The DCIT, Circle-3, Surat V. Smt. Shailyben Sureshbhai Bapna, Surat

ITA 1138/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0667 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K MAL
• Keywords: Capital asset; Business income; Share purchase agreement

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA.NO.1138/AHD/2012 / ASSTT. YEAR: 2008-2009 DCIT, CIR.3 SURAT. VS SMT. SHAILYBEN SURESHBHAI BAPNA CHANKYAPURI SOCIETY JAMNA NAGAR ROAD BHATAR ROAD, SURAT. PAN : AHZPH 9620 M ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, AR ASSESSEE BY : SHRI R.K. MALPANI, AR / DATE OF HEARING : 24/08/2016 / DATE OF PRONOUNCEMENT: 01/09/2016 $%/ O R D E R PER RAJPAL YADAV, ACCOUNTANT MEMBER REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A)-II, SURAT DATED 27.3.2012 PASSED FOR THE ASSTT.YEAR 2008-09. 2. IN SOLE SUSTENTATIVE GROUND OF APPEAL, THE REVEN UE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,47,15,000/- WHICH WAS ADDED BY THE AO BY TREATING ALLEGED CLAIM OF LONG T ERM CAPITAL GAIN AS A BUSINESS INCOME AND BY ESTIMATING THE SALE PRICE OF SHARES SOLD BY THE ASSESSEE. ITA NO.1138/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME ON 31.7.2008 DECLARING TOTAL INCOME AT RS.3, 13,89,121/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.3,12,50,000/- ON SALE OF SH ARES OF M/S.PMC BUILDWELL PVT. LTD. (PMCB FOR SHORT). ON FURTHER INQUIRY, IT REVEALED TO THE AO THAT THE ASSESSEE HAS ALLEGED PURCHASES OF 2500 SHARES O F PMCB ON 5.10.2006 AT THE RATE OF RS.10/- PER SHARE. SHE HAS SOLD THESE SHARES ON 27.11.2007 AND 28.1.2008. SHE HAS SOLD SHARES AT THE RATE OF RS.1 2,500/- PER SHARE. SHE COMPUTED LONG TERM CAPITAL GAIN AND OFFERED THAT GA IN FOR TAXATION. ACCORDING TO THE ASSESSEE, SHE HAS PAID LONG TERM CAPITAL GAI N TAX AT RS.70 LAKHS. THE AO HAS MADE AN INQUIRY ABOUT THESE TRANSACTIONS. H E REJECTED THE CLAIM OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE DID NOT SUBMIT COPIES OF SHARE CERTIFICATE, SHARE TRANSFER FORM FOR PURCHASE AND S ALE OF SHARES. THE ASSESSEE DID NOT FILE BALANCE SHEET OR CASH ACCOUNT OR DETAI LS OF INVESTMENTS ALONG WITH RETURN OF THE ASSTT.YEAR 2007-08. SHE HAS SHOWN HOL DING OF THE SHARES AS ON 31.3.2007. THUS, ACCORDING TO THE AO, THE DATE OF ACQUISITION OF THE SHARES IS TO BE TAKEN AS 31.3.2007, AND IF THAT BE SO, THEN S HARES HAVE BEEN SOLD WITHIN ONE YEAR FROM THE DATE OF ACQUISITION, I.E. THE SAL ES HAVE BEEN MADE 27.11.2007 AND 28.1.2008. THE LD.AO, THEREAFTER, O BSERVED THAT THE CLAIM OF THE ASSESSEE FOR ASSESSMENT OF LONG TERM CAPITAL GA IN CANNOT BE ACCEPTED, BECAUSE, THESE TRANSACTIONS APPEARS TO BE A PRE-ARR ANGED TRANSACTION. THE ASSESSEE FAILED TO DISCLOSE AS TO HOW SHE CAME TO K NOW THAT SHARES OF PMCB WERE AVAILABLE AT THE PRICE OF RS.10/- PER SHARE WH EREAS PMCB WAS HOLDING 10.79 ACRES OF LAND IN GURGAON WHICH IS SUPPOSED TO BE COSTLIEST CITY. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAD SOLD SHAR ES AT THE RATE OF RS.12,500/- PER SHARE IN A VERY SHORT SPAN OF TIME. IT ITSELF INDICATES THAT THE TRANSACTION WAS STAGE-MANAGED TRANSACTION BY THE AS SESSEE. THE LD.AO, IN THIS ITA NO.1138/AHD/2012 3 WAY, TREATED THIS TRANSACTION AS A BUSINESS TRANSAC TION AND REJECTED ALL THE CLAIM OF THE ASSESSEE FOR ASSESSMENT OF GAINS AS LO NG TERM CAPITAL GAIN. 4. WITH REGARD TO THE QUANTIFICATION OF THE GAIN, T HE LD.AO HAS OBSERVED THAT THE LAND VALUE IN THE CITY OF GURGAON WAS NOT LESS THAN RS.5,000/- PER SQ.YARD. PMCB WAS HAVING 10.79 ACRES OF LAND. H E HAS ESTIMATED THE VALUE OF THIS LAND AT RS.25,89,60,000/-. ACCORDIN G TO THE AO, THE VALUE OF SHARES OF THIS COMPANY COULD BE DETERMINED AT RS.25 ,896/- PER SHARE. HE ACCORDINGLY WORKED OUT VALUE OF EACH SHARE AT RS.25 ,896/-. THE ASSESSEE WAS HAVING 2500 SHARES OF THIS COMPANY, AND WITH THIS E STIMATION OF THE VALUE, HE WORKED OUT THE SALE CONSIDERATION AT RS.6,47,40,00, 000/-. 5. ON APPEAL, THE ASSESSEE HAS EXPLAINED THAT AS FA R AS ALLEGATION WITH REGARD TO NON-SUBMISSION OF SHARE CERTIFICATE, SHAR E TRANSFER FORMS FOR PURCHASE AND SALE ARE CONCERNED, THIS ASPECT FACTUA LLY IS INCORRECT. THE ASSESSEE POINTED OUT THAT THE AO HAD SENT A COMMISS ION TO ADDL.DIT(INV.), UNIT-1, NEW DELHI TO INQUIRE INTO THE FOLLOWING ISS UES: 'A COMMISSION U/S. 131(1)(D) OF THE IT ACT WAS ISSU ED TO ADDL. DIT(INV.), UNIT-1, NEW DELHI ON FOLLOWING ISSUES:- 1) DATE OF REGISTRATION OF M/S. PMC BUILDWELL P. LTD, AND ITS SHARE HOLDING FROM THE DATE OF INCORPORATION TILL DATE. 2) TOTAL AREA OF LAND OWNED BY M/S. PMC BUILDWELL P. LTD AND MARKET VALUE OF LAND AS ON 31.03.2007. 3) WHAT IS THE NEXUS BETWEEN M/S. SHAILY SURESH B APNA AND OTHER SHARE HOLDERS OF M/S. PMC BUILDWELL P. LTD AND M/S. SPAZE TOWERS P. LTD.(DISCREET ENQUIRIES CONDUCTED IN THIS CASE HAVE REVEALED THAT M/S. SHAILY SURESH BAPNA IS CLOSELY RELATED WITH THE SHA RE HOLDER OF M/S. PMC BUILDWELL P. LTD AND M/S. SPAZE TOWERS P. LTD. 4) DATE OF REGISTRATION OF M/S. SPAZE TOWERS P. L TD. AND ITS SHARE HOLDING FROM THE DATE OF INCORPORATION TILL DATE. ITA NO.1138/AHD/2012 4 5) WHAT IS THE NEXUS BETWEEN THE M/S. PMC BUILDWE LL P. LTD AND M/S. SPAZE TOWERS P. LTD.' 6. THE LD.ADIT HAD CONDUCTED AN INQUIRY AND SUBMITT ED HIS REPORT. COPY OF THE REPORT IS AVAILABLE AT PAGE NOS.35 TO 45 OF THE PAPER BOOK. THE ASSESSEE, THEREAFTER, CONTENDED THAT SHE WAS A SALA RIED PERSON. SHE HAS MADE ONLY INVESTMENT IN THESE SHARES. SHE HAS NOT CARRI ED OUT ANY BUSINESS ACTIVITIES IN THE ASSESSMENT YEAR. SHE MADE REFERE NCE TO LARGE NUMBER OF DECISIONS, WHICH HAVE BEEN REFERRED TO BY THE LD.CI T(A). 7. WITH REGARD TO THE ALLEGATION OF THE AO THAT THE ASSESSEE HAS SHOWN LESSER SALE VALUE OF THE SHARES, IT WAS CONTENDED T HAT THE AO FAILED TO TAKE NOTE OF THE LIABILITIES OF PMCB. IF THOSE LIABILITIES ARE DEDUCTED, THEN VALUE PER SHARE WOULD BE AROUND RS.9,798/-. THE ASSESSEE ALS O POINTED OUT SHE WAS HOLDING 2500 SHARES ONLY. THERE WERE OTHER TWO PER SONS WHO HELD REMAINING 7500 SHARES. IN THEIR CASE, ADDL.DIT HAS ACCEPTED SALE PRICE AT THE RATE OF RS.12,500/- PER SHARE. THE LD.CIT(A) HAS EXAMINED ALL THESE ASPECTS LUCIDLY AND ELABORATELY. THE LD.CIT(A) HAS ACCEPTED CONTEN TIONS OF THE ASSESSEE AND DIRECTED THE AO TO ACCEPT THE CLAIM OF LONG TERM CA PITAL GAIN DISCLOSED BY THE ASSESSEE AND ALSO ACCEPTED SALE PRICE OF THE SHARES EVEN FOR COMPUTING CAPITAL GAIN AT THE RATE OF RS.12,500/- PER SHARE. 8. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE T HROUGH THE RECORD CAREFULLY. THE FIRST QUESTION POSED BEFORE US IN T HE STATEMENT FACTS FILED BY THE REVENUE ALONG WITH APPEAL IS, WHETHER SOLITARY TRANSACTION OF THE ASSESSEE IN PURCHASE AND SALE OF SHARES IS TO BE TREATED AS A TRADING IN THE SHARES OR NOT?. THE ISSUE, WHETHER GAIN FROM SALE OF SHARES I S TO BE ASSESSED AS A BUSINESS INCOME OR SHORT TERM CAPITAL GAIN/LONG TER M CAPITAL GAIN, IS A HIGHLY DEBATABLE ISSUE. IT ALWAYS PUZZLED THE ADJUDICATOR EVEN AFTER AVAILABILITY OF LARGE NUMBERS OF AUTHORITATIVE PRONOUNCEMENTS BY TH E HONBLE SUPREME ITA NO.1138/AHD/2012 5 COURT/HONBLE HIGH COURT. THE REASON FOR THE PUZZL E IS, ONE HAS TO GATHER THE INTENTION OF AN ASSESSEE WHILE HE ENTERED INTO THE TRANSACTION. THE EXPRESSION INTENTION AS DEFINED IN MERIAM WEBSTER DICTIONARY MEANS, WHAT ONE INTENDS TO ACCOMPLISH OR ATTAIN, IT IMPLIES LITTLE MORE THAN WHAT ONE HAS IN MIND TO DO OR BRING OUT. IT SUGGESTS CLEAR FORMULA TION OR DELIBERATION. THUS, IT IS ALWAYS DIFFICULT TO ENTER INTO THE RECESS OF THE MIND OF AN ASSESSEE TO FIND OUT THE OPERATIVE FORCES EXHIBITING THE INTENTION F OR ENTERING INTO THE TRANSACTION. THIS WOULD GIVE RISE A DEBATE. NEVERT HELESS, WE HAVE TO LOOK INTO THE CURIOUS FEATURES OF THIS CASE WHICH WILL GOAD U S ON JUST CONCLUSION. 10. BEFORE WE EMBARK UPON AN INQUIRY ON THE FACTS O F PRESENT CASE SO AS TO FIND OUT, WHETHER ASSESSEE IS TO BE TERMED AS INVOL VING IN THE TRADING OF SHARES OR TO BE TREATED AS A SIMPLICITOR INVESTORS. WE WOULD LIKE TO REFER CERTAIN BROAD PRINCIPLE CULLED OUT BY ITAT LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE PVT. LTD. REPORTED IN 120 TTJ 216. THESE TESTS READ AS UNDER :- 13. AFTER CONSIDERING ABOVE RULINGS WE CULL OUT FO LLOWING PRINCIPLES, WHICH CAN BE APPLIED ON THE FACTS OF A CASE TO FIND OUT WHETHER TRANSACTION(S) IN QUESTION ARE IN THE NATURE OF TRA DE OR ARE MERELY FOR INVESTMENT PURPOSES: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TI ME OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED STOCK-IN-TRADE OR INVESTMENT. WHETHE R SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVEST MENT OR NON- TRADING ASSET. (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY, MONEY IS BORROWED TO P URCHASE GOODS FOR THE PURPOSE OF TRADE AND NOT FOR INVESTING IN AN AS SET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASE AND DISP OSAL IN THAT PARTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT , OR THERE ARE SUBSTANTIAL TRANSACTION IN THAT ITEM, IF WOULD INDI CATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF IN TENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PURCHASES AND SALES AN D THE HOLDINGS ITA NO.1138/AHD/2012 6 MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTI NG (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREA S LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROF IT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION ITS VALUE? FORMER WILL INDICATE INTENTION OF TRADES AND LATTER, AN INVESTM ENT. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIA L MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN TH E BALANCE SHEET? IF THE ITEMS IN QUESTION ARE VALUED AT COST , IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MARKET VALUE OR NET REALIZABLE VALUE (WHICHEVER IS LESS), IT WILL INDICATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEM ORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION? WHETHER FOR TR ADE OR FOR INVESTMENT? IF AUTHORIZED ONLY FOR TRADE, THEN WHE THER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO C ARRY OUT INVESTMENTS IN THAT COMMODITY? AND VICE VERSE. 7. IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHO W THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT D ISTINCTION HE HAS KEPT IN THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS. IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY, STOCK-IN-TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPA RENT IS NOT REAL. 8. THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHAR ES ( OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) FOR INVESTMENT. 9. ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISITE S FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE A SSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS, IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM? WHETHER IT HAD SUCH AN I NTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR W HEN PURCHASES WERE MADE? 10. IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 OF 2007 OF 15 TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIO S, ONE FOR TRADING ITA NO.1138/AHD/2012 7 AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR B OTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. 11. NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EF FECT OF SEVERAL FACTORS HAS TO BE SEEN. 11 . THE HONBLE GUJARAT HIGH COURT HAD ALSO AN OCCASI ON TO CONSIDER THIS ISSUE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RIVA SHARKAR A KOTHARI REPORTED IN 283 ITR 338. HONBLE COURT HAS MADE RE FERENCE TO THE TEST LAID BY IT IN ITS EARLIER DECISION RENDERED IN THE CASE OF PARI MANGALDAS GIRDHARDAS VS. CIT REPORTED IN 1977 CTR 647. THESE TESTS READ AS UNDER: AFTER ANALYZING VARIOUS DECISIONS OF THE APEX COUR T, THIS COURT HAS FORMULATED CERTAIN TESTS TO DETERMINE AS TO WHETHER AN ASSESSEE CAN BE SAID TO BE CARRYING ON BUSINESS. (A) THE FIRST TEST IS WHETHER THE INITIAL ACQUISITION O F THE SUBJECT-MATTER OF TRANSACTION WAS WITH THE INTENTION OF DEALING IN THE ITEM, OR WITH A VIEW TO FINDING AN INVESTMENT. IF THE TRANSACTION, SINCE THE INCEPTION, APPEARS TO BE IMPRESSED WITH THE CHARACT ER OF A COMMERCIAL TRANSACTION ENTERED INTO WITH A VIEW TO EARN PROFIT, IT WOULD FURNISH A VALUABLE GUIDELINE. (B) THE SECOND TEST THAT IS OFTEN APPLIED IS AS TO WHY AND HOW AND FOR WHAT PURPOSE THE SALE WAS EFFECTED SUBSEQUENTLY. (C) THE THIRD TEST, WHICH IS FREQUENTLY APPLIED, IS AS TO HOW THE ASSESSEE DEALT WITH THE SUBJECT-MATTER OF TRANSACTION DURING THE TIME THE ASSET WAS THE ASSESSEE. HAS IT BEEN TREATED AS STOCK-IN- TRADE, OR HAS IT BEEN SHOWN IN THE BOOKS OF ACCOUNT AND BALANCE SHEE T AS AN INVESTMENT. THIS INQUIRY, THOUGH RELEVANT, IS NOT CONCLUSIVE. (D) THE FOURTH TEST IS AS TO HOW THE ASSESSEE HIMSELF HAS RETURNED THE INCOME FROM SUCH ACTIVITIES AND HOW THE DEPARTMENT HAS DEALT WITH ITA NO.1138/AHD/2012 8 THE SAME IN THE COURSE OF PRECEDING AND SUCCEEDING ASSESSMENTS. THIS FACTOR, THOUGH NOT CONCLUSIVE, CAN AFFORD GOOD AND COGENT EVIDENCE TO JUDGE THE NATURE OF THE TRANSACTION AND WOULD BE A RELEVANT CIRCUMSTANCE TO BE CONSIDERED IN THE ABSEN CE OF ANY SATISFACTORY EXPLANATION. (E) THE FIFTH TEST, NORMALLY APPLIED IN CASE OF PARTNER SHIP FIRMS AND COMPANIES, IS WHETHER THE DEED OF PARTNERSHIP OR TH E MEMORANDUM OF ASSOCIATION, AS THE CASE MAY BE, AUTHORIZES SUCH AN ACTIVITY. (F) THE LAST BUT NOT THE LEAST, RATHER THE MOST IMPORTA NT TEST, IS AS TO THE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRA NSACTION OF PURCHASE AND SALE OF THE GOODS CONCERNED. IN A CAS E WHERE THERE IS REPETITION AND CONTINUITY, COUPLED WITH THE MAGNITU DE OF THE TRANSACTION, BEARING REASONABLE PROPOSITION TO THE STRENGTH OF HOLDING THEN AN INFERENCE CAN READILY BE DRAWN THAT THE ACTIVITY IS IN THE NATURE OF BUSINESS. 12. BEFORE ADVERTING TO THE FACTS, WE WOULD LIKE TO MAKE REFERENCE TO THE FINDING OF THE LD.CIT(A) IN THIS CONNECTION. IT RE ADS AS UNDER: IN THE LIGHT OF THE LEGAL PROVISIONS EXPLAINED BY D IFFERENT COURTS AS ABOVE, IT HAS TO BE SEEN WHAT THE FACTS APPLICABLE IN THE CASE OF ASSESSEE ARE. THE ASSESSEE IS MAINTAINING HER PORTFOLIO BY T REATING THE SHARES AS INVESTMENT; NO SALE TRANSACTIONS OF SHARES HAVE BEE N MADE EXCEPT THE SALE OF SHARES OF PMC BUILDWELL P. LTD DURING THE Y EAR UNDER CONSIDERATION; SHARES HAVE BEEN PURCHASED FROM THE OWN SAVINGS NOT FROM THE BORROWED FUNDS; SHARES WERE HELD FOR THE P ERIOD MORE THAN TWELVE MONTHS; THESE SHARES REFLECT IN THE BALANCE SHEET AS INVESTMENT NOT THE STOCK IN TRADE AND THE INTENTION OF ASSESSE E HAS BEEN THAT OF MAKING INVESTMENT IN SHARES AND NOT DEALING IN SHAR ES AS REFLECTED FROM THE DETAILS FILED IN THE RETURN OF INCOME. IN VIEW OF THESE FACTS, SALE ON SHARES OF PMC BUILDWELL P. LTD TRANSACTIONS HAS TO BE TREATED LONG TERM CAPITAL GAIN NOT THE BUSINESS INCOME AS HELD B Y AO. MOREOVER, THE CIRCULAR NO. 4 DATED 15.06.2007 OF CBDT NEW DEL HI HAS ALSO LAID DOWN CERTAIN TESTS FOR MAKING DISTINCTION BETWEEN S HARES HELD AS STOCK ITA NO.1138/AHD/2012 9 IN, TRADE AND SHARES HELD AS INVESTMENT. TESTS LAID IN THIS CIRCULAR ARE THAT THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE MA NNER OF MAINTAINING THE BOOKS OF ACCOUNT, THE MAGNITUDE OF PURCHASE & S ALES AND THE RATIO BETWEEN PURCHASES AND SALES AND HOLDING OF SHARES W OULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTIONS. ORDINARILY, THE PURCHASE & SALES OF SHARES WITH THE MOTIVE OF EARNI NG PROFIT WOULD RESULT IN THE TRANSACTIONS BEING IN NATURE OF TRADE / ADVENTURE IN NATURE OF TRADE; BUT WHERE THE OBJECT OF INVESTMENT IN SHA RES OF A COMPANY IS TO THE DERIVE INCOME BY WAY OF DIVIDENDS ETC. THEN THE PROFITS ACCRUING BY SALE OF THE SHARES WILL YIELD CAPITAL GAINS AND NOT REVENUE RECEIPT. IF THE FACTS OF THE ASSESSEE'S CASE ARE TESTED ON THES E GUIDING PRINCIPLES THEN IT COMES OUT THAT THE INVESTMENT MADE BY NE AS SESSEE IN THE SHARES OF THIS PRIVATE LIMITED COMPANY WAS IN THE NATURE O F CAPITAL INVESTMENT. THIS WAS THE SOLITARY TRANSACTION OF SALE OF SHARES DURING THE YEAR. AS THERE IS NO OPEN MARKET FOR SELLING THESE SHARES AN D THERE WERE RESTRICTIONS ON TRANSFER OF THESE SHARES BEING SHAR ES OF A PRIVATE LIMITED COMPANY, IT CANNOT BE SAID THAT THE MOTIVE WAS TO E ARN PROFIT BY RE- SELLING THE SAME. THE ARGUMENTS OF THE ASSESSEE THA T DUE TO INCREASE IN THE VALUE OF THE ASSETS (LAND) HELD BY THE COMPANY AND DUE TO LEVERAGE EFFECT OF BORROWED FUNDS, THE VALUE OF SHAREHOLDING OF ASSESSEE INCREASED MANIFOLD. IN SUCH A SITUATION, MERELY BEC AUSE THE ASSESSEE COULD SELL THESE SHARES AT A VERY GOOD PRICE IT CAN NOT BE SAID THAT THE MOTIVE BEHIND THIS INVESTMENT WAS TO EARN THE PROFI TS BY RE-SELLING. THE VERY FACT THAT THERE ARE RESTRICTIONS ON TRANSFER O F SHARES OF PRIVATE LIMITED COMPANY AND THERE IS NO READY MARKET FOR SA LE OF THESE SHARES GOES IN FAVOR OF THE ASSESSEE. THE RATIO OF PURCHAS E & SALE PRICE IS ALSO VERY HIGH WHICH INDICATE THAT THIS WAS CASE OF INVE STMENT. THE CRITERION OF MAGNITUDE OF TRANSACTION ALSO GOES IN FAVOR OF A SSESSEE. THUS, IF THE FACTS OF ASSESSEE'S CASE ARE EXAMINED ON THE TESTS LAID DOWN IN CIRCULAR NO. 4 DATED 15.06.2007 THEN IT WILL BE CLEAR THAT T HESE SHARES WERE HELD BY THE ASSESSEE AS AN INVESTMENT (CAPITAL ASSETS) A ND NOT AS STOCK IN TRADE. THEREFORE, PROFITS AND GAINS ARISING FROM TR ANSFER OF THESE SHARES ARE ASSESSABLE AS 'CAPITAL GAINS' NOT THE 'BUSINESS INCOME'. 13. THE FIRST REASON ASSIGNED BY THE AO FOR HARBOUR ING A BELIEF THAT LONG TERM CAPITAL GAIN MADE BY THE ASSESSEE ON SALE OF S HARES IS NOT ACCEPTABLE, IS BASED ON THE FACT THAT, ASSESSEE HAS NOT PRODUCED C OPIES OF SHARE CERTIFICATE AND SHARE TRANSFER FORMS FOR PURCHASE AND SALE. ON VERIFICATION OF THESE EVIDENCES, WE FIND THAT IT IS FACTUALLY INCORRECT. AS OBSERVED EARLIER, THE AO HAS ISSUED A COMMISSION TO LD.ADDL.DIT, DELHI FOR M AKING INQUIRIES. THE ITA NO.1138/AHD/2012 10 LD.ADIT HAS MADE AN INQUIRY AND SUBMITTED HIS REPOR T VIDE LETTER DATED 7.12.2011, WHICH APPEARS TO HAVE BEEN RECEIVED IN T HE OFFICE OF THE AO AFTER PASSING OF THE ASSESSMENT ORDER, AND DUE TO THIS RE ASON, THE AO HAS MADE THE ABOVE OBSERVATION. BEFORE THE COMMISSION, ALL THE DETAILS WITH REGARD TO PMCB AND M/S.SPAZE TOWERS P. LTD. WERE SUBMITTED. SHRI K.S. TANWAR WAS HOLDING 5000 SHARES OF PMCB. SIMILARLY, SHRI PARAS BADHWAR WAS HOLDING 2500 SHARES. THE ASSESSEE WAS HOLD HOLDING 2500 SHARES. PMCB WAS HUNDRED PERCENT SUBSIDIARY COMPANY OF M/S.SPAZE TOWERS LTD. THE LD. ADIT DID NOT DOUBT ON THE TRANSACTION. HE HAS REFE RRED TO STATEMENT OF ALL CONCERNED PERSONS AND ALSO MADE INQUIRY WITH OTHER TWO SHARE HOLDERS. HE MADE REFERENCE TO THE REPLIES GIVEN BY SHRI K.S. TA NWAR AND SHRI PARAS BADHWAR. HE ALSO RECORDED STATEMENT OF THE ASSESSE E. THIS REPORT IS ON THE RECORD. THE LD.CIT(A) HAS CONSIDERED THIS REPORT. OTHER REASONS ASSIGNED BY THE AO ARE BASED ON SUSPICION ONLY. HE HIMSELF FAI LED TO COLLECT ANY MATERIAL FOR DEMONSTRATING THE FACT THAT THESE TRANSACTION A S A PRE-ARRANGED TRANSACTION. THERE MIGHT BE VARIOUS REASONS FOR ALL OF SUDDEN IN CREASE IN THE PRICE OF THE SHARES. ONE POSSIBLE REASON COULD BE PERMISSION TO CONSTRUCT A TOWER ON THE LAND OWNED BY PMCB. EVEN A SINGLE TRANSACTION CA N BE TREATED AS A VENTURE INTO A TRADE, BUT THE AO FAILED TO POINT OU T THOSE PECULIAR CIRCUMSTANCES. REASONS GIVEN BY THE LD.CIT(A) IN T HE FINDING EXTRACTED SUPRA WOULD INDICATE THAT THE ASSESSEE HAS NOT BORROWED F UNDS FOR MAKING INVESTMENT. SHE HAS NOT SHOWN SHARES AS STOCK-IN-T RADE. SHE DID NOT TAKE HELP OF EXPERTS; SHE DID NOT INCUR ANY EXPENDITURE TOWARDS SELLING CONSULTANCY OR MAINTAINING OF ANY OFFICE. SHE HAS NOT PURCHASE D SHARES OF ANY OTHER COMPANIES IN THIS PERIOD. THUS, FACTS EMERGE OUT F ROM THE RECORD, IF WE EXAMINE IN THE LIGHT OF VARIOUS TESTS PROPOUNDED BY THE HONBLE JURISDICTIONAL HIGH COURT AS WELL AS BY THE ITAT IN THE CASE OF SA RNATH INFRASTRUCTURE PVT. LTD., 10 TTJ 216, THEN IT WOULD REVEAL THAT THELD.C IT(A) HAS TAKEN A CORRECT VIEW OF TREATING THE TRANSACTION AS SIMPLICITOR INVESTMENT. ITA NO.1138/AHD/2012 11 14. THE NEXT FOLD OF DISPUTE IS WHETHER THE AO WAS JUSTIFIED IN TAKING SALE VALUE OF SHARES AT RS.25,896/- PER SHARE. THE AO H AS OBSERVED THAT PMCB WAS OWNER OF A LAND ADMEASURING 10.79 ACRES. HE TO OK THE VALUE OF THIS LAND AT RS.25,89,60,000/- AND DIVIDED THIS VALUE BY THE TOTAL NUMBER OF SHARES ISSUED BY THE COMPANY. IN THIS WAY, HE WORKED OUT THE VALUE PER SHARE AT RS.25,896/-. ON THE OTHER HAND, THE LD.CIT(A) HAS OBSERVED THAT THE AO HAS COMMITTED AN APPARENT ERROR BY ESTIMATING THE VALUE OF SHARES AT RS.25,89,60,000/-. THE LD.CIT(A) HAS OBSERVED THAT THE AO HAS NOT TAKEN INTO CONSIDERATION THE LIABILITIES OF PMCB, AND I F THESE LIABILITIES ARE TAKEN INTO CONSIDERATION, THEN THE VALUE PER SHARE WOULD BE WORKED OUT AT THE RATE OF RS.9798/-. THE ASSESSEE HAS SHOWN SALE VALUE OF THE SHARES AT RS.12,500/-. THE FINDING RECORDED ON THIS ISSUE IS WORTH TO NOTE . IT READS AS UNDER: 5.5 THE NEXT ISSUE INVOLVE IN THIS GROUND IS TH E ESTIMATION OF MARKET VALUE OF SHARES. THE AO HAS WORKED OUT THE VALUE OF SHARES AT RS.25,896/- PER SHARE AGAINST THE SALE PRICE OF RS. 12,500/- PER SHARE SHOWN BY APPELLANT. THE REASONS GIVEN BY AO ARE THA T THE SALE PRICE OF SHARES OF M/S. PMC BUILDWELL P. LTD AT RS .12,500/- PER SHARE, IN FACT, REPRESENTS MARKET VALUE OF THE PROPERT Y OWNED BY M/S. PMC BUILDWELL P. LTD AT GURGAON AS THE COMPANY DOES NOT HAVE ANY RESERVES AS ON 31.03.2008 TO ENHANCE T HE VALUE OF ITS SHARES. BY TAKING IN TO ACCOUNT THAT GURGAON IS ONE OF THE COSTLIEST CITIES SO FAR AS PRICES OF REAL ESTATE ARE CONCERNED, AO ESTIMATED THE VALUE OF LAND OWNED BY M/ S. PMC BUILDWELL P. LTD AT RS.5,000/- PER SQ. YARD AND WORKED OUT THE AGGREGATE VALUE OF TOTAL LAND A T RS.25,89,60,000/- AND, IN THIS PROCESS, WORKED OUT THE VALUE OF SHARES O F COMPANY AT RS.25,896/- PER SHARE. NOW THE QUESTION ARISES WHETHER AO CAN ESTIMATE THE VALUE OF SHARES AT HIGHER P RICES AGAINST THE RATES APPELLANT HAS SHOWN IN THE RETURN OF INCOME IF THE INCOME IS COMPUTED UNDER THE HEAD 'BUSI NESS -COME'. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. NILOFE R I. 5INGH (309 ITR 233), FOLLOWING THE JUDGMENTS OF HON'BLE SUPREME CO URT IN THE CASES CIT VS. INCOME IF THE INCOME IS COMPUTED UNDER THE HEAD BUSINESS INCOME. HONBLE DELHI HIGH COURT IN THE CASE OF C IT VS. SMT. NILOFER I. SINGH (309 ITR 233), FOLLOWING THE JUDGMENTS OF HONBLE SURPEME ITA NO.1138/AHD/2012 12 COURT IN THE CASES OF GILLENDERS ARBUTHNOT AND CO. (87 ITR 407) AND CIT VS. | GEORGE HENDERSON AND CO. LTD (66 ITR 62 2), HAS HELD THAT IN THE CASE OF SALE PRICE OF ASSET, THERE WOULD BE NO QUESTION OF ANY MARKET VALUE AND ALL THAT ONE HAS TO SEE THAT WHAT IS THE CONSIDERATION BARGAINED FOR. THUS, EVEN IF PRESUMING THAT THE SHA RE TRANSACTIONS ARE BUSINESS IN NATURE, MARKET RATE CANNOT BE APPLIED I N ABSENCE OF ANY COGENT MATERIAL OR EVIDENCE AVAILABLE IN POSSESSION OF AO. IN THE CASE OF APPELLANT, AO HAS ESTIMATED THE VALUE OF SHARES BY GIVING A GENERAL STATEMENT THAT THE CITY GURGAON IS ONE OF THE COSTL IEST CITIES OF THE COUNTRY THEREFORE ESTIMATION OF RS.5,000/- PER SQ. YARD IS REASONABLE. AO HAS NO COMPARABLE CASE OR ANY SPECIFIC INFORMATI ON THAT THE APPELLANT HAS RECEIVED MONEY OVER AND ABOVE WHAT TH E APPELLANT HAS SHOWN IN THE RETURN OF INCOME. MOREOVER, WHILE ESTI MATING THE MARKET VALUE OF SHARES OF COMPANY, AO HAS SIMPLY FORGOTTEN TO REDUCE THE COST VALUE / BOOK VALUE OF THE PROPERTY, OWNED BY M/S. P MC BUILDWELL P. LTD, FROM THE SALE VALUE. AS THE APPELLANT HAS ALSO SUBMITTED DURING APPELLATE PROCEEDINGS THAT THE AO HAS MADE APPARENT MISTAKE IN CALCULATING THE VALUE OF THESE SHARES AT RS.25,896/ - PER SHARE. THE APPELLANT HAS GIVEN A CHART TO PROVE THAT EVEN IF V ALUE OF LAND HELD BY M/S. PMC BUILDWELL P. LTD IS TAKEN AS PER PREVAILIN G MARKET RATE, THE CORRECT VALUE OF SHARES WORKS OUT T O BE RS.9,798/- PER SHARE, NOT RS. 25,896/- AS ESTIMATED BY AO. THE WOR KING GIVEN BY APPELLANT IS AS UNDER: ASSETS & LIABILITIES OF PMC BUILDWELL PVT. LTD. AS PER BALANCE SHEET AS ON 31ST MARCH, 2008 VALUE OF SHARE TAKING LAND VALUE AS ADOPTED BY ID.A.O. BOOK VALUE AS ON 31ST MARCH, 2008 ASSETS:- 1. CASH & BANK BALANCES 3,80,29,742 3,80,29,742 2. LOANS & ADVANCES 1,09,47,185 1,09,47,185 3. INVENTORIES (LAND)* 25,89,60,000 16,16,24,278 4. PRELIMINARY & PRE- OPERATIVE EXPENSES 30,523 30,523 TOTAL ASSETS (1+2+3) (A) 30,79,67,450 21,06,31,728 ITA NO.1138/AHD/2012 13 LESS:- LIABILITIES & PROVISIONS (B) 20,99,88,741 20,99,88,741 NET WORTH OF THE COMPANY (A-B) (C) 9,79,78,709 6,42,987 NO. OF SHARES (D) 10,000 10,000 VALUE PER SHARE (C/D) 9797.87 64.30 IT CAN BE SEEN FROM ABOVE WORKING, AO HAS COMMITTED APPARENT MISTAKE OF NOT DEDUCTING THE LIABILITIES FROM THE F AIR MARKET VALUE OF THE ASSETS OF THE SAID COMPANY. THE VALUE HAS BEEN ARRI VED AT BY AO BY ONLY CONSIDERING THE VALUE OF LAND WITHOUT DEDUCTIN G LIABILITIES THEREFROM. IN THIS WAY, THE VALUE PER SHARE IS WORK ED OUT @ RS.9,798/- WHICH IS LESS THAN WHAT THE APPELLANT HAS SHOWN IN THE RETURN OF INCOME. THESE FACTS AND THE WORKING GIVEN BY APPELL ANT HAS NOT BEEN REJECTED OR CONTROVERTED BY AO IN THE REMAND REPORT SUBMITTED BY HIM. EVEN THE ITO (INV.), IN HIS REPORT, HAS NOT GIVEN A NY ADVERSE FINDINGS ON THE VALUATION OF PROPERTY OWNED BY THE M/S. PMC BUILDWELL P. LTD OR FOR THAT MATTER, THE VALUATION OF SHARES. TH E BUYER OF THE SHARES HAS ALSO CONFIRMED THAT THESE SHARES WERE PURCHASED AT THE RATE OF RS. 12,5007- PER SHARE. THUS, IN VIEW OF THESE FACTS, E VEN IF THE SHARE TRANSACTIONS ARE TREATED IN THE NATURE OF TRADE OR BUSINESS, THE VALUATION PER SHARE @ RS.25,896/- ESTIMATED BY AO I S ON THE WRONG BASIS. 5.6 IN THE ASSESSMENT ORDER, IT HAS BEEN HELD BY AO THAT ALL THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES OF M/S. PMC BUILDWELL P. LTD BY APPELLANT WERE PREARRANGED OR STAGE MANAGED AND IT WAS NOT A MERE COINCIDENCE AND THE INTENTION OF ENTERING IN T O THESE TRANSACTIONS WAS EARNING PROFIT ONLY. HOWEVER, THE AO HAS FAILED TO SUBSTANTIATE THIS CONCLUSION DRAWN BY HIM IN ABSENCE OF ANY SPECIFIC MATERIAL OR EVIDENCE. TO EXAMINE THIS ASPECT OF TRANSACTIONS, C OMMISSION U/S.131(1)(D) WAS ISSUED BUT THE ITO (INV.), UNIT-V (3), NEW DELHI, IN HIS REPORT, AFTER RECORDING THE STATEMENTS OF RELEV ANT PERSONS AS WELL AS EXAMINING THE TRANSACTIONS ENTERED INTO, DID NOT GI VE ANY FINDING TO SHOW THAT THESE WERE THE PREARRANGED OR STAGE MANAG ED TRANSACTIONS. IN HIS REMAND REPORT DATED 10.02.2012, AO ALSO HAS REPEATED THE FACTS OF ASSESSMENT ORDER BUT FAILED TO GIVE ANY SPECIFIC REASON TO HOLD THAT ITA NO.1138/AHD/2012 14 THESE TRANSACTIONS ARE PREARRANGED OR STAGE MANAGED . ON THE OTHER HAND, APPELLANT HAS SHOWN LONG TERM CAPITAL GAIN OF RS.3,12,25,000/- IN THE RETURN OF INCOME AND PAID TAXES ON THAT AND AO HIMSELF HAS ASSESSED THIS INCOME UNDER THE HEAD BUSINESS INCOME . TREATING THE TRANSACTIONS AS SHAM AND ASSESSING THE SAME AS A TA XABLE BUSINESS INCOME, BOTH ARE CONTRADICTORY. INVESTIGATION CONDU CTED BY ITO (INV.) ALSO DOES NOT SUPPORT THE THEORY OF AO. IN VIEW OF THESE FACTS, IT IS HELD THAT TRANSACTIONS ENTERED IN TO BY APPELLANT ARE GE NUINE IN NATURE. 5.7 IN THE ASSESSMENT ORDER, AO HAS PROPOSED TO ASS ESS THE INCOME ON ACCOUNT OF AFORESAID SHARE TRANSACTIONS, EITHER AS BUSINESS INCOME OR AS SHORT TERM CAPITAL GAIN. SO FAR AS THE ISSUE OF CAPITAL GAINS VIS-A- VIS BUSINESS INCOME IS CONCERNED, IT HAS ALREADY BE EN DISCUSSED IN THE ABOVE PARAGRAPHS. ON THE ISSUE OF ASSESSING AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN ON THE PROFIT ACCRUING O N SALE OF SHARES, FACTS STATED BY APPELLANT IN THE SUBMISSIONS AND THE REPO RT OF ITO (INV.), NEW DELHI ARE RELEVANT. AS PER THESE, SHARES OF M/S. PM C BUILDWELL P. LTD WERE PURCHASED BY APPELLANT ON 05.10.2006 AND SOLD ON TWO DATES I.E. 27.11.2007 AND 28.01.2008. SINCE THE APPELLANT HAS HELD THESE SHARES FOR MORE THAN TWELVE MONTHS, INCOME HAS TO BE COMPU TED AS 'LONG TERM CAPITAL GAIN' AND TAXED ACCORDINGLY. 15. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX ACT PROVID ES MODE OF COMPUTATION OF CAPITAL GAIN. THIS SECTION CONTEMPLATES THAT IN COME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF CAPITAL ASSETS THE FOLLOWING AMOUNTS, VIZ. (A)., AND (B) THE ASS ESSEE HAS SHOWN FULL VALUE OF THE CONSIDERATION AS RS.12,500/- PER SHARE . THE LD.AO INTENDS TO CHANGE THIS FULL VALUE OF THE CONSIDERATION. IN HI S EFFORTS, HE MADE REFERENCE TO THE LAND HOLDING OWNED BY PMCB. HE CONSIDERED THE VALUE OF SUCH LAND HOLDING, AND DIVIDED THAT HOLDING WITH TOTAL NUMBER OF SHARES ISSUED BY THE COMPANY. WHAT IS THE BASIS OF CHANGING THIS PATTER N ? THERE IS NO EVIDENCE WITH THE AO THAT THE ASSESSEE HAS RECEIVED MORE VAL UE THAN THE ONE DISCLOSED BY HER. UNLESS HE POSSESSES SOME EVIDENCES, DEMONS TRATING THE FACT THAT FULL VALUE OF THE CONSIDERATION DISCLOSED BY THE ASSESSE E WAS INCORRECT, HE CANNOT ITA NO.1138/AHD/2012 15 REPLACE THAT VALUE BY ESTIMATION OR ON THE BASIS OF HIS OWN ESTIMATION. IT IS ALSO PERTINENT TO MENTION THAT HIS ESTIMATION IS AL SO NOT BASED ON CONSTRUCTION OF FACTS IN RIGHT PERSPECTIVE. THE LD.CIT(A) HAS R ECORDED THAT HE FAILED TO CONSIDER LIABILITIES OF PMCB. HAD THESE LIABILIT IES BEEN DEDUCTED AGAINST THE TOTAL VALUE OF THE LAND, AND THE VALUE OF THE S HARES WERE WORKED OUT, THAT VALUE WOULD BE LESSER THAN THE ONE SHOWN BY THE ASS ESSEE. THE LD.CIT(A) HAS EXAMINED BOTH THESE ISSUES ELABORATELY, AND AFTER G OING THROUGH THE FINDING OF THE LD.CIT(A), WE DO NOT SEE ANY REASON TO INTERFER E IN IT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST SEPTEMBER, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/09/2016