ACIT, Hyderabad V. Shri P. Bhaskar Rao, Hyderabad

ITA 1284/HYD/2010

• Counselvise Citation: 128422514 RSA 2010
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RATNAKAR
• Assessee Lawyers: RAJAN MITRA
• Keywords: Capital asset; Business income; Salary income; Rule of consistency

Judgement Text

ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 1 OF 16 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1284/HYD/2010 (ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 10(1) HYDERABAD VS. SHRI P. BHASKAR RAO, MANBHUM SUMUKHA, INDIAN AIRLINES COLONY, BEGUMPET, HYDERABAD PAN: AHWPP 9846 Q (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAJAN MITRA, DR DEPARTMENT BY: V. RATNAKAR, ADVOC ATE) DATE OF HEARING: 06/01/2015 DATE OF PRONOUNCEMENT: 04/03/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT (A)-VI HYDERABAD, DATED 30.07.2012 PASSED FOR A .Y 2007-08. 2. BRIEFLY STATED, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y 2007- 08 ON 27.07.2007 ADMITTING TOTAL INCOME OF RS.84,02 ,637 CONSISTING OF INCOME FROM SALARIES AMOUNTING TO RS.13,38,600, INCOME FRO M DIVIDEND OF RS.4,43,857, INCOME FROM HOUSE PROPERTY AMOUNTING T O RS.3,88,668 AND INCOME FROM SALE OF SHARES UNDER THE SHORT TERM CA PITAL GAINS AMOUNTING TO RS.61,66,584 AND LONG TERM CAPITAL GAINS AMOUNTING TO RS.4,07,933. 3. THE AO REJECTED VARIOUS CONTENTIONS OF THE ASSES SEE AND HELD THAT THE CLAIM OF THE ASSESSEE FROM PROFIT ON SALE OF SHARES IS A BUSINESS PROFIT DERIVED OUT OF BUSINESS ACTIVITY AND NOT AS APPRECIATION OF CAPITAL ON INVESTMENT. THE AO ALSO OBSERVED THAT THE VOLUME AND FREQUENCY OF T HE TRANSACTION IS HIGH AND THE INTENTION OF THE ASSESSEE WAS TO MAKE PROFIT ON SALE OF SHARES AND HE HAD NO INTENTION TO HOLD THE SHARES FOR A LONG PERIOD T O EARN DIVIDEND. THE AO ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 2 OF 16 OBSERVED THAT THE ASSESSEE INDULGED IN RECURRENT AC TIVITY OF INVESTING IN SHARES AND ALSO REINVESTING THE PROFITS EARNED FROM SUCH T RANSACTIONS WITHIN A SHORT SPAN OF TIME GIVING IT A CHARACTER OF TRADING ACTIV ITY DEPENDING ON MARKET FLUCTUATIONS. IT WAS OBSERVED BY THE AO THAT THE AS SESSEE BORROWED FUNDS ON VARIOUS DATES AND PURCHASED SHARES OF RS.1,39,70,01 8 AND SOLD SHARES OF RS.90,86,837. THUS THE AO CONCLUDEDTHE ASSESSMENT F OR A.Y 2007-08 TREATING THE PROFIT EARNED ON SALE OF SAHRES AS BUS INESS PROFITS OUT OF BUSINES SINCOME AND NOT AS CAPITAL GAINS. AO REJECTED THE C LAIM OF THE ASSESSEE FOR RS.61,66,584 UNDER THE SHORT TERM CAPITAL GAIN AND PREPARED TRADING AND LOSS A/C OF SALE AND PURCHASE TRANSACTION AND ARRIVED AT THE NET PROFIT OF RS.70,45,550 AND DETERMINED THE TOTAL INCOME AT RS. 88,85,670. 4. THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A ). THE ASSESSEE FILED WRITTEN SUBMISSIONS IN SUPPORT OF HIS CONTENTIONS A S UNDER: THE MAIN GROUND IN THE APPEAL IS AGAINST THE TREATM ENT OF SHORT TERM AND LONG TERM CAPITAL GAIN ON THE SALE OF SHARES AS BUSINESS INCOME BY THE ASSESSING OFFICER. THE APPELLANT IS ONLY AN INVESTOR IN SHARES AND NOT A TRADER. THE APPELLANT HAS SOLD THE SHARES HELD BY H IM BOTH FOR LONG TERM AND SHORT TERM PERIODS AND HAS DERIVE D LONG TERM AND SHORT TERM CAPITAL GAIN. DURING THE ASSESSMENT YEAR HE ALSO REDEEMED UNITS OF MUTUAL FUNDS HELD BY HIM ON SHORT TERM BASIS AND DERIVED SHORT TERM CAPITAL GAIN ON THE REDEMPTION OF MUTUAL FUNDS. THE FOLLOWING ARE THE DETAILS OF THE CAPITAL GAINS INCOME ON THE SALE OF SHARES AND REDEMPTION OF MUTUAL FUND UNITS. THE APPELLANT HAS OFFERED THE SAME FOR TAX IN HIS TAX RETURN. A SHORT TERM CAPITAL GAIN ON REDEMPTION OF MUTUAL 4,07,933 FUNDS B. LONG TERM CAPITAL GAIN ON SALE OF SHARES 8,73,513 C. SHORT TERM CAPITAL GAIN ON SALE OF SHARES 61,66,584 TOTAL 74,48,030 THE ASSESSING OFFICER HAS ASSESSED THE CAPITAL GAIN (BOTH LONG TERM AND SHORT TERM) ON SALE OF SHARES ENTIRELY AS BUSINESS INCOME AND ASSESSED TO TAX AS BUSINESS PROFIT RS.70,45,550/- (THERE APPEARS TO BE AN ERROR AND THE CORRECT AMOUNT IS RS.70,40,097/ - VIZ RS.8,73,513/-+RS.61,66,584/-). IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS M ADE SOME INCORRECT STATEMENTS. HENCE IT HAS BECOME NECESSARY TO PLACE BEFORE THE LEARNED COMMISSIONER THE ERRORS IN THE A SSESSMENT ORDER ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 3 OF 16 IN RELATION TO THE FACTUAL POSITION. THE ASSESSING OFFICER, AT PAGE 4 LAST PARA, OBSERVED AS UNDER: THE SECOND CONTENTION RAISED BY ASSESSEE THAT HE HA D NEVER RE-ENTERED INTO ANY OF THE SCRIPT WHICH HE HAD SOLD ONCE. HE ALSO FURTHER SUBMITTED THAT HE HAD NEVER ACQUIRED THE SHARES ON DIFFERENT DATES AND HE HAD N EVER SOLD THE SAME ON DIFFERENT DATES, THE ENTIRE SHARES OF PARTICULAR SCRIPT HAVE BOUGHT IN ONE GO AND SOLD AT A STRETCH'. IT IS SUBMITTED THAT THE ABOVE OBSERVATIONS ARE NOT CORRECT AND THERE WAS NEVER ANY SUCH SUBMISSION MADE BY THE APPELLANT . THE ASSESSING OFFICER HAS WRONGLY INCORPORATED THE ABOV E OBSERVATIONS AS IF IT WAS ONE OF THE SUBMISSIONS MADE BY THE APPELLANT TO JUSTIFY THE ASSESSMENT OF CAPITAL GAIN AS BUSINESS PROFIT. THE APPELLANT HAS BEEN BUYING AND SELLING VARIOUS SCRIPTS AT VARIOUS TIMES. SOMETIMES IT IS POSSIBLE THAT THE SHARES OF A COMPANY PURCHASED AT EARLIER TIME WERE SOLD AND NEW SHARES OF THE SAME COMPANY PURCHA SED AT A LATER TIME. IT IS ALSO POSSIBLE THAT SHARES OF A PARTICULAR COMPANY WOULD HAVE BEEN SOLD AT DIFFERENT TIMES IN DIFFEREN T LOTS. THEREFORE, THE OBSERVATIONS OF THE ASSESSING OFFICER ABOUT THE CONTENTIONS RAISED BY THE APPELLANT ARE NOT FACTUALLY TRUE. NO SUCH CONTENTION WAS EVER ADVANCED. THE ASSESSING OFFICER HAS ALSO DRAWN A CHART (TABLE-1 AT PAGE-2 OF THE ASSESSMENT ORDER) TO SUPPORT THAT THE APPELLANT PURCHASED AND SOLD THE VERY SAME SHARE ON THE SAME DAY PERHAPS TO SUPPORT HIS CONCLUSION THAT THEY WERE BUSINESS TRANSACTIONS. IN OTHER WORDS THESE ARE TREATED BY THE ASSESSING OFFICER AS 'BUY TODAY AND SELL TODAY' TRANSACTIONS WHICH ARE NOT DELIVERY BASED. T HIS IS NOT TRUE. NO SHARES WERE EVER SOLD WITHOUT TAKING DELIVERY. THE APPELLANT HAD TAKEN DELIVERY OF THE SHARES PURCHASED BY HIM AND T HE SHARES WERE CREDITED TO HIS DEEMAT ACCOUNT. THE SIT WAS PAID ON ALL TRANSACTIONS. THESE SHARES WERE HELD BY THE APPELLA NT AT ALL TIMES IN HIS DEEMAT ACCOUNT. THE SHARES WERE SOLD FROM THE D EEMAT ACCOUNT BY DEBITING THE DEEMAT ACCOUNT. THE ASSESSING OFFIC ER IN TABLE-1 FURNISHED INCOMPLETE PARTICULARS. THE SHARES SOLD W HICH ARE SHOWN IN TABLE-1 HAVE BEEN HELD FOR A SIZABLE NUMBER OF DAYS IN THE DEEMAT ACCOUNT AS PER THE DETAILS FURNISHED BELOW. NAME OF THE NO. OF DATE OF DATE WHEN NO. OF DAYS SCRIPT SHARES SALE THESE SHARES HELD BEFORE SOLD ARE SALE PURCHASED HINDAL 700 02.08.2006 19.05.2006 75 ALECHE 2000 27.12.2006 19.10.2006 69 ALECHE 1000 29.12.2006 19.10.2006 67 AKRINIR 14 13.02.2007 01.04.2006 318 IN THE SAME TABLE-1 SOME SHARES ARE SHOWN AS PURCHASED ON ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 4 OF 16 VARIOUS DATES. THESE SHARES HAVE BEEN SOLD SUBSEQUE NTLY. GIVEN BELOW ARE THE DETAILS OF THE SALE OF SHARES WHICH W ERE BOUGHT ON THE DATES SHOWN IN TABLE-1 NAME OF NO. OF DATE OF DATE WHEN NO. OF THE SCRIP T SHARES PURCHASE THESE ARE DAYS HELD PURCHASED SOLD BEFORE SALE HINDAL 1000 02.08.2006 01.02.2007 183 ALECHE 793 27.12.2006 17.01.2007 21 ALECHE 398 29.12.2006 17.01.2007 19 AKRINIR 86 13.02.2007 7.02.2007 7 THE ASSESSING OFFICER MERELY TRIED TO TALLY THE DAT ES WITHOUT REALIZING THAT SHARES WHICH WERE SOLD WERE PURCHASED ON AN EA RLIER DATE AND THE SHARES WHICH WERE PURCHASED ON THAT DATE HAVE BEEN SOLD AT A LATER DATE AS SHOWN ABOVE. HAD THE ASSESSING OFFICER SOUGHT CLARIFICATIONS BEFORE MAKING THE ASSESSMENT, THIS A SPECT WOULD HAVE BEEN CLARIFIED TO HIM. THE ASSESSING OFFICER HAS WR ONGLY PROJECTED IN THE FOUR TRANSACTIONS SHOWN IN TABLE-1 AS IF THE VERY SAME SHARES WERE BOUGHT AND SOLD ON THE SAME DAY, WHICH WERE NO T DELIVERY BASED, WHICH IS FACTUALLY INCORRECT. IT WOULD ALSO BE WORTHWHILE TO MENTION THAT THROUGHOUT THE YEAR THE TOTAL NUMBER O F TRANSACTIONS WERE 325 IN NUMBER. HE COULD ONLY FIND FOUR TRANSACTIONS WHE RE THE DATES ARE TALLIED. FOR THE REMAINING TRANSACTIONS, THE DATES DIFFER. BUT HERE AGAIN THE CONCLUSION DRAWN BY HIM, IS NOT TRUE. EVEN IF FOR ANY REASON, THE ASSESSING OFFICER CONCLUDES THAT TH ESE FOUR TRANSACTIONS REPRESENT BUSINESS ACTIVITY, THE BUSIN ESS PROFITS SHOULD BE RESTRICTED TO ONLY THESE TRANSACTIONS AND NO FUR THER. AT TABLE-2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER, HAS ILLUSTRATED SINGLE DAY TRANSACTIONS SHOWING THAT SH ARES OF DIFFERENT COMPANIES WERE PURCHASED AND SHARES OF SOME OTHER C OMPANIES WERE SOLD ON A SINGLE DAY. HE HAS GIVEN THREE SUCH DATES I.E. 12.07.2006, 28.12.2006 AND 15.01.2007 FOR THIS PURP OSE. THE APPELLANT SUBMITS THAT IN RESPECT OF THESE TRANSACT IONS THE SHARES THAT WERE PURCHASED WERE SOLD MUCH LATER AND THE SH ARES THAT WERE SOLD WERE BOUGHT MUCH EARLIER. THE ASSESSING OFFICE R HAS IGNORED THE NUMBER OF DAYS FOR WHICH THE SHARES WERE HELD I N THE DEEMAT ACCOUNT OF THE APPELLANT BEFORE SALE. THE APPELLANT THEREFORE IS FURNISHING THE DETAILS OF THE NUMBER OF DAYS THESE SHARES WERE HELD IN HIS DEEMAT ACCOUNT. I) THE TRANSACTIONS OF 12.07.2006. NAME OF THE NO. OF SHARES DATE OF SALE OF NO. OF DAYS SHER. SCRIPT PURCHASED ON THESE SHARES HELD BEFORE SALT 12.07.2006 ICIBAN 1000 27.07.2006 15 ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 5 OF 16 NATALU 1000 10.11.2006 121 RELPET 4000 18.09.2006 68 TATAPOW 420 27.07.2006 15 TOTAL 6420 NAME OF THE NO. OF SHARES SOLD DATE OF PURCHASE NO. OF DAYS SHARE SCRIPT ON 12.07.2006 OF THESE SHARES HELD BEFORE SALE PUNTRA 600 01.04.2006 102 INNCO M 1000 25.04.2006 78 OPTCIR 1674 25.04.2006 78 PETLLNG 200 18.04.'2006 85 POWTRA 100 18.04.2006 85 PUNTRA 600 01.04.2006 102 TOTAL 4174 NAME OF NO. OF SHARES DATE OF SALE OF NO. OF DAYS SHARES THE SCRIPT PURCHASED ON THESE SHARES HELD BEFORE SALE 28.12.2006 ANOBAN 5000 15.01.2007 18 ASHLEY 9000 15.01.2007 18 KEG/N 1000 15.01.2007 18 POWTRA 3000 15.01.2007 18 PR/GEM 1000 22.01.2007 25 SAGGEM 1000 08.01.2007 11 TOTAL 20000 NAME OF NO. OF SHARES DATE OF PURCHASE NO. OF DAYS SHARES THE SCRIPT SOLD ON OF THESE SHARES HELD BEFORE SALE 28.12.2006 ALEGHE 9000 21.10.2006 36 RELLNO 1300 20.11.2006 40 TGS 1000 19.10.2006 34 TOTAL 11300 (III) THE TRANSACTION OF 15. 1.2007 NAME OF NO. OF SHARES DATE OF SALE OF NO. OF DAYS SHARES THE SCRIPT PURCHASED ON THESE SHARES HELD BEFORE SALE 15.01.2007 BAJH/N 1000 19.02.2007 35 GAL/NO 2580 27.02.2007 43 ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 6 OF 16 GOOPOW 1000 31.01.2007 16 HGLLNF 1000 31.01.2007 16 H/NLEV 1000 07.05.2007 112 H/NZIN 500 07.05.2007 112 MAASOF 5000 06.02.2007 22 MUKANO 2000 06.02.2007 22 RANSUG 5000 20.02.2007 36 RPGTRA 1000 27.04.2007 102 TOTAL 20080 NAME OF NO. OF SHARES DATE OF PURCHASE NO. OF DAYS THESE THE SCRIPT SOLD ON OF THESE SHARES SHARES ARE HELD 15.01.2007 ALEGHE 2969 22.11.2006 42 ANDBAN 5000 28.12.2006 18 ASHLEY 16000 28.12.2006 18 IFCI 10000 29.12.2006 19 SAGGEM 99 28.12.2006 18 SATGOM 1450 05.12.2006 40 TANSOL 33 25.04.2006 265 TCS 99 4.10.2006 86 TOTAL 40038 IT IS CLEAR FROM THE ABOVE THAT THE APPELLANT HAD N OT BEEN INVOLVED IN DAY TRADING AS CLAIMED BY THE ASSESSING OFFICER. A STATEMENT WAS FILED BEFORE THE ASSESSING OFFICER, S HOWING NUMBER OF DAYS FOR WHICH SHARES WERE HELD BEFORE TH EY WERE SOLD DURING THE YEAR. THE HOLDING OF SHARES VARIES FOR D IFFERENT PERIODS AS UNDER. THIS CLEARLY DEMONSTRATES THE TIME LAG THE D ATE OF PURCHASE AND DATE OF SALE. NO. OF TRANSACTIONS AMOUNT OF CAPITAL GAIN RS. A. NUMBE R OF TRANSACTIONS 38 4,22,585 WHERE SHARES WERE HELD LESS THAN 10 DAYS B. NUMBE R OF TRANSACTIONS 104 15,65,236 WHERE SHARES WERE HELD BETWEEN 11 DAYS TO 30 DAYS ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 7 OF 16 I C. NUMBE R OF TRANSACTIONS 94 11,54,235 WHERE SHARES WERE HELD BETWEEN 31 TO 60 DAYS D. NUMBE R OF TRANSACTIONS 57 16,99,225 WHERE SHARES WERE HELD BETWEEN 61 TO 120 DAYS E. NUMBE R OF TRANSACTIONS 32 13,25,303 WHERE SHARES WERE HELD ABOVE 121 DAYS. IN ADDITION, THE APPELLANT HAS HELD NUMBER OF SHARES AS INVESTMENT IN HIS DEEMAT ACCOUNT AS ON 31.03.2007 AS PER STATEMENT GIVEN BELOW: NAME OF NO. OF DATE OF NO. OF DAYS DATE OF TOTAL NUMBER THE SCRIPT SHARES PURCHASE THESE SALE OF OF DAYS THESE OF THESE SHARES WERE THESE SHARES WERE SHARES HELD UP TO SHARES IN HELD BEFORE 31.03.07 NEXT YEAR SALE (I) (II) (III) (IV) (V) (VI) BPL 2000 01.03.2007 30 18.07.2007 139 BPL 2625 01.03.2007 30 09.04.2007 139 BSES 1 22.01.2007 68 28.06.2007 157 BROINI 186 31032007 1 09.04.2007 10 CAIIND 9000 1.3.2007 30 9.4.2007 39 COMTEC 100 13.2.2007 46 7.1.2008 328 GAUAMB 2000 1.3.2007 30 17.5.2007 77 EVIACC 220 31.3.2007 1 9.4.2007 10 HINLEV 1000 15.1.2007 75 7.5.2007 112 ICIBAN 800 28.02.2007 31 30.05.2007 91 IOECEL 245 31.03.2007 1 09.04.2007 10 INOFIL 144 31.03.2007 1 09.04.2007 10 KREBIO 4000 18.01.2007 72 28.05.2007 130 MUOLLF 271 31.03.2007 1 09.04.2007 10 MORLAB 5000 01.03.2007 30 09.04.2007 39 ORITRI 500 31.03.2007 1 09.04.2007 10 NATALU 2000 01.03.2007 30 28.05.2007 88 NCLLNO 5000 01.03.2007 30 28.05.2007 88 PRICE 10000 27.02.2007 32 28.05.2007 88 RELCOM 500 28.02.2007 31 19.02.2008 375 ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 8 OF 16 RELLNO 1001 14.02.2007 45 07.01.2008 327 RPGTRA 1000 15.01.2007 75 27.04.2007 102 SAGCEM 3050 06.02.2007 53 30.05.2007 113 TLSCO 600 06.02.2007 53 27.06.2007 140 V/JATE 300 31.03.2007 1 09.04.2007 10 VISINO 900 01.03.2007 30 09.04.2007 39 PIL 2442900 2006-2007 STILL HOLDING THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS R EFRAINED FROM GOING INTO THE LENGTH OF HOLDING OF THE SHARES. HE SELECTIVELY HIGHLIGHTED ONLY THOSE FEW DETAILS TO DRAW ADVERSE CONCLUSION WHILE THE REMAINING INFORMATION WAS NOT LOOKED AT ALL OR WAS IGNORED THOUGH WAS RELEVANT FOR CONSIDERATION. HE MERELY WE NT BY THE NUMBER OF TRANSACTIONS TO SUPPORT HIS CONCLUSION TH AT THE INCOME SHOULD BE TREATED AS BUSINESS INCOME. THE ASSESSING OFFICER HAS ALSO IGNORED THE FOLLOWIN G IMPORTANT ASPECTS WHICH HAVE A VITAL BEARING FOR THE PURPOSE OF CONSIDERATION OF THE SURPLUS ON THE SALE OF SHARES AS LONG TERM AND SHORT TERM CAPITAL GAIN. THE APPELLANT HAS RECEIVED A SUM OF RS. 4, 43, 857/- AS DIVIDEND IN RESPECT OF VARIOUS SHARES AND MUTUAL FUNDS HELD BY HIM DURING THE YEAR. THIS WAS DECLARED IN THE TAX RETURN AND A STATEMENT SHOWING DETAILS WAS ALSO FURNISHED. THE SAID STATEMENT SHOWING LIST OF DIVIDEND IS AGAIN ENCLOSED. THE APPELLANTS INTENTION TO HOLD SHARES WAS ALSO TO EARN DIVIDENDS. AS AT THE END OF THE YEAR, THE APPELLANT IS HOLDING SH ARES AND MUTUAL FUNDS OF VALUE RS.2,88,62,302L-. THE REASONS FOR SELLING THE SHARES WITHIN THE SAME YEAR IS ONLY BECAUSE OF THE TAXATION RATE FOR THE SHARES HELD FOR A SHORT TERM PERIOD IS CONCESSIONAL RATE AT 10%. THE APPELLANT HAS ALSO DERIVED LONG TERM CAPITAL GA IN FROM THE SALE OF SHARES HELD BY HIM FOR PERIODS IN EXCESS OF ONE YEA R. PARTICULARS OF THIS LONG TERM CAPITAL GAIN ON SALE OF SHARES HAS ALSO B EEN FURNISHED TO THE ASSESSING OFFICER. THE APPELLANT HAD BEEN ALLOTTED SHARES OF PENNAR PROFILES LIMITED ON 31.07.2005. THESE SHARES WERE S OLD DURING 28.11.2006 TO 21.12.2006. A STATEMENT SHOWING LONG TERM CAPITAL GAIN EARNED IS ENCLOSED. THIS LONG TERM CAPITAL GAIN ON SHARES AT RS.8, 73,513/- HAS BEEN WRONGLY TREATED AS BUSINESS INCOME AND ASSESSED TO TAX AS BUSINESS PROFIT. IN THE PAST YEARS ALSO THERE WERE SIMILAR SALE OF SHARES. FOR EXAMPLE IN THE ASSESSMENT YEAR 2006-07 THE APPELLAN T SOLD SHARES AND THE SHORT TERM CAPITAL GAIN ON SUCH SALE OF SHARES IS RS.82,49,206/-. AN ENQUIRY WAS MADE REGARDING THE S ALE OF SHARES DURING THE AY 2006-07 BY THE ASSESSING OFFICER VIDE HIS LETTER DA TED 30.05.2008 AND AFTER CONSIDERING THE EXPLANATION PR OVIDED BY THE APPELLANT, THE ASSESSING OFFICER HAD ACCEPTED THE P ROFIT DERIVED ON THE SALE OF SHARES AS SHORT TERM CAPITAL GAIN DURING THE AY 2006-07. ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 9 OF 16 THERE IS NO CHANGE IN THE FACTUAL POSITION BETWEEN EARLIER YEARS AND THE YEAR UNDER APPEAL. EVEN IN THE ASSESSMENT YEARS PRIOR TO 2006-07, THE SURPLUS ON SALE OF SHARES WERE TREATED AS CAPITAL GAIN AND WAS TAXED ACCORDINGLY. ALL THE TRANSACTIONS INVOLVING SALE OF SHARES HAVE BEEN ROUTED THROUGH THE RECOGNISED STOCK EXCHANGE AND WERE SUBJ ECT TO STT. ALL THE SHARES SOLD WERE FIRST ENTERED INTO DEEMAT ACCO UNT OF THE APPELLANT AND IT IS ONLY FROM THE DEEMAT ACCOUNT TH AT THE SHARES WERE SOLD. THE SALE OF SHARES REPRESENTED ONLY THOSE SHARES WHICH WERE FIRST PURCHASED, HELD IN DEEMAT ACCOUNT AND LA TER SOLD. THE APPELLANT FOLLOWED CONSISTENT PRACTICE OF KEEPING RECORDS AND STATEMENTS AS HIS INVESTMENT IN SHARES AT THE END OF THE YEAR. THIS IS NOT EVEN A CASE WHERE THE APPELLANT HELD SOME SHARES ON TRADING ACCOUNT AND SOME AS INVESTMENT. THE ENTIRETY OF THE HOLDING WAS ON THE INVESTMENT ACCOUNT. IT IS ALSO NOT THE C ASE THAT THERE HAS BEEN A CONVERSION OF THESE INVESTMENT INTO STOCK-IN-TRADE AND THE APPELLANT ALTERED HIS POSITION. THE HOLDING OF THE SHARES AS INVESTMENT CONTINUED TO REMAIN WITHOUT ANY CHANGE F OR THE YEAR UNDER APPEAL. . IN ALL THE CASES, THE PURCHASE AND SALE OF SHARES ARE DELIVERY BASED TRANSACTIONS. THE LENGTH OF HOLDING OF THESE SHARES WAS IGNORED COMPLETELY. THERE ARE NO NON-DELIVERY BASED TRANSAC TIONS. THE APPELLANT DID NOT DEAL IN ANY FUTURES & OPTIONS AT ALL. THERE IS NO INFRASTRUCTURE EMPLOYED IN THE FORM OF EMPLOYEES, REGULAR OFFICE ESTABLISHMENT ETC. THE APPELLANT DID NOT INDULGE IN ANY KIND OF ADVERTISING OR CANVASSING OR MADE ANY D ECLARATION AT ANY POINT OF TIME THAT HE IS A TRADER IN SHARES. NO LOANS WERE BORROWED FOR THE PURPOSE OF ACQUIRING THE SHARES. THERE WAS NO PAYMENT OF INTEREST BY THE APPELLANT. ALL TH E SHARES WERE PURCHASED OUT OF OWN FUNDS AVAILABLE WITH THE APPEL LANT FOR INVESTMENT. THE APPELLANT IS NOT A TRADER OF SHARES. HE IS EMPLOYED AS CEO / MO OF A PRIVATE SECTOR COMPANY. HE IS AN ENGINEER BY PROFES SION AND QUALIFICATION. THE APPELLANT IS NOT AN AGRICULTURIS T AND SUGAR CANE GROWER AS MENTIONED IN PARA 3 OF PAGE 3 OF THE ASSESSMENT ORDER. . THE APPELLANT HAS NOT ACQUIRED PENNAR INDUSTRIES SHARES FROM ICICI BANK. THE APPELLANT DID NOT MAKE ANY SUCH SUBMISSIO N. SHARES OF PENNAR INDUSTRIES WERE WITH THE APPELLANT SINCE LON G TIME. THE APPELLANT IS ALSO A DIRECTOR OF PENNAR INDUSTRIES LIMITED FOR LAST 10 YEARS. ALL THE SHARES SOLD FALLING UNDER LONG TERM CAPITA L GAIN ARE RELATING TO ONLY ONE COMPANY VIZ. PENNAR PROFILES LIMITED WHICH THE APPELLANT WAS THE MANAGING DIRECTOR FOR A PERIOD OF 12 LONG YEARS . ALL THESE SHARES SOLD WERE ALLOTTED ON SUBSCRIPTION BY THE CO MPANY ON 31.07.2005. THESE SHARES WERE HELD FOR A PERIOD OF MORE THAN 16 MONTHS BEFORE THEY WERE SOLD ON 28 TH NOVEMBER, 2006. ALL THE ABOVE FACTORS CUMULATIVELY PROVE THAT THE I NCOME DERIVED ON ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 10 OF 16 THE SALE OF SHARES SHOULD BE TREATED AS CAPITAL GAI N AND NOT AS BUSINESS INCOME. BASED ON THE ABOVE FACTUAL POSITION, THE LEGAL ASPE CTS MAY NOW BE CONSIDERED BY THE LEARNED COMMISSIONER 5. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISI ONS IN SUPPORT OF THE SALE OF SHARES, SHOULD BE ASSESSED AS CAPITAL GAINS AND NOT AS BUSINESS INCOME: S.NO NAME ITA NO. DATE OF ORDER 1 GOPAL PUROHIT VS. JCIT 4854/MUM/2008 10.2.2009 2 DCIT VS. SMK SHARES & STOCK BROKING (P) LTD 799/MUM/2009 24.11.2010 3 MANAGEMENT STRUCTURE & SYSTEMS (P) LTD VS. ITO 6966/MUM/2007 30.4.2010 4 ACIT VS. NAISHADH V. VACHHARAJANI 6429/MUM/2009 25.2.2011 5 JANAK S. RANGWALLA V. ACIT SOT 627 6 CIT VS. GOPAL PUROHIT 1121/2009 MUMBAI HC 6.1.2010 PRINCIPLE OF CONSISTENCY 1 RADHASOAMI SATSANG V. CIT S.C 193 ITR 321 2 DIT VS. LOVELY BAL SHIKSHA PRASAD S.C 266 ITR 349 3 TARBEN RAMANBHAI PATEL V. ITO & OTHERS GUJARAT 215 ITR 323 4 DHANSIRAM AGARWALLA V. CIT GUWAHATI 217 ITR 4 5 CIT VS. LAGAN KALA UPVAN DELHI 259 ITR 489 6 CIT VS. LEADER VALVES LTD P&H 295 ITR 273 7 CIT VS. DARIUS PANDOLE BOM. 330 ITR 485 ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 11 OF 16 MERE INTENTION TO EARN PROFIT DOES NOT CONVERT INVE STMENT INTO TRADING TRANSACTION 1 JANAKIRAM BAHADUR V CIT S.C 57 ITR 21 2 CIT VS. H. HOLCK LARSEN S.C 160 ITR 67 SHARES WHETHER HELD AS INVESTMENT OR STOCK IN TRADE IS WITHIN THE KNOWLEDGE OF THE ASSESSEE. 1 CIT V. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. (P) LTD S.C 82 ITR 586 6. THE ASSESSEE ALSO SUBMITTED ADDITIONAL GROUNDS O F APPEAL WHICH ARE AS FOLLOWS: THE APPELLANT CONTENDS THAT THE DESCRIPTION IN THE CAUSE TITLE OF THE ASSESSMENT ORDER AT COL.9, UNDER THE HEAD NATURE OF BUSINESS SHOWN AS SHARE TRADING AND OTHER INCOME IS NOT CORRECT. THERE IS NO BUSINESS CARRIED BY THE APPELLANT. THE SAID COLUMN SHOULD BE KEPT BLANK. IN THE ALTERNATIVE, IN THE SAID COLUMN THE APPELLANT SHOUL D BE DESCRIBED AS SALARIED EMPLOYEE, 7. THE CIT(A) HELD AS FOLLOWS: THE ASSESSEES CONTENTION THAT COLUMN SHOULD BE KE PT BLANK IS NOT ACCEPTED AS ALL COLUMNS SHOULD BE FILLED IN. FURTHE R THE ASSESSEES CONTENTION THAT IT SHOULD BE DESCRIBED AS SALARIES EMPLOYEE. AS SEEN FROM THE RETURN OF INCOME FILED BY THE ASSESSEE, HIS SAL ARY INCOME WAS RS.13,38,600, INCOME FROM HOUSE PROPERTY WAS RS.3,8 8,668, INCOME FROM SHORT TERM CAPITAL GAINS (WHICH WAS ASSESSED AS BUS INESS INCOME) WAS RS.61,66,584 AND LONG TERM CAPITAL GAINS WAS RS.4,0 7,933. FROM THE ABOVE THE ASSESSEES MAIN SOURCE OF INCOME WAS FROM SHORT TERM CAPITAL GAINS WHICH WERE ASSESSED AS BUSINESS INCOME. THUS THE COLUMN WAS CORRECTLY FILED. FURTHER, THE ASSESSEE IN HIS SUBMISSIONS BEFORE THE CIT (A) MENTIONED THAT THERE ARE WRONG STATEMENTS MADE IN THE ASSESSMENT O RDER AT PARA NO.3 OF PAGE 3, PARA NO.4 AT PAGE 4, PARA 2 AT PAGE NO.5 AN D AT PARA 2 AT PAGE 6. AS VERIFIED FROM RECORDS, IT WAS SUBMITTED THAT THE SE ARE TYPING MISTAKE WHILE ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 12 OF 16 CUT PASTING THE DATA FROM A SIMILAR ASSESSMENT ORDE R. THESE ARE NOT WRONG STATEMENTS BUT THESE ARE MISTAKES IN TYPING THE ORD ER. THE DATA DO NOT PERTAIN TO THE ASSESSEE. HOWEVER, THE ABOVE MENTIONED WRONG DETAILS HAVE NO BEARING ON THE ASSESSMENT MADE. AS MENTIONED ABOVE, THOUGH ASSESSEE HAS SALARY INCOME, THE ASSESSEES MAIN SOURCE OF INCOME WAS FROM DEALING IN SHARES. THE ASSESSEE HAS CLASSIFIED THEM AS SHORT T ERM CAPITAL GAINS AND IT WAS ASSESSED AS BUSINESS INCOME FOR REASONS DISCUSS ED IN THE ASSESSMENT ORDER. AS DISCUSSED IN THE ASSESSMENT ORDER THE ASSESSEE M ADE FREQUENT TRANSACTIONS IN THE SHARES AND THE INTENTION OF THE ASSESSEE IS NOT TO INVEST FOR EARNING THE DIVIDENDS OR FOR CAPITAL APPRECIATION, BUT TO EARN PROFIT AT A SHORT NOTICE. THE ASSESSEE HAS NOT DENIED THE FREQUENCY O F TRANSACTIONS HE MADE. DETAILS OF SOME OF THE TRANSACTIONS WERE EVEN MENTI ONED IN ASSESSMENT ORDER. THUS THE ASSESSMENT WAS CORRECTLY MADE BY TREATING THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME. 8. THE CIT (A) HELD AS FOLLOWS: 6.0 I HAVE GONE THROUGH THE FACTS OF THE CASE AND SUBMISSIONS MADE BY THE APPELLANT. THERE IS A CONSIDERABLE FORC E IN THE SUBMISSIONS MADE BY THE APPELLANT. THE MAIN REASON THAT THE AO DELVED UPON FOR CONCLUDING THAT THE CAPITAL GAINS A S BUSINESS INCOME IS BASED ON FREQUENCY OR PERIOD OF HOLDING A ND THE VOLUME OF SHARES. DURING THE COURSE OF APPELLATE PROCEEDIN GS AND ALSO ON THE PERUSAL OF THE SUBMISSIONS MADE BY THE APPELLAN T AND OBJECTIONS RAISED BY THE AO AND VICE-A-VERSA, IT IS FOUND THAT THERE ARE SEVERAL INCORRECT FACTS MADE BY THE AO IN THE A SSESSMENT ORDER. THESE FACTS HAVE NO BEARING ON THE ISSUE WHICH IS BEFORE ME. DURING THE COURSE OF PROCEEDINGS, THE AR OF THE APPELLANT DREW A PARALLEL AND A COMPARATIVE FACTUAL POSITION IN SUPPORT OF HIS CONTENTION FROM THE DECISION OF ITAT & MUMBAI HIGH COURT IN THE CASE OF GOPAL PUROHIT. 6.1 IT IS OBSERVED THAT IN THE EARLIER YEARS THE AO HAS THE CLAIM OF THE APPELLANT UNINTERRUPTED ON IDENTICAL FACTS W HICH ARE PREVALENT DURING THE YEAR UNDER CONSIDERATION AND ALLOWED THE SAME TRANSACTIONS AS CAPITAL GAINS. CONSISTENCY IS A DEG REE OF FIRMNESS AND HARMONY OF CONDUCT WITH PROFESSION. THERE HAS T O BE AN AIM OR A DESIGN OR PURPOSE OR GOAL TO EXECUTE A SPECIFIED COURSE OF ACTION ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 13 OF 16 WITH A PROPER FORM AND PATTERN. THEREFORE, I AGREE THAT THE ABOVE CASE LAW FITS INTO THE FACTS AND CIRCUMSTANCES OF T HE CASE. 6.2 THE AO HAS MAINLY BASED THE ASSESSMENT ORDER ON THE FACT THAT THE APPELLANT INDULGED IN FREQUENT VOLUMINOUS SALE AND PURCHASES OF SHARES AND CONCLUDED THAT IT IS NOT AN INVESTMENT BUT AN INTENTIONAL ACTIVITY IN THE FORM OF BUSINESS ADV ENTURE. AN INTENTION IS AN ANTICIPATED OUTCOME THAT IS GUIDED THROUGH A PROCESS AND A PURPOSE TO OBTAIN THE END RESULT. IN THE CASE OF THE APPELLANT SUCH INTENTION IS NOT CLEARLY BROUGHT OUT BY THE AO TO GIVE IT A CHARACTER OF ADVENTURE OR BUSINESS ACTIVITY. 9. THE LD COUNSEL REITERATED THE SUBMISSIONS MADE B EFORE THE CIT (A). THE LD DR RELIED ON THE DECISION OF SMT. SADHANA NA BERA VS. ACIT (ITA NO.2586/MUM/2009) DATED 26 TH MARCH, 2010IN SUPPORT OF HIS CONTENTIONS. 10. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL ON RECORD. THE DECISION IN CASE OF DCIT VS . E-CAP PARTNERS, [2014] 45 TAXMANN.COM 342 (MUM.) WITH REGARD TO THE TREATM ENT OF CAPITAL GAINS VIS- -VIS BUSINESS INCOME, THE COORDINATE BENCH HELD A S UNDER: WE HAVE DELIBERATED UPON VARIOUS CASE LAWS CITED B Y THE ID. AUTHORIZED REPRESENTATIVE AND ID. CIT DR AND IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. WE HAD ALSO DELIBERATED ON THE CASE LAWS REFERRED TO BY LOWER A UTHORITIES IN THEIR RESPECTIVE ORDERS. THE QUESTION AS TO WHET HER THE ASSESSEE HAS EARNED CAPITAL GAIN OR BUSINESS PROFIT S ON THE SHARES SOLD BY HIM DEPEND ON THE FACTS AND CIRCUMST ANCES OF EACH CASE. SUCH DECISION IS TO BE ARRIVED AT BY TAKING INTO ACCOUNT THE INTENTION OF THE ASSESSEE WHILE PURCHAS ING THE SHARES, AS TO WHETHER THE SAME WAS ACQUIRED FOR HOL DING AS INVESTMENT OR FOR DOING BUSINESS THEREIN. THE TREAT MENT GIVEN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IS AL SO ONE OF THE DECISIVE FACTORS TO FIND OUT WHETHER THE SHARES WERE HELD AS INVESTMENT OR STOCK IN TRADE. IF THE SHARES ARE BOUGHT WITH THE INTENTION OF EARNING CAPITAL GAINS THEREON AND ALSO DIVIDEND INCOME BY KEEPING THE SAME AS INVESTMENT, THE GAIN ARISING THERE FROM IS REQUIRED TO BE TREATED A S CAPITAL GAINS. ON THE OTHER HAND, IF THE SHARES ARE PURCHAS ED WITH THE INTENTION TO EARN PROFIT THEREON AND THE SAME I S TREATED AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT, THE PROF IT ARISING OUT OF SALE OF SUCH SHARES ARE LIABLE TO BE TREATED AS BUSINESS INCOME. VOLUME AND FREQUENCY OF TRANSACTIO N IS ALSO ONE OF THE GUIDING FACTORS TO FIND OUT WHETHER THE ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 14 OF 16 ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES OR MAKING INVESTMENT TO HAVE CAPITAL GAIN S THEREON. IN THE INSTANT CASES BEFORE US, WE FOUND THAT THE A SSESSEE HAS INVESTED IN SHARES OF INDIAN COMPANIES WHICH IS CL EAR FROM THE STATEMENT OF SHAREHOLDING OF THE ASSESSEE. THUS, TH E FACT OF THE ASSESSEE INVESTING IN SHARES FOR THE LAST SEVERAL Y EARS IS NOT IN DISPUTE. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS TREATED THE EQUITY SHARES OF INDIAN COMPANIES AS IN VESTMENT I.E. CAPITAL ASSET ALL ALONG. THE ASSESSEE HAS ALSO VALU ED THE SHARES AT COST THUS GIVEN A PARTICULAR TREATMENT TO THE SHARE S HELD AS INVESTMENT, THEREFORE, WITHOUT BRINING ON RECORD CO NTRARY MATERIAL, THE AO CANNOT CHANGE THE INTENTION AND MANNER OF IN VESTMENT BEING MADE BY THE ASSESSEE. HAD THE ASSESSEE VALUED THE SHARES AT COST OR MARKET PRICE WHICHEVER IS LOWER, THE GAI N ARISING OUT OF SALE OF SHARES COULD EASILY BE TREATED AS BUSINESS INCOME. ASSESSEE HAD NOT VALUED THE SHARES AS STOCK BUT VAL UED THE SAME AS INVESTMENT. THUS, WHAT WAS A CAPITAL ASSET WILL REMAIN A CAPITAL ASSET UNLESS A PERSON HOLDING THE ASSET HIMSELF CHA NGES THE NATURE BY A SPECIFIC ACTION LIKE CONVERSION OF CAPITAL ASS ET INTO STOCK IN TRADE. IN VIEW OF THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF RAM KUMAR AGARW & BROTHERS, 205 ITR 251, THE AO WAS NOT JUSTIFIED IN TREATING THE CAPITAL GAIN EARNED FROM SALE OF THESE SHARES, AS BUSINESS PROFITS, WHICH WERE ENTERED BY THE ASSESSEE AS INVESTMENT IN BOOKS OF ACCOUNT. THERE IS ALSO NO DI SPUTE TO THE WELL SETTLED LEGAL PROPOSITION THAT RES JUDICATA DO NOT STRICTLY APPLY TO THE INCOME TAX PROCEEDINGS, BUT AT THE VERY SAME TIME, IT IS WELL SETTLED THAT PRINCIPLE OF CONSISTENCY UNDER THE SAME FACTS AND CIRCUMSTANCES IS THE FUNDAMENTAL OF JUDICIAL PRINCI PLE, WHICH CANNOT BE BRUSHED ASIDE WITHOUT PROPER REASONING. IN THIS REGARD, RELIANCE CAN BE PLACED ON THE DECISION IN CASE OF S.M.K. SHA RES AND STOCK BROKING PRIVATE LIMITED, I.T.A. NO. 799/MUM/09 ORDE R DATED 24.N.201O. IN THIS PROPOSITION, THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF GOPAL PUROHIT, 228 CTR 582, IS VERY MUCH RELEVANT AND IMPORTANT. MERELY BECAUSE THE ASSESSEE LIQUIDATES ITS INVESTMENT WITHIN A SHORT SPAN OF TIME, WHICH HAD GIVEN BETTER OVERALL EARNING TO THE ASSESSEE, WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAD NO INTENTION TO KEEP ON THE F UNDS AS INVESTOR IN EQUITY SHARES, BUT WAS ACTUALLY INTENDED TO TRAD E IN SHARES. 11. FURTHER, THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF SHANTILAL M JAM VS ACIT VIDE ORDER DATED 27-04-2011 (ITA NO. 26 9/MUM/201O) HELD THAT DESPITE LARGE VOLUME OF SHARES TRANSACTIONS, THE A SSESSING OFFICER CANNOT IGNORE THE RULE OF CONSISTENCY TO TREAT THE GAINS ON SALE OF SHARES AS STCG. IN ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 15 OF 16 THAT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF INVESTMENT IN SHARES AND SECURITIES OFFERED RS.1.54 CRORES AS SHORT TERM CAPITAL GAIN AND RS. 291 CRORES FROM LONG TERM CAPITAL GAIN. THE LO NG TERM CAPITAL GAIN WAS ACCEPTED WHEREAS SHORT TERM ITA NOS.2012&1609/11 CA PITAL GAIN WAS HELD TO BE BUSINESS PROFIT. 12. SINCE IN EARLIER ASSESSMENT YEARS THE CLAIM OF THE ASSESSEE WAS CONSISTENTLY ACCEPTED AS SHORT TERM CAPITAL GAIN, I T WAS HELD THAT THE RULE OF CONSISTENCY AS PROPOUNDED BY HON'BLE BOMBAY HIGH CO URT IN THE CASE OF GOPAL PUROHIT (SUPRA), IT IS FAIRLY APPLICABLE AND THE INCOME HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN. 13. IDENTICALLY IN THE CASE OF NAGINDAS P SETH (ITA NO.961/MUM/201O) IT WAS HELD THAT DESPITE LARGE NUMBER OF TRANSACTIONS IN SHARES, THE PROFIT CAN BE ASSESSED AS CAPITAL GAINS UNDER THE FACTS OF THE CA SE. THE CASE OF THE ASSESSEE IS FURTHER FORTIFIED BY THESE DECISIONS MO RE SPECIFICALLY WHEN THE ASSESSEE WAS HOLD THE SHARES IN HIS BOOKS AS INVEST OR, AS WELL AS STOCK-IN- TRADE SEPARATELY. 14. THE DECISION IN THE CASE OF JANAK S RANAWALA, 1 1 SOT 627 (MUM.) FURTHER SUPPORTS THE CASE OF HE ASSESSEE. LIKEWISE, THE DECISION FROM HON'BLE MADRAS HIGH COURT IN CIT VS N.S.S. INVESTMENT PVT L TD. 227 ITR 149 (MAD), CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY, 82 ITR 526 (SC) SUPPORTS THE CASE OF THE ASSESSEE. 15. IN THE PRESENT APPEAL, WE NOTE THAT THE ASSESS EE MADE INVESTMENT IN SHARES WITH INTENTION TO EARN DIVIDEND INCOME ON AP PRECIATION OF PRICE OF SHARES. THEREFORE, IT CANNOT BE SAID THAT THE ASSES SEE WAS DOING BUSINESS. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) AND DISM ISS THE APPEAL OF THE REVENUE. ITA NO.1284 OF 2010 P BHASKAR RAO HYDERABAD PAGE 16 OF 16 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015. SD/- SD/- ( P.M. JAGTAP ) ( ASHA VIJA YARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 4 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 10(1) ROOM NO.515, AC GUARDS, IT TOWERS, HYDERABAD 2. SHRI P. BHASKAR RAO, FLAT NO.102, MANBHUM SUMUKH A, INDIAN AIRLINES COLONY, BEGUMPET, HYDERABAD 3. THE CIT (A)VI HYDERABAD 4. THE CIT HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE