE TRANSACTIONS AS AN 'INVESTMENT' IN HER BOOKS IS INDICATIVE OF ITS NATURE BUT NOT CONCLUSIVE. 4. IN THE CASE OF PVS RAJU V ADDL CIT [2012J 340 ITR 75 (AP), THE HIGH COURT OBSERVED THAT THE FACTORS WHICH WEIGHED WITH THE LOWER AUTHORITIES IN COMING TO THE CONCLUSION THAT THE SHARES IN QUESTION CONSTITUTED 'STOCK-IN-TRADE' AND NOT 'INVESTMENT' WERE AS FOLLOWS : A) THE FREQUENCY OF BUYING AND SELLING OF SHARES BY THE ASSESSEES WERE HIGH; B) THE PERIOD OF HOLDING WAS LESS; C) THE HIGH TURNOVER WAS ON ACCOUNT OF FREQUENCY OF TRANSACTIONS AND NOT BECAUSE OF HUGE INVESTMENT; D) THE ASSESSEE HAD DEALT IN DELIVERY TRADING PURELY WITH THE INTENTION OF MAKING QUICK PROFITS ON A HUGE TURNOVER; E) THE PERIOD OF HOLDING OF A MAJORITY OF THE STOCK WAS BETWEEN ONE TO SEVEN DAYS; 25 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. F) IN MOST OF THE TRANSACTIONS, THE ASSESSEES DID NOT EVEN HOLD ON TO AT LEAST SOME PART OF THE HUGE PURCHASES AND HAD ENGAGED IN THE SAME SCRIPS FREQUENTLY; G) THE INTENTION OF THE ASSESSEES IN BUYING SHARES WAS NOT TO DERIVE INCOME BY WAY OF DIVIDEND ON SUCH SHARES BUT TO EARN PROFITS ON THE SALE OF THE SHARES; H) THE ASSESSEES INDULGED IN MULTIPLE TRANSACTIONS OF LARGE QUANTITIES WITH VERY HIGH PERIODICITY. THESE PERIODIC TRANSACTIONS SELECTING THE TIME OF ENTRY AND EXIT IN EACH SCRIP CALLED FOR REGULAR DIRECTION AND MANAGEMENT WHICH WOULD INDICATE THAT IT WAS IN THE NATURE OF TRADE; I) REPEATED TRANSACTIONS, COUPLED WITH THE SUBSEQUENT CONDUCT OF THE ASSESSEES TO RE-ENTER THE MARKET, IN ORDER TO TAKE ADVANTAGE OF MARKET FLUCTUATIONS LENT THE FLAVOUR OF TRADE TO SUCH TRANSACTIONS; J) THE ASSESSEES WERE PURCHASING AND SELLING THE SAME SCRIPS REPEATEDLY AND WERE SWITCHING FROM ONE SCRIP TO ANOTHER; K) THE DOMINANT IMPRESSION LEFT ON THE MIND WAS THAT THE ASSESSEES HAD NOT INVESTED IN SHARES; L) MERE CLASSIFICATION OF THESE SHARE TRANSACTIONS AS INVESTMENT IN THE ASSESSEE'S BOOKS OF ACCOUNT WAS NOT CONCLUSIVE; M) THE INTENTION OF THE ASSESSEES AT THE TIME OF PURCHASE WAS ONLY TO SELL THE SHARES IMMEDIATELY AFTER PURCHASE; N) FREQUENCY OF PURCHASE AND SALE OF SHARES SHOWED THAT THE ASSESSEES NEVER INTENDED TO KEEP THESE SHARES AS INVESTMENT; AND 26 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. O) IT IS ONLY FOR THE PURPOSE OF CLAIMING BENEFIT OF LOWER RATE OF TAX UNDER SECTION 111A OF THE ACT THAT THEY HAD CLAIMED CERTAIN SHARES TO BE INVESTMENT THOUGH THESE TRANSACTIONS WERE ONLY IN THE NATURE OF TRADE. IN THE CASE OF THE ASSESSEE, MOST OF THE ABOVE FACTORS ARE PRESENT AS OBSERVED BY THE ASSESSING OFFICER IN HIS ORDER . 5. IN THE CASE OF PVS RAJU VS. ADDL. CIT (2012), THE HIGH COURT ALSO NOTED 'IT IS EVIDENT FROM THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL THAT THE VOLUMINOUS SHARE TRANSACTIONS WERE IN THE ORDINARY LINE OF THE APPELLANTS' BUSINESS; PURCHASE OF SHARES BY THEM WAS NOT FOR THE PURPOSE OF EARNING DIVIDEND BUT WITH THE DOMINANT INTENTION OF RESALE IN ORDER TO EARN PROFITS; THE PROFIT MADE BY THEM IS NOT OF MERE ENHANCEMENT OF VALUE OF THE SHARES, BUT IS A PROFIT MADE IN THE CARRYING ON OF A BUSINESS SCHEME OF PROFIT MAKING; HUGE VOLUME OF SHARE TRANSACTIONS, THE REPETITION AND CONTINUITY OF THE TRANSACTIONS, GIVE THEM A FLAVOUR OF 'TRADE'; THE MAGNITUDE, FREQUENCY AND THE RATIO OF SALES TO PURCHASES ON THE TOTAL HOLDINGS IS EVIDENCE THAT THE APPELLANT HAD NOT PURCHASED THE SHARES AS AN INVESTMENT, BUT WITH THE INTENTION TO TRADE IN SUCH SCRIPS.' 6. IN THE CASE OF ACIT VS. MANOJ KUMAR SAMDARIA 54 SOT 331 (DEL), THE ITAT HELD THAT MOST IMPORTANT TEST IS THE INTENTION OF THE ASSESSEE. IN THIS CASE, SHARES OF RS. 4.9 CR WERE PURCHASED AND OF RS. 4.10 CR SOLD WHEREAS THE OPENING INVESTMENT WAS RS. 1 CR. A MEAGRE AMOUNT OF DIVIDEND HAD BEEN EARNED. THE ITAT HELD THAT MAGNITUDE, FREQUENCY AND RATIO OF SALES AND PURCHASE SHOWED INTENTION TO TRADE. 27 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 7. IN THE CASE OF CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. (P.) LTD. 82 ITR 586 (SC), IT WAS HELD 'THE MULTIPLICITY OF THE TRANSACTIONS OCCURRING SUCCESSIVELY OVER THE YEARS SUPPORTED THE DEPARTMENTAL STAND THAT THE ASSESSEE HAD CEASED TO BE AN INVESTOR AND HAD BECOME A DEALER.' 8. IN THE CASE OF CIT VS. SUTLEJ COTTON MILLS AGENCY LTD. 100 ITR 706 (SC), THE COURT ALSO HELD 'IT IS NOT NECESSARY TO CONSTITUTE TRADE THAT THERE SHOULD BE SERIES OF TRANSACTIONS, BOTH OF PURCHASE AND OF SALE . A SINGLE TRANSACTION OF PURCHASE AND SALE OUTSIDE THE ASSESSEE'S LINE OF BUSINESS MAY CONSTITUTE AN ADVENTURE IN THE NATURE OF TRADE. NEITHER REPETITION NOR CONTINUITY OF SIMILAR TRANSACTIONS IS NECESSARY TO CONSTITUTE A TRANSACTION AN ADVENTURE IN THE NATURE OF TRADE. IF THERE IS REPETITION AND CONTINUITY, THE ASSESSEE WOULD BE CARRYING ON A BUSINESS AND THE QUESTION WHETHER THE ACTIVITY IS AN ADVENTURE IN THE NATURE OF TRADE CAN HARDLY ARISE . '. 9. IN THE CASE OF HARSHA MEHTA (ITA 859/MUM/ 2009 DTD.16.7.2010), THERE WERE 70 TRANSACTIONS, IN 35 SCRIPS, WITH A TURNOVER OF RS.3 CRORES. THE PROFIT FROM THE SALES WAS HELD TO BE BUSINESS INCOME. 10. IN THE CASE OF THE ASSESSEE, THE DIVIDEND INCOME WAS OF A MERE RS.10,62,160 FROM A TURNOVER OF RS.139 CRORES AND AN INVESTMENT OF RS.20,45,90,334. THE RATIO OF DIVIDEND TO TURNOVER SHOWS THAT THIS INCOME WAS NOT THE AIM AND MOTIVE OF THE APPELLANT IN MAKING THIS 'INVESTMENT'. IT FOLLOWS THAT THE APPELLANT INTENDED TO EARN PROFIT FROM HER INVESTMENT BY 'SELLING THE SCRIPS PERIODICALLY', AS THE AR , OF THE ASSESSEE HIMSELF HAS PUT IT. 28 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 8.1. IN THE LIGHT OF THE ABOVE SUBMISSIONS, LEARNE D D.R. CONTENDED THAT THE RELIEF GIVEN BY THE LD. CIT (A) TO THE ASSESSEE IN A.Y. 2010-2011 ACCEPTING THE TREATM ENT GIVEN TO THE PROFIT ARISING FROM SHARE TRANSACTIONS AS SHORT TERM CAPITAL GAIN THUS IS NOT WELL FOUNDED AND THE SAME IS LIABLE TO BE SET ASIDE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE COMMON ISSUE INVOLVED IN THESE FOUR APPEALS IS WHETHER THE PROFIT EARNED BY THE TWO ASSESSEES IN THE RELEVANT YEARS U NDER CONSIDERATION IS CHARGEABLE TO TAX IN THEIR HANDS A S BUSINESS INCOME AS HELD BY THE A.O. OR AS SHORT TER M CAPITAL GAIN AS CLAIMED BY THE ASSESSEES. IN THIS C ONTEXT, LD. COUNSEL FOR THE ASSESSEE IN THE FIRST PLACE HAS PRESSED INTO SERVICE THE RULE OF CONSISTENCY AND CONTENDED RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF GOPAL PUROHIT (SUPRA) THAT THE ASSESSEE HAVING TREA TED AS INVESTOR IN SHARES IN THE EARLIER YEARS AND THE PRO FIT ON SALE OF SHARES HAVING BEEN ACCEPTED AS CAPITAL GAIN IN THEIR HANDS IN THE EARLIER YEARS, THERE WAS NO REAS ON FOR THE AUTHORITIES BELOW TO TAKE A DIFFERENT STAND IN THE YEARS UNDER CONSIDERATION. IN ORDER TO CONSIDER THIS CONT ENTION OF THE LD. COUNSEL FOR THE ASSESSEE, HE WAS REQUIRE D BY US TO CLARIFY AS TO WHETHER ANY OF THE ASSESSMENTS FOR THE EARLIER YEARS IN THE CASES OF THE ASSESSEES WAS COM PLETED ON SCRUTINY UNDER SECTION 143(3) AND IF SO, HE WAS REQUIRED TO FILE THE COPIES OF SUCH ORDERS. IN THIS REGARD, HE HAS FILED A COPY OF ONE ORDER DATED 28.12.2007 P ASSED UNDER SECTION 143(3) IN THE CASE OF SMT. NANDURI SO BHA RANI FOR A.Y. 2005-2006. A PERUSAL OF THE SAME, HOW EVER, 29 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. SHOWS THAT THERE IS NO DISCUSSION WHATSOEVER IN THE SAID ORDER ABOUT THE TREATMENT GIVEN BY THE ASSESSEE TO THE PROFIT ARISING FROM THE TRANSACTIONS IN SHARES OR T HE ACCEPTANCE OF THE SAME BY THE A.O. AFTER EXAMINATIO N OF THE ISSUE. IN THE COMPUTATION OF TOTAL INCOME GIVEN AT PAGE-5 OF THE SAID ORDER, THE TOTAL INCOME OF THE A SSESSEE WAS DETERMINED BY THE A.O. AT RS.1,16,96,373 AFTER MAKING ADDITIONS TO THE INCOME OF RS.63,67,290 RETU RNED BY THE ASSESSEE WHICH INTER ALIA, INCLUDED THE MAIN ADDITION OF RS.50 LAKHS MADE ON ACCOUNT OF KEY MAN INSURANCE. IT IS NOT EVEN CLEAR FROM THE ASSESSMENT ORDER AS TO WHETHER THE INCOME RETURNED BY THE ASSESSEE W AS INCLUSIVE OF ANY PROFIT ARISING FROM THE SHARE TRAN SACTIONS AND WHAT EXACTLY WAS THE TREATMENT GIVEN BY THE ASS ESSEE TO SUCH PROFIT. THE WORKING OF TAX PAYABLE GIVEN BY THE A.O. FURTHER REVEALS THAT THE INCOME AS DETERMINED BY THE A.O. DID NOT INCLUDE ANY SHORT TERM CAPITAL GAIN WH ICH INCIDENTALLY WAS CHARGEABLE AT LOW RATE OF TAX. THE SOLITARY ORDER PASSED IN THE CASE OF SMT. N. SOBHA RANI FOR ASSESSMENT YEAR 2005-06 THUS DOES NOT SHOW THAT THE PROFIT FROM SHARE TRANSACTIONS, IF ANY, WAS DECLARE D BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN AND IF SO, THE SAME WAS ACCEPTED BY THE A.O. AFTER DUE EXAMINATION. 10. IN SO FAR AS THE CASE OF SMT. NANDURI TEJASWY IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A COPY OF ORDER DATED 28.11.2008 PASSED BY A.O. UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2006-07 AND ALTH OUGH THE COMPUTATION OF TOTAL INCOME GIVEN ON PAGE NO.3 OF THE SAID ORDER SHOWS THAT SHORT TERM CAPITAL GAIN OF RS.54,76,642 AS DECLARED BY THE ASSESSEE WAS ACCEPT ED BY 30 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. THE ASSESSING OFFICER, THERE IS NO DISCUSSION WHATS OEVER IN THE ORDER TO SHOW UNDER WHAT CIRCUMSTANCES AND ON W HAT BASIS THE SAME WAS ACCEPTED. THERE IS NOTHING IN TH E ORDER OF THE A.O. TO SHOW THAT ALL THE RELEVANT ASP ECTS OF THE ISSUE WERE EXAMINED BY HIM AND ON SUCH EXAMINATION, THE CLAIM OF THE ASSESSEE FOR SHORT TE RM CAPITAL GAIN WAS ACCEPTED. THE LD. COUNSEL FOR THE ASSESSEE ALSO HAS NOT FILED THE RELEVANT DETAILS TO SHOW THAT THE FACTS INVOLVED IN THE CASE OF SMT. NANDURI TEJASWY IN ASSESSMENT YEAR 2006-07 ARE MATERIALLY SIMILAR TO THE FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE TREATMENT GIVEN BY THE ASSESSEE TO THE PROFIT ON SA LE OF SHARES AS CAPITAL GAIN WAS ACCEPTED BY THE DEPARTME NT IN THE EARLIER YEARS IN SIMILAR FACTS AND CIRCUMSTANCE S ON MERIT AND THE ISSUE INVOLVED IN THE YEARS UNDER CONSIDERATION, THEREFORE, CANNOT BE DECIDED BY PRES SING INTO SERVICE THE RULE OF CONSISTENCY AS SOUGHT TO B E CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE RELYI NG ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F GOPAL PUROHIT (SUPRA). MOREOVER, AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF NEW JEHANGIR VAKIL MIL LS CO. LTD., VS. CIT (1963) 49 ITR 137 (SC) THE CIRCUMSTAN CES THAT IN THE EARLIER ASSESSMENT YEAR ASSESSEE WAS TR EATED AS AN INVESTOR COULD NOT STOP THE ASSESSING AUTHORI TY FROM CONSIDERING FOR THE PURPOSE OF COMPUTATION OF PROFI TS FOR THE SUCCEEDING YEAR AS TO WHEN THE TRADING ACTIVITI ES OF THE ASSESSEE BEGAN. 31 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 10. IT IS NOW WELL SETTLED THAT THE ISSUE AS TO WHETHER PROFIT ON SALE OF SHARES CONSTITUTES BUSINE SS INCOME OF THE ASSESSEE OR CAPITAL GAINS DEPENDS ON WHETHER THE SAID SHARES WERE PURCHASED BY THE ASSES SEE AS INVESTMENT OR STOCK IN TRADE. IN ORDER TO ASCERT AIN AS TO WHETHER THE SHARES ARE PURCHASED BY THE ASSESSEE AS INVESTMENT OR STOCK IN TRADE, THE MOST RELEVANT ASP ECT WHICH IS TO BE SEEN IS THE INTENTION OF THE ASSESSE E BEHIND PURCHASE OF SHARES AND SUCH INTENTION HAS TO BE GAT HERED FROM THE RELEVANT FACTS OF THE CASE INCLUDING THE C ONDUCT OF THE ASSESSEE. IN THIS REGARD, CERTAIN GUIDELINES HAVE BEEN LAID DOWN IN THE VARIOUS JUDICIAL PRONOUNCEMEN TS INCLUDING THE DECISION RENDERED BY THE HONBLE A.P. HIGH COURT IN THE CASES OF MR. PVS RAJU (SUPRA) AND SPEC TRA SHARES & SCRIPS P. LTD., (SUPRA). IN HIS IMPUGNED O RDERS PASSED IN THE CASE OF SMT. NANDURI SOBHARANI FOR ASSESSMENT YEARS 2007-2008 AND 2008-2009 AND IN THE CASE OF NANDURI TEJASWY FOR ASSESSMENT YEAR 2007-20 08, THE LD. CIT(A) HAS CONSIDERED SUCH GUIDELINES LAID DOWN BY THE HONBLE A.P. HIGH COURT AND IDENTIFIED THE F ACTORS IN FAVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE RELATING TO THE ISSUE UNDER CONSIDERATION. AFTER GIVING DUE WEIGHTAGE TO ALL THESE FACTORS IN THE LIGHT OF DECI SION OF HONBLE A.P. HIGH COURT IN THE CASES OF MR. PVS RAJ U (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD. (SUPRA) , HE ARRIVED AT THE CONCLUSION THAT BOTH THE ASSESSEES I N THE RELEVANT YEARS WERE ENGAGED IN TRADING IN SHARES AN D PROFIT ARISING THEREFROM WAS CHARGEABLE TO TAX IN T HEIR HANDS AS BUSINESS INCOME AS RIGHTLY HELD BY THE ASS ESSING OFFICER. 32 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. 11. AFTER HAVING CONSIDERED ALL THE FACTORS IDENTIFIED AND HIGHLIGHTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER FOR ASSESSMENT YEARS 2007-08 AND 200 8- 09 IN THE LIGHT OF GUIDELINES LAID DOWN BY THE HON BLE A.P. HIGH COURT IN THE CASES OF MR. PVS RAJU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD. (SUPRA), WE FIND OU RSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT THE TRANSACTI ONS IN SHARES WERE CARRIED ON BY THE ASSESSEES AS TRADERS IN SHARES AND NOT AS INVESTORS AND PROFIT ARISING FROM THE SAID TRANSACTIONS, THEREFORE, WAS CHARGEABLE TO TAX IN THEIR HANDS AS THE BUSINESS INCOME AND NOT CAPITAL GAINS. FOR INSTANCE, THE ASSESSEE SMT. NANDURI SOBHARANI ENTER ED INTO 174 TRANSACTIONS IN AS MANY AS 50 SCRIPS IN ASSESSMENT YEAR 2007-08 AND 282 TRANSACTIONS IN AS MANY AS 81 SCRIPS IN ASSESSMENT YEAR 2008-09. THE O THER ASSESSEE NAMELY SMT. NANDURI TEJASWY ALSO TRANSACTE D IN AS MANY AS 128 SCRIPS IN ASSESSMENT YEAR 2007-08. T HE FREQUENCY OF BUYING AND SELLING OF SHARES IN THE CA SE OF BOTH THESE ASSESSEES WAS ALSO VERY HIGH AND EVEN TH E PERIOD OF HOLDING WAS LESS IN A LARGE NUMBER OF SCR IPS. BOTH THE ASSESSEES WERE FOUND TO HAVE PURCHASED, SO LD AND AGAIN RE-PURCHASED THE SAME SCRIPS SHOWING REPETITIVE TRANSACTIONS OF THE SAME SCRIPS, A COMMO N FEATURE GENERALLY ATTRIBUTABLE TO THE TRADER. THE D IVIDEND INCOME EARNED BY THE ASSESSEE ON SHARES WAS VERY LO W AS COMPARED TO THE INVESTMENT MADE WHICH AGAIN GOES TO SHOW THAT THE INTENTION OF THE ASSESSEES WAS NEVER TO HOLD THE SHARES AS LONG TERM INVESTMENT IN ORDER TO EARN DIVIDEND INCOME. EVEN THE TURNOVER OF SHARE TRANSAC TIONS DURING THE YEAR UNDER CONSIDERATION WAS MANIFOLD OF THE VALUE OF SHARES HELD BY THE ASSESSEE WHICH BY ITSEL F IS 33 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. SUFFICIENT TO SHOW THAT THE ASSESSEES WERE REGULARL Y TRADING IN SHARES AND IT WAS NOT THE CASE OF INVEST ORS. THERE WERE HARDLY ANY TRANSACTIONS ENTERED INTO BY THE ASSESSEE GIVING RISE TO LONG TERM CAPITAL GAIN OR L OSS WHICH AGAIN PROVES THAT THE SHARES WERE NOT HELD BY THE ASSESSEE AS LONG TERM INVESTMENT BUT THE SAME WERE SOLD INVARIABLY AFTER SHORT PERIOD TO BOOK OR REALISE TH E PROFIT. IF ALL THESE MATERIAL FACTS AS INVOLVED IN THE CASES O F THE ASSESSEES FOR ASSESSMENT YEARS 2007-08 AND 2008-09 ARE CONSIDERED IN THE LIGHT OF GUIDELINES LAID DOWN BY THE HONBLE A.P. HIGH COURT IN THE CASES OF MR. PVS RA JU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD., (SUPRA ), WE FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THA T THE TRANSACTIONS IN SHARES WERE ENTERED INTO BY THE ASS ESSEES AS TRADERS IN THE RELEVANT YEARS AND NOT AS AN INVE STORS AND THE PROFIT ARISING FROM THESE TRANSACTIONS WAS CHARGEABLE TO TAX AS BUSINESS INCOME IN THE HANDS O F THE ASSESSEES AND NOT CAPITAL GAINS. WE, THEREFORE, UPH OLD THE IMPUGNED ORDERS OF THE LD. CIT(A) CONFIRMING THE AC TION OF THE A.O. IN TREATING THE PROFITS FROM THE SALE OF S HARES AS BUSINESS INCOME IN THE CASE OF SMT. NANDURI SOBHARA NI FOR ASSESSMENT YEAS 2007-08, 2008-09 AND IN THE CAS E OF SMT. NANDURI TEJASWY FOR ASSESSMENT YEAR 2007-08. T HE CORRESPONDING APPEALS OF THE ASSESSEE ARE ACCORDING LY DISMISSED. 12. AS REGARDS THE CASE OF SMT. NANDURI SOBHARANI FOR ASSESSMENT YEAR 2010-2011, IT IS OBSERVED THAT THE LD. CIT(A) HAS DECIDED A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE WITHOUT TAKING INTO CONSIDERATION THE DECI SION RENDERED BY HIS LEARNED PREDECESSOR IN ASSESSEES O WN 34 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. CASE FOR ASSESSMENT YEARS 2007-08 AND 2008-09. THE IMPUGNED ORDER PASSED BY HIM ALSO SHOWS THAT HE HAS NOT EXAMINED THE RELEVANT FACTS OF THE CASE IN THE LIGH T OF GUIDE LINES LAID DOWN BY THE HONBLE A.P. HIGH COUR T IN THE CASE OF MR. PVS RAJU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD., (SUPRA). HE HAS NOT IDENTIFIED THE RELEVANT FACTORS IN FAVOUR OF THE ASSESSEE AND AGAINST THE A SSESSEE AND WEIGHED THE SAME IN THE LIGHT OF HONBLE A.P. H IGH COURT IN THE CASE OF MR. PVS RAJU (SUPRA) AND SPECT RA SHARES & SCRIPS P. LTD. (SUPRA) AS DONE BY HIS PRED ECESSOR IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2007-08 AND 2008-09. THE IMPUGNED ORDER PASSED BY THE LD. CIT(A ) IN THE CASE OF SMT. NANDURI SOBHARANI FOR ASSESSMENT Y EAR 2010-2011 ALSO CANNOT BE CONSIDERED AS WELL DISCUSS ED AND WELL REASONED ON THE ISSUE. HE APPEARS TO HAVE CONSIDERED ONLY THE FACTS WHICH ARE IN FAVOUR OF TH E ASSESSEE ON SELECTIVE BASIS AND AS POINTED OUT BY T HE LEARNED D.R. FROM THE RELEVANT DETAILS, AVAILABLE O N PAGE NO. 51 OF ASSESSEES PAPER BOOK, THE FINDING RECORD ED BY THE LD. CIT(A) IN THIS REGARD THAT THE ASSESSEE HAD ONLY ONE PURCHASE DURING THE ENTIRE YEAR RELATING TO SHO RT TERM CAPITAL GAIN WAS FACTUALLY INCORRECT. KEEPING IN VI EW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONSI DER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO S ET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) PASSED IN THE CASE OF SMT. NANDURI SOBHARANI FOR ASSESSMENT YEAR 2010-201 1 AND REMIT THE MATTER BACK TO HIM FOR DECIDING THE S AME AFRESH AFTER ANALYSING THE FACT SITUATION INVOLVED IN THAT YEAR IN THE LIGHT OF THE GUIDELINES LAID DOWN BY TH E JURISDICTIONAL HIGH COURT IN THE CASE OF MR. P.V.S. RAJU (SUPRA) AND SPECTRA SHARES & SCRIPS P. LTD., (SUPRA ) AS 35 ITA.NO.1110 & 1111/HYD/2013, 1112/HYD/2013 & 1240/HYD/2013 SMT. NANDURI SHOBHA RANI & SHRI NANDURI TEJASWY, HYDERABAD. DONE BY HIS LEARNED PREDECESSOR IN ASSESSEES OWN C ASE FOR ASSESSMENT YEARS 2007-08 AND 2008-09. 12. IN THE RESULT, APPEALS FILED IN THE CASE OF SM T. NANDURI SOBHA RANI FOR ASSESSMENT YEARS 2007-2008 A ND 2008-09 AND IN THE CASE OF SMT. NANDURI TEJASWY FOR ASSESSMENT YEAR 2007-08 ARE DISMISSED WHILE APPEAL FILED BY THE REVENUE IN THE CASE OF SMT. NANDURI SOBHARAN I FOR ASSESSMENT YEAR 2010-2011 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.03.2015. SD/- SD/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH MARCH, 2015 VBP/- COPY TO 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1) , 7 TH FLOOR, D BLOCK, I.T. TOWERS, MASAB TANK, HYDERABA D. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), HYDE RABAD. 3. SMT. SOBHA RANI NANDURI, FLAT NO. 104, NIRMAL TOWER S, DWARAKAPURI COLONY, PUNJAGUTTA, HYDERABAD-500 082. 4. SRI NANDURI TEJASWY, HYDERABAD. C/O. MR. SAMUEL NAGADESI, CHARTERED ACCOUNTANT, 408, SRI RAMAKRISHN A TOWERS, BESIDES IMAGE HOSPITALS, AMEERPET, HYDERABAD-073. 5. CIT(A)-IV, HYDERABAD 6. CIT-III, HYDERABAD. 7. D.R. I.T.A.T. B BENCH, HYDERABAD. 8. GUARD FILE