The ITO, Ward-7(1), Ahmedabad V. Shri Jaydeep R.Agrawal, Ahmedabad

ITA 1274/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8632 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Salary income; Rule of consistency
• Section: 132

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.1274 AND 1846/AHD/2011 / ASSTT. YEAR: 2007-08 AND 2008-09 ITO, WARD - 7(1) AHMEDABAD. VS SHRI JAYDEEP R. AGRAWAL 70, VASANT BAHAR COLONY BOPAL, AHMEDABAD. PAN : AGMPA 5249 D ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI ROOPCHAND, SR ASSESSEE(S) BY : SHRI S.N.SOPARKAR, AR / DATE OF HEARING : 28/01/2015 / DATE OF PRONOUNCEMENT: 02/02/2015 $%/ O R D E R PER BENCH: THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S)-VI, AHMEDABAD DATED 28.2.2011 FOR ASSTT.YEAR 2007-08 AND 19.5.201 1 FOR ASSTT.YEAR 2008-09. IN BOTH THE APPEALS, THE REVENUE HAS TAKE N THE FOLLOWING COMMON GROUNDS OF APPEALS: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO TREAT THE INCOME OF RS.59,97,410/- FOR A.Y.20 07-08 AND RS.67,08,965/- FOR A.Y.2008-09 FROM TRANSACTION THR OUGH PMS AND MARKET BROKER AS CAPITAL GAIN, INSTEAD OF BUSIN ESS INCOME AS ASSESSED BY AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. ITA NO.1846/AHD/2011 - 2 2 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D.CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT IN ASSTT.YEAR 2 007-08, THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN INCOME FROM PURCHASE AND SALE OF SHARES IN NO RMAL TRADES OF RS.7,67,170/- AND THROUGH PORTFOLIO MANAGEMENT SCHE ME (PMS) OF RS.52,30,240/- AGGREGATING TO RS.59,97,410/-. HE O BSERVED THAT IN ASSTT.YEAR 2006-07, THE ASSESSEE HAS INDULGED IN SI MILAR MODUS OPERANDI OF TRANSACTIONS IN SHARES THROUGH PMS AND THROUGH N ORMAL SALES THROUGH BSE/NSE IN RESPECT OF SALE OF EQUITIE S. AFTER CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE, THE CLAIM OF T HE ASSESSEE FOR THE SHORT TERM AS WELL AS LONG TERM CAPITAL GAIN WAS RE JECTED AND TAXED ACCORDINGLY TREATING THE SAME AS BUSINESS INCOME. 3. ON APPEAL, THE CIT(A) ACCEPTED THE APPEAL OF THE ASSESSEE, AND DIRECTED THE AO NOT TO TREAT THESE TRANSACTION AS B USINESS AS AGAINST CAPITAL GAIN DISCLOSED BY THE ASSESSEE BY OBSERVING AS UNDER: 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER TREAT ED INCOME FROM SHARE TRANSACTIONS DONE THROUGH PMS AND STOCK EXCHA NGE AS BUSINESS INCOME AS AGAINST CAPITAL GAIN DISCLOSED B Y THE APPELLANT. APPELLANT SUBMITTED THAT SIMILAR ISSUE C AME UP BEFORE MY LEARNED PREDECESSORS AND IT WAS HELD THAT TRANSA CTIONS WERE IN THE NATURE OF INVESTMENT AND RESULT OF THE SAME WER E TAXABLE IN THE CAPITAL GAIN HEAD AS AGAINST BUSINESS INCOME TR EATED BY THE ASSESSING OFFICER. THE RELEVANT EXTRACT OF THE ORDE R IS QUOTED BY THE APPELLANT IN THE SUBMISSION. APPELLANT FURTHER SUBMITTED THAT JURISDICTION ITATS ORDER IS ALSO QUOTED IN THE APP ELLANT'S OWN CASE IN EARLIER YEAR HELD THAT APPELLANT WAS MAKING INVE STMENT IN SHARES AND THE SAME WERE NOT SHOWN AS STOCK IN TRAD E AND THEREFORE THE RESULT IS TAXABLE AS CAPITAL GAIN AND NOT BUSINESS INCOME. RELEVANT EXTRACT OF THE ITAT'S ORDER IS ALS O QUOTED IN THE APPELLANT'S SUBMISSION. SINCE TRANSACTIONS IN THIS YEAR ARE ALSO IDENTICAL, THESE GROUNDS ARE COVERED IN FAVOUR OF A PPELLANT BY THE ORDER OF MY LEARNED PREDECESSORS AND ALSO BY JURISD ICTIONAL ITAT. RESPECTFULLY FOLLOWING THE SAME, ASSESSING OFFICER IS DIRECTED NOT TO TREAT THESE TRANSACTIONS AS BUSINESS AS AGAINST CAPITAL GAIN DISCLOSED BY THE APPELLANT. THESE GROUNDS ARE THERE FORE ALLOWED. ITA NO.1846/AHD/2011 - 2 3 4. SIMILARLY, IN ASSTT.YEAR 2008-09 ALSO, THE AO FO R SIMILAR REASON IN THE PRECEDING ASSTT.YEAR 2007-08, AND 2006-07, HELD THAT THE ASSESSEE HAS INDULGED IN THE SIMILAR MODUS OPERANDI OF TRANSACTIONS IN SHARES THROUGH PMS AND NORMAL SALES THROUGH BSE/NSE IN RES PECT OF SALE OF EQUITIES, AND HELD THAT GAIN FROM TRANSACTIONS WAS NOT SHORT-TERM AND LONG TERM CAPITAL GAINS, BUT WAS BUSINESS INCOME OF THE ASSESSEE, THEREFORE, HE TAXED THE GAINS FROM THESE TRANSACTIO NS AS BUSINESS INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) ACCEPTED THE APPEAL OF THE ASSESSEE AND DIRECTED THE AO TO RECALCULATE THE INCOME FROM BUSI NESS AND INCOME FROM CAPITAL GAIN IN THE LIGHT OF HIS DECISION BY O BSERVING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER TREATED L ONG-TERM AND SHORT-TERM CAPITAL GAIN DISCLOSED BY THE APPELLANT AS BUSINESS PROFIT ON THE GROUND THAT APPELLANT WAS NOT MAKING INVESTMENT BUT TRADING IN SHARES. ON THE IDENTICAL FACTS, ITAT AHMEDABAD IN THE CASE OF SHRI SUGAM CHAND C SHAH VS AC1T, CIRCLE - 3 , SURAT IN ITA NOS 3554/AHD/2008 FOUR AY 2005-06 AND 1932/AHD/ 2009 FOR AY 2006-07 HELD THAT IN CASES THE SHARES ARE HELD F OR MORE THAN 30 DAYS, THE TRANSACTION HAS TO BE CATEGORISED AS A N INVESTMENT TRANSACTION WHEREAS THE SALES HELD FOR A PERIOD UP TO 30 DAYS, THE SAME SHALL BE TREATED AS BUSINESS TRANSACTIONS. IN ARRIVING AT THIS DECISION, THE ITAT AHMEDABAD HAS CONSIDERED SEVERAL DECISIONS OF VARIOUS BENCHES OF ITAT, HIGH COURTS AND SUPREME CO URT. THE ITAT AHMEDABAD HAS ALSO CONSIDERED THE CIRCULAR ISS UED BY THE CENTRAL BOARD OF DIRECT TAXES AND HAS COME TO THIS CONSIDERED FINDING. THE RELEVANT EXTRACT OF THIS ORDER IS QUOT ED BELOW- THE SHARES WHICH ARE SOLD OUT OF SUCH INVESTMENT T HIS YEAR WERE MOSTLY PURCHASED A YEAR OR EARLIER SHOWING THA T THE ASSESSEE HAD INTENTION WHILE PURCHASING THEM TO HOL D THEM AND THEY WERE REFLECTED IN THAT BALANCE-SHEET AS INVESTMENT. THE ASSESSEE HAS ENJOYED DIVIDEND INCOM E AND DECLARED THE SAME IN THE RETURN OF INCOME TRADING T HE TRANSACTIONS AS INVESTMENT, EVEN IF FREQUENCY OF SE LLING OF SHARES MAY BE MORE BUT IN RESPECT OF SHARES HELD FO R A CONSIDERABLE LONGER PERIOD (FOR MORE THAN 366 DAYS) AS PER FINDING GIVEN BY THE LEARNED CIT(APPEALS). THIS FIN DING ITA NO.1846/AHD/2011 - 2 4 REMAINED UNCONTROVERTED. THE ASSESSEE HAS EARNED GA IN OF RS.37,52,281/-, ON SALE OF THOSE SHARES WHICH WERE HELD FOR MORE THAN 366 DAYS AND UPTO 6832 DAYS. IN ANY CASE, WHEN THOSE SHARES WERE PURCHASED IT COULD NOT BE SAID TH AT INTENTION OF THE ASSESSEE WAS TO DEAL IN THEM AND N OT TO HOLD THEM AS INVESTMENT. EVEN IN THE CASE OF INVEST MENT IT IS FOR THE ASSESSEE TO DECIDE WHEN TO DISPOSE THEM OFF SO THAT TO GIVE MAXIMUM RETURN OUT OF THEM. THERE IS N O THEORY THAT ASSET HELD LONG-TERM BASIS SHOULD BE SO LD ONLY AT THE TIME OF NEED ON IN EMERGENCY. HE CAN VERY WE LL SALE THE INVESTMENTS TO REAP THE BENEFIT WHEN PRICES OF SHARES ARE HIGH SO AS TO EARN BETTER GAINS AND MAKE INVEST MENT ELSEWHERE. IN OUR CONSIDERED' VIEW, IT IS THE DECIS ION OF THE ASSESSEE TO DISPOSE OF AN INVESTMENT, IF ACCORDING TO HIM, MARKET VALUE THEREOF HAVE REACHED A PLATEAU SO AS T O MAKE INVESTMENT IN OTHER ASSETS WHICH HAVE POTENTIAL OF APPRECIATION IN MARKET VALUE. THIS DECISION TO SALE HIS INVESTMENT AT HIGH MARKET PRICE CANNOT CONVERT AN OTHERWISE INVESTMENT INTO TRADING. IF IN THE PAST, THE DEPARTMENT HAS ACCEPTED THE SALE OF SHARES OF HOLDI NGS OF MORE THAN A YEAR AS INVESTMENT AND PROFITS THEREON HAS BEEN ASSESSED UNDER THE HEAD 'CAPITAL GAIN', THEN T HERE IS NO REASON TO HOLD DIFFERENTLY THIS YEAR. WE ACCORDI NGLY CONFIRM THE ORDER OF THE LEARNED CIT(APPEALS) IN RE SPECT OF HOLDING (HAT PROFIT OF RS.37,52,28 II-SHOULD BE ASS ESSED AS 'LONG-TERM CAPITAL GAIN'. 15. IN RESPECT OF PROFIT OF RS.55,40,679/- BEING 'S HORT-TERM CAPITAL GAIN' AS CLAIMED BY THE ASSESSEE AND HELD A S PROFITS ASSESSED UNDER THAT BUSINESS BY TWO AUTHORITIES, WE FIND THAT IN MANY CASES THERE IS DELIVERY OF SHARES AND SHARE WERE REGISTERED IN THE NAME OF THE ASSESSEE. THE HO LDING PERIOD OF THE SHARES IS FROM 'O' DAYS TO '366' DAYS . IN SOME CASES, THE FREQUENCY OF TRANSACTIONS ARE APPARENTLY SUBSTANTIAL AS ON ONE DAY THE ASSESSEE HAS PURCHASE D SEVERAL SCRIPTS AND SOLD SEVERAL OF THEM ON THE SAM E DAY. 16. THE QUESTION IS WHETHER THEREFORE, MERELY FROM FREQUENCY OF THE TRANSACTIONS CARRIED ON BY THE ASS ESSEE, HE IS TREATED AS DEALER IN SHARES OR STILL HE IS HELD AS INVESTOR. AS FOUND IN THE CASE OF SARNATH INFRASTRUCTURE (P) LTD. VS. ASSTT.CIT (SUPRA) ALSO, ASSESSEE ADDUCED EVIDENCE T O SHOW THAT HIS HOLDINGS ARE FOR INVESTMENT AS RECORDED IN THE BOOKS OF ACCOUNT. THE HOLDINGS ARE VALUED AT COST, AND SUCH ACCOUNTING HAS BEEN ACCEPTED BY THE REVENUE IN EARL IER YEARS. THERE IS NO MATERIAL TO SHOW THAT ASSESSEE H AS DECLARED HIMSELF AS A TRADER IN SHARES AND LEGAL ITA NO.1846/AHD/2011 - 2 5 REQUIREMENTS THEREFORE HAVE BEEN COMPLIED WITH. IT IS ALSO A FACT THAT HE HAS NOT BORROWED ANY MONEY FOR INVESTI NG IN SHARES. MERELY BECAUSE, ASSESSEE HAD SOME -IT WOULD NOT BY ITSELF SHOW THAT THEY WERE DEPLOYED IN INVESTMENT. NOTWITHSTANDING, EVEN BORROWING ARE REQUIRED TO SETTLE PAYMENTS OBLIGATIONS 10 RESPECT OF INVESTMEN TS, LIKE ONE TAKES LOAN FOR PURCHASING A HOUSE. IN ANY CASE, HIGH FREQUENCY TRANSACTIONS AND LOW PERIOD HOLDINGS INDI CATE TRADE, WHEREAS LOW FREQUENCY TRANSITIONS AND HIGH P ERIOD HOLDINGS INDICATE INVESTMENT. 17. IN THIS CASE THE ASSESSEE HAS DISCHARGED THE ON US OF SHOWING THAT IT IS MAKING INVESTMENT BUT REVENUE IS ABLE TO SHOW THAT THERE ARE HIGH FREQUENCIES AND LOW HOLDIN GS IN MANY TRANSACTIONS OF SHARES INDICATING THAT ASSESSE E HAS SOME INTENTION OF PURCHASING AND SELLING SHARES AS A TRADER. THE CASE OF THE ASSESSEE IS SUPPORTED BY THE FACT T HAT IT HAS ENTERED THE PURCHASES IN THE BOOKS AS INVESTMENT, S HARES ARE VALUED AT COST AND REVENUE IS HOLDING SUCH ACCO UNTING TREATMENT AS INVESTMENT IN THE PAST. THUS, THERE CA NNOT BE A FIXED CRITERIA TO DECIDE AS IN THE PRESENT CASE W HETHER, ASSESSEE HAS TRADED IN SHARES EVENTHOUGH ASSESSEE H ELD THEM AS INVESTMENT. 18. THOUGH IT HAS BEEN HELD IN THE CASE OF SARNATH INFRASTRUCTURE (P) LTD. (SUPRA) THAT DELIVERY OF SH ARES IS AN IMPORTANT CRITERIA FOR HOLDING THAT ASSESSEE IS INV ESTING IN THEM BUT AFTER, DEMATIZATION WHERE SHARES ARE DELIV ERED IN THE DEMA T ACCOUNT THE NEXT DAY, IT CANNOT BE 'HELD THAT IN ALL SUCH EASES, IT WOULD BE INVESTMENT AND NOT TRAD ING. IF THAT IS SO HELD, THEN ALL THOSE TRADERS IN SHARES I N WHOSE DEMAT ACCOUNTS SHARES ARE DELIVERED CAN BE SAID TO HAVE EARNED CAPITAL GAINS AND NOT PROFITS. THEREFORE, ON LY ONE CRITERIA I.E. DELIVERY OF SHARES ALONE WILL NOT BE SUFFICIENT TO DECIDE THE ISSUE. EVEN OTHERWISE IN SARNATH INFRAST RUCTURE (P) LID. (SUPRA) ITSELF IT HAS BEEN HELD T HAT CUMU LATIVE EFFECT OF SEVERAL FACTORS WILL DECIDE THE ISSUE. 19. CONSIDERING THE TOTALITY AND PECULIARITY OF THE FACTS OF THIS CASE, WE FIND THAT ASSESSEE IS NEITHER FULLY A CTING AS A TRADER NOR AS, FULLY INVESTOR. DEMARCATION IS QUITE HAZY; THOUGH IN THE BOOKS HE IS SHOWING ALL THE PURCHASES AS INVESTMENT BUT FREQUENCY OF TRANSACTION IN SEVERAL CASES IS SO LARGE AND HOLDING PERIOD IN MANY CASES IS SO SMA LL - FROM 0 TO A WEEK OR SO THAT ASSESSEE IS DE FACTO SELLING AND PURCHASING SHARES AS TRADER. HE IS ALSO HOLDING SHA RES FOR ITA NO.1846/AHD/2011 - 2 6 LONG PERIOD - INDICATING THAT THEY ARE HELD AS INVE STMENT. THEREFORE, O CRITERIA HAS TO BE FIXED FOR, DETERMIN ING AS TO WHEN HE IS ACTING AS TRADER AND WHEN AS INVESTOR. ACCORDINGLY, WE DECIDE FOLLOWING CRITERIA TO HOLD W HEN GAINS ARE ,TO BE TAXED AS TO BE EARNED UNDER THE BUSINESS OR TO BE TAXED AS SHORT- TERM CAPITAL GAIN, WE HOLD THAT IF SHARES ARE NOT HELD EVEN SAY FOR A MONTH, THEN THE INTENTION I S CLEARLY TO REAP PROFIT BY ACTING AS A TRADER AND HE DID NOT INTEND TO HOLD THEM IN INVESTMENT PORT-FOLIO. WE BELIEVE THAT IF A PERSON INTENDS TO HOLD HIS PURCHASES OF SHARES AS INVESTMENT, HE WOULD WATCH THE FLUCTUATION OF RATES IN THE MARKET FOR WHICH A MINIMUM TIME IS NECESSARY, WHICH WE ESTIMATE AT ONE MONTH. WHERE SHARE ARE HELD FOR MOR E THAN A MONTH, THEY SHOULD BE TREATED AS INVESTMENT AND O N THEIR SALE SHORT TERM CAPITAL GAIN SHOULD BE CHARGED. WHE RE SHARES ARE HELD FOR LESS THAN A MONTH, GAIN ON THEM SHOULD BE TREATED AS PROFIT FROM BUSINESS. 20. THE ASSESSEE WILL GIVE THE WORKING AND COMPUTIN G 'SHORT-TERM CAPITAL GAINS' ON THE ABOVE BASIS. THE REST OF THE PROFIT WILL BE TREATED AS ASSESSABLE UNDER THE HEAD 'BUSINESS'. FOLLOWING THE DECISION OF JURISDICTIONAL TRIBUNAL O N THIS ISSUE ON SIMILAR FACTS, IT IS HELD THAT WHENEVER TH E ASSESSEE HAS HELD THE SHARES FOR THE PERIOD MORE THAN 30 DAY S, THE SAME IS TREATED AS INVESTMENT RESULTING IN LONG-TER M AND SHORT-TERM CAPITAL GAIN AND WHEREVER SHARES ARE HEL D UP TO 30 DAYS, THE INCOME ARISING THERE FROM IS TREATED A S BUSINESS INCOME OF THE APPELLANT. 6. AT THE OUTSET, THE AR OF THE ASSESSEE FILED BEFO RE US, A COPY OF THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR A.Y.2006-07 IN ITA NO.2498/AHD/2009 AND CO NO.227/A HD/2009 ORDER DATED 30.3.2012 AND SUBMITTED THAT THE ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THIS ORDER OF THE TRIBUNAL. THE D R CONCEDES TO THIS SUBMISSION OF THE ASSESSEE THAT THE ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL CITED SUPRA. 7. WE HAVE CONSIDERED SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE TRIBUNAL IN ITA NO.1846/AHD/2011 - 2 7 ASSTT.YEAR 2006-07 WHILE DECIDING THE APPEAL OF THE REVENUE AND CO OF THE ASSESSEE HELD AS UNDER: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT (A)- III, AHMEDABAD VIDE HIS ORDER NO. CIT (A)- III/81/CC2(2)/08-09 DATED 20-5- 2009 FOR THE ASSESS MENT YEAR 2006-07. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-III, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN CONSIDER ING THE RESULT OF SHARE TRANSACTION OF RS. 92,77,928/- AS C APITAL GAIN BY DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER WHO HAD TAXED THE SAME AS BUSINESS INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A)-III, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME TAX (A)-III, AHMEDABAD MAY B E SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF I NCOME WAS FILED BY THE ASSESSEE ON 31-12-2006 DECLARING TOTAL INCOM E AT RS.64,96,380/- DISCLOSING INCOME FROM INTEREST AND CAPITAL GAINS. THE ASSESSING OFFICER (A.O.) OBSERVED THAT SAID SHR I RAVINDRA AGARWAL HAD BEEN SUBJECTED TO ACTION U/S. 132 OF TH E ACT ON 29- 11-2004. IN THE ASSESSMENT OF SHRI RAVINDRA AGARWAL , THE A.O. HAS NOTED THAT HE HAD CARRIED OUT THE TRANSACTIONS IN THE NAME OF THE FAMILY MEMBERS, INCLUDING THAT OF THE APPELLANT . THERE WERE CONTINUOUS SALES AND PURCHASE OF SHARES IN VARIOUS NAMES AND THIS ACTIVITY WAS CARRIED OUT FOR NUMBER OF YEARS. HE FURTHER OBSERVED THAT THE PROFIT ON PURCHASING AND SELLING THE SHARES WAS SEVERAL TIMES HIGHER THAN THE DIVIDEND INCOME EARNE D BY THE ASSESSEE. HE FURTHER OBSERVED THAT SALE PROCEEDINGS IN THE NAME OF ONE PERSON HAS BEEN DISTRIBUTED IN THE BANK ACCO UNTS OF OTHER PERSONS IN THE GROUP AND PURCHASES IN NAME OF A PER SON HAVE ALSO BEEN MADE FROM FUNDS OF OTHER MEMBERS. HE FURTHER O BSERVED THAT THE ASSESSEE HAD CARRIED OUT SUBSTANTIAL TRANS ACTIONS IN SHARES THROUGH A PORTFOLIO MANAGER. THE ASSESSEE HA D ALSO DEDUCTED/REDUCED THE INCOME BY CLAIMING THE FEES PA ID TO PORTFOLIO MANAGER AMOUNTING TO RS. 2,01,396/-. FURT HER, IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAD CLAIM ED EXPENSES ITA NO.1846/AHD/2011 - 2 8 LIKE D-MAT DELIVERY CHARGES, STT, SERVICE TAX ETC., AND ON POINTING OUT THE SAME, IT WAS WITHDRAWN BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, THE A.O. HELD THE ASSESSEE TO BE A TRADER OF SHARES AND THEREFORE, THE ACTIVITIES OF SHARE TRANS ACTIONS TO BE IN THE NATURE OF TRADING/ADVENTURE IN THE NATURE OF TR ADE. ACCORDINGLY, HE TAXED THE PROFIT FROM SHARE TRANSAC TIONS AMOUNTING TO RS.92,77,928/- AS BUSINESS INCOME IN STEAD OF CAPITAL GAINS. 4. AGGRIEVED BY THE ACTION OF THE A.O. IN TREATING RS.92,77,928/- AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). CI T (A) CONSIDERED THE FACTUAL POSITION/EXPLANATION/REBUTTA L FURNISHED BY THE APPELLANT IN RESPECT OF THE PREMISES ADOPTED BY THE A. O. FOR REACHING AT HIS CONCLUSION. ON THE BASIS OF SUBMISS IONS, CIT (A) HELD THAT THE SALE/PURCHASE OF SECURITIES WAS APPAR ENTLY AN INDEPENDENT ACTIVITY AND DID NOT FORM THE ONLY SOUR CE OF SHARE TRADING. THE LOW RATIO BETWEEN PURCHASES AND SALES AND HOLDING, THE PURCHASE OF LISTED SECURITIES OF INDEPENDENT CO MPANIES AND NOT AS PROMOTERS, THE DELIVERY BASED TRANSACTIONS A ND THE ACTUAL PAYMENT/RECEIPTS AND NOT MERE BOOK ENTRIES, ABSENCE OF LACK OF INTRA DAY TRADING AND OF REPEATED TRANSACTIONS OF S OME SCRIPS ETC., WERE THE FACTORS BASED ON WHICH HE CONCLUDED THAT T HE ASSESSEE WAS AN INVESTOR. THUS, AFTER CONSIDERING THE DETAIL ED SUBMISSIONS, FACTS ON RECORD, THE BOARDS CIRCULARS ETC., HE CON CLUDED THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THE APPELLANT AS A TRADER AND DIRECTED THE ASSESSING OFFICER TO TREAT THE APPELLANT AS AN INVESTOR AND TREAT THE PROFIT ON SALE OF SHARES AS CAPITAL GAINS INSTEAD OF BUSINESS INCOME AND ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDING OF THE LEARNED CIT (A). 6. THE LD. DR RELIED ON THE ORDER OF ASSESSING OFFI CER. THE LD. AR FOR THE ASSESSEE ON THE OTHER HAND STATED THAT THE ISSUE IN QUESTION HAS ALREADY BEEN DECIDED BY THE TRIBUNAL V IDE ITS ORDER IN APPEAL NO. 2115 & 2161/AHD/2008 FOR THE ASSESSME NT YEARS 2004-05 AND 2005-06 RESPECTIVELY BY ORDER DATED 28- 1-2011 BY HOLDING AS UNDER:- 13..IT IS A SETTLED LAW THAT, TO DETERMINE WHETHE R THE ASSESSEE IS A TRADER OR INVESTOR IN SHARES, NO SING LE TEST IS CONCLUSIVE BUT CUMULATIVE EFFECT OF ALL THE FACTS A RE TO BE SEEN. IN THE CASE OF THE ASSESSEE, ONE FACT I.E. FREQUENT PURCHASE/SALE OF SHARES CAN BE SAID TO BE AGAINST T HE ASSESSEE ITA NO.1846/AHD/2011 - 2 9 BUT ALL OTHER FACTS WHICH CAN BE SUMMARIZED AS UNDE R ARE IN FAVOUR OF THE ASSESSEE: I) SHRI RAVINDRA AGRAWAL IS A QUALIFIED PROFESSIONAL B EING CHARTERED ACCOUNTANT, COMPAY SECRETARY AND COST ACCOUNTANT; II) SHRI AGRAWAL WAS FULL TIME DIRECTOR OF A PUBLIC LIM ITED COMPANY AT THE RELEVANT TIME, POSTED AT PORBANDAR, III) SHARES WERE ACQUIRED WITH OWN MONEY AND THERE WAS N O BORROWING BY SHRI RAVINDRA AGRAWAL OR ANY OTHER FAM ILY MEMBER, IV) NO OFFICE OR ANY STAFF WAS MAINTAINED FOR LOOKING A FTER PURCHASE AND SALE OF SHARES; V) THERE WAS SUBSTANTIAL DIVIDEND INCOME; VI) HIS SOURCE OF INCOME WAS INCOME FROM SALARY, CAPITA L GAIN, DIVIDEND AND INTEREST AND HE WAS NOT HAVING A NY BUSINESS INCOME; VII) IN THE ORIGINAL RETURN OF INCOME FURNISHED FROM TIM E TO TIME, INCOME FROM SALE OF SHARES WAS DISCLOSED UNDE R THE HEAD CAPITAL GAIN AND WAS ACCEPTED BY REVENUE AS SUCH UNDER SECTION 143(1). WHEN TOTALITY OF ALL THE ABOVE FACTS ARE CONSIDERED , THE INFERENCE DRAWN BY THE CIT (A) THAT THE ASSESSEE IS AN INVEST OR IN SHARES, APPEARS TO BE CORRECT. APART FROM THE ABOVE, ON THE PRINCIPLE OF CONSISTENCY ALSO ORDER OF THE CIT (A) ON THIS POINT DESERVES TO BE UPHELD BECAUSE IN THE ORIGINAL RETURNS INCOME FROM SALE OF SHARES WAS DISCLOSED UNDER THE HEAD CAPITAL GAIN AND THE SAME WAS ACCEPTED BY THE REVENUE. ITAT, MUMBAI BENCH IN THE CASE OF GOPAL PUROHIT (SUPRA) HELD THAT THOUGH IN INCOME TA X PROCEEDINGS THE RULE OF RES JUDICATA DOES NOT APPLY BUT THERE S HOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY UNDER THE S AME FACTS AND CIRCUMSTANCES. THIS DECISION IS UPHELD BY THE HONB LE MUMBAI HIGH COURT IN CIT VS. GOPAL PUROHIT, 228 CTR 582 (B OM.).THESE DECISIONS WOULD BE SQUARELY APPLICABLE TO THE CASES OF THE ASSESSEE UNDER APPEAL BECAUSE IN THESE CASES NOT ON LY IN EARLIER YEAR BUT IN THE YEARS UNDER APPEAL ALSO IN ORIGINAL PROCEEDINGS TRANSACTION OF PURCHASE ADDITION SALE OF SHARES SHO WN AS CAPITAL GAIN WAS ACCEPTED BY THE REVENUE MERELY BECAUSE, TH ERE WAS SEARCH AT THE ASSESSEES PREMISES, THE NATURE OF TR ANSACTION WOULD NOT CHANGE. IN VIEW OF THE ABOVE, AFTER CONSI DERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS JUDICIAL PRONOUNCEMENT REFERRED ABOVE, WE FIND NO J USTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT (A) ON THIS POI NT. THE SAME IS UPHELD AND THE REVENUES APPEALS ARE DISMISSED. ITA NO.1846/AHD/2011 - 2 10 7. WE FIND THAT THERE IS NO CHANGE IN THE FACTS IN THE CURRENT YEAR AS COMPARED TO THOSE OF EARLIER YEARS AND ACCORDING LY THE ASSESSEES CASE IS COVERED BY THE DECISION OF THE C O-ORDINATE BENCH IN EARLIER YEARS. RESPECTFULLY FOLLOWING ABOV E DECISION OF THE CO-ORDINATE BENCH, IN ASSESSEES OWN CASE, WE DISMI SS THE APPEAL FILED BY THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURES BEING POINTED OUT BY THE DR, AND THE FACTS BEING IDENTICAL, RESPECTFULLY FOL LOWING THE PRECEDENT, WE DISMISS GROUNDS OF APPEALS OF THE REVENUE FOR BO TH THE YEARS UNDER APPEAL. 8. IN THE RESULT, THE APPEALS OF THE REVENUE FOR BO TH THE YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 2 ND FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 02/02/2015