Ashok B Shah, Pune V. Dy. CIT, Pune

ITA 1331/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84841 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: R G NAHAR
• Keywords: Business income
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO S. 1331 & 1332 / P N/ 20 1 3 ASSESSMENT YEAR S : 200 8 - 09 & 2010 - 11 ASHOK B SHAH, M ZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.:84, WELLESLEY ROAD, NEAR RTO, PUNE VS. DY. COMMISSIONER OF INCOME TAX, CIR. - 1(1), PUNE (APPELLANT) (RESPONDENT) PAN NO. ACHPS9459C APPELLANT BY: SHRI R.G. NAHAR RESPOND ENT BY: SHRI S.P. WALIMBE DATE OF HEARING : 02 - 06 - 2014 DATE OF PRONOUNCEMENT : 14 - 0 8 - 2014 ORDER PER R.S . PADVEKAR , JM : - THESE TWO APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A) - I, PUNE DATED 30 - 05 - 2013 FOR THE A.YS. 200 8 - 09 & 20 10 - 11. THE FACTS AS WELL AS ISSUES ARE COMMON AND IDENTICAL IN BOTH THE ASSESSMENT YEARS AND HENCE, THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. WE FIRST TAKE THE APPEAL FOR THE A.Y . 2008 - 09 AS A LEAD CASE BEING ITA NO.1331/PN/2013. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: ON THE FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT, THAT SHORT TERM CAPITAL GAIN DERIVED O N SALE OF SHARES OF RS.50,45,981/ - SHOULD HAVE BEEN TAXED AS SHORT TERM CAPITAL GAIN ONLY AND NOT AS THE 2 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE INCOME FROM BUSINESS TREATED BY THE AO & CONFIRMED BY CIT(A). JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT ON THIS SCORE . 3. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND DERIVED INCOME FROM THE SHARE TRANSACTIONS AND DIVIDEND INTEREST ETC. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2008 - 09 ON 04 - 07 - 2008 DECLARING TOTAL INCOME OF RS.53,85, 150/ - . IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DECLARED THE SHORT TERM CAPITAL GAIN (IN SHORT STCG) ON THE SALE OF SHARES TO THE EXTENT OF RS.50,45,981/ - . THE ASSESSING OFFICER HAS OBSERVED THAT THE SHARES AVAILABLE WITH THE ASSES SEE HAVE BEEN SHOWN AS INVESTMENTS. AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE IS DEALING IN VARIOUS NUMBERS OF SCRIPS AND THE FREQUENCY OF PURCHAS E AND SALE THE SHARES IS REGULAR AND RECURRING. THE ASSESSING OFFICER, THEREFORE, COME TO THE CONCLUSIO N THAT THE SHARE TRANSACTIONS OR SHARE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF BUSINESS. AS NOTED BY THE ASSESSING OFFICER , THE ACTIVITY OF THE ASSESSEE IN THE SHARE TRANSACTIONS IS THE ONLY ACTIVITY AND IT IS BEING CONTINUOUSLY CARRIED ALMOST ON DAY TO DAY BASIS. SOME OF THE TRANSACTIONS ARE CON CLUDED ON A SINGLE DAY. IN THE OPINION OF THE ASSESSING OFFICER THE MANNER IN WHICH SHARES ARE SHOWN, WHETHER AS STOCK IN TRADE OR INVESTMENT IS NOT A CONCLUSIVE PROOF THAT IT IS NOT SHARE TRADING BUSINES S. THE ASSESSING OFFICER IS NOT DISPUTED THAT THE ASSESSEE HAS SHOWN THE SHARES HELD BY HIM AS INVESTMENT AND NOT AS STOCK - IN - TRADE. THE ASSESSEE FILED THE DETAILED REPLY WHICH IS REPRODUCED IN THE ASSESSMENT ORDER ON PAGE NOS. 4 AND 5 BY RESISTING THE E XPLANATION FOR TREATING THE SHORT TERM CAPITAL GAIN AS A BUSINESS INCOME OF THE ASSESSEE. THE ASSESSE ALSO PLACED THE RELIANCE ON THE FOLLOWING DECISIONS: (I). CIT VS. GOPAL PUROHIT, 336 ITR 287 (BOM). 3 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE (II). MANAGEMENT STRUCTURE AND SYSTEMS PVT. LTD. VS. ITO, ITA NO. 6966/MUMBAI/2007, I - BENCH, MUMBAI. 4. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE THAT HE IS ONLY INVOLVED IN THE INVESTMENT IN THE SHARES AND THE SAID ACTIVITY CANNOT BE EQUATED WITH THE BUSINESS ACTIVITY. THE ASSESSING OF FICER HAS GIVEN THE FOLLOWING REASONS FOR TR EATING THE SHARE TRANSACTIONS ENTER INTO BY THE ASSESSEE AS THE SYSTEMATIC BUSINESS ACTIVITY. 4.8 THE ARGUMENTS MADE BY THE ASSESSEE HAVE BEEN CAREFULLY PERUSED. HOWEVER, THE SAME ARE NOT ACCEPTED. THE ASSESSEE' S BUSINESS ACTIVITIES ARE NOTHING BUT ONLY 'PURCHASE AND SALE' OF THE SHARES AND UNITS. THE ACTUAL ISSUE NEEDS TO BE LOOKED INTO THAT THE ASSESSEE HAS BEEN PURCHASING AND SELLING UNITS IN A SYSTEMATIC MANNER CONTINUED OR CONTEMPLATED TO BE CONTINUED FOR A PROFIT MOTIVE. THE ACTIVITY OF SALE AND PURCHASE OF SHARES OR UNITS THE MANNER IS ORGANIZED. NOW THE CASE OF THE ASSESSEE IS EXAMINED IN VIEW OF THIS: 4.9 IT IS IMPORTANT HERE TO HAVE LOOKED AT THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. S. NO. DETAILS OF TRANSACTIONS A.Y. 2007 - 08 1 NO. OF SHARES PURCHASED DURING THE YEAR 422584 2 NO. OF SHARES SOLD DURING THE YEAR 347314 3 TOTAL COST OF SHARES PURCHASED DURING THE YEAR 3,89,28,172 4 TOTAL VALUE OF SH ARES SOLD DURING THE YEAR 4,40,07,738 5 MAXIMUM NO. OF SHARES SOLD IN A DAY (13.07.2007) 21603 6 TOTAL NO. OF SCRIP IN WHICH ASSESSEE HAS DEALT 92 7 TOTAL NO. OF TRANSACTIONS DURING THE YEAR WHEN SHARES WERE PURCHASED. 238 8 TOTAL NO. OF TRA NSACTIONS DURING THE YEAR WHEN SHARES WERE SOLD. 336 4.10 ASSESSEE HAS SOLD 347314 SHARES IN 336 TRANSACTIONS SHOWS THE HIGH FREQUENCY OF THE TRANSACTIONS AND THE SUBSTANTIAL NATURE 4 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE CAN BE ASCERTAINED BY LOOKING AT THE FACT THAT 21603 SHARES WERE SOLD ON A SINGLE DAY. THE ASSESSEE HAS BEEN PURCHASING SHARES / UNITS AND AFTER EFFECTING THE SALE OF THE SAME IS GOING BACK AGAIN IN PURCHASING OF SHARES/UNITS. ON PERUSAL OF THE SHORT TERM CAPITAL GAIN STATEMENT, FOLLOWING ARE THE INSTANCES NOTICED WHEREI N THE ASSESSEE HAS INVESTED IN IPO OF ALLIED COMPUTER' AND GOT THE 500 SHARES ON 21.11.2007 AND SOLD THE SAME ON 23.11.2007 I.E. AFTER 2 DAYS. SIMILARLY IN THE CASE OF AMD METPLAST, ARVIND MILLS, ANKIT MET. & POWER, ARIES AGRO, AUTOLINE IND., B ARAK VALLEY CEMENT, BEML, B.F. UTILITIES, BRIGADE ENT., BURNPUR CEMENT, CELESTIAL LABS, CENTRAL BANK OF INDIA, CENTURY TEXTILES, CIRCUITS SYSTEMS, CCCL, DHANUS TECH., DLF LTD., ECLERX SERVICES, EVERRON SYS., EDELWEISS, EMPEE DIST, FINOLEX CABLES, FUTURA PO LY, HDIL, HINDALCO, HIND OIL EXPLORATION, ICICI BANK, IDEA CELLULAR, IDBI, IFB IND., IFCI, ISMT, INDOCO REM., IVR PRIME, JSW HOLDING, JYOTHY LAB, KALYANI STEELS, KIRLOSKAR FERROUS, KAUSHALYA INFRA, KOLTE PATIL, KOUTON RETAIL, MANUJSHREE EXT., MAYTAS INFRA, MOTILAL OSWAL, MUNDRA PORT, NAGARJUNA PERT, NAGREEKA CAPITAL, NELCAST, NITIN FIRE, POWER GRID, PRECISION PIPES, REFLEX REFRIGERANTS, REL, .IENISSANCE JEW, RNRL, SHIVALIK GLOBAL, SIMPLEX PROJECTS, ROMAN TARMAT, SEL MFG., SPICE COMM, STERLITE INDS., SUPREME INFRA, SWAN MILLS, TATA STEEL, TIME TECHNOPLAST, U.B. ENGG., UCO BANK, VARUN IND., VISHAL RETAIL AND ZYLOG SYTEMS, THE ASSESSEE ACQUIRED THE SHARES THROUGH IPO/PURCHASE AND SOLD THE SAME WITH IN A FEW DAYS AND IN SOME CASES, SOLD THE SHARES THE SAME DAY O R IN A DAY OR TWO. ALL THE ABOVE LOTS COMPRISE AROUND 80%OF THE TOTAL SHARES TRADED BY THE ASSESSEE, THEREFORE, THE SAME CAN NOT BE TREATED AS AN INVESTMENT ACTIVITY. THE ASSESSEE HAS RELIED UPON THE DECISION OF THE CIT V. GOPAL PUROHIT (BOMBAY HIGH COURT ), 228 CTR 582. IN THE SAID JUDGEMENT THE HON'BLE HIGH COURT HAS UPHELD THE DECISION OF THE TRIBUNAL WHEREIN THE TRIBUNAL HAD HELD THAT IT IS OPEN TO AN ASSESSEE TO MAINTAIN TWO SEPARATE PORTFOLIOS, ONE RELATING TO INVESTMENT IN SHARES, AND ANOTHER RELATIN G TO BUSINESS ACTIVITY INVOLVING DEALING IN SHARES. THE FACTS AND CIRCUMSTANCES ARE DIFFERENT IN THE PRESENT CASE. THE ASSESSEE IS ENGAGING INTO BUSINESS ACTIVITY INVOLVING DEALING IN SHARES. THE INTENSITY OF THE TRANSACTIONS IS HIGH AND HOLDING PERIOD IS VERY LOW. THE ASSESSEE HAS ACQUIRED THE SHARES ON THE BORROWED FUNDS. THE 5 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE MINIMUM HOLDING PERIOD ALSO SUGGESTS THAT THE ASSESSEE HAS NEVER WANTED TO REAP THE BENEFITS OF THE DIVIDEND. IT IS SEEN THAT SECURITIES WERE ACQUIRED FOR THE PURPOSE OF TRADING, PRI MARILY, THE PURPOSE OF EARNING DIVIDEND THEREON IS A DORMANT FACTOR AND DOMINATING FACTOR IS EARNING PROFIT IN SHORT TENURE BY ACTIVELY PARTICIPATING INTO SHARE TRADING. FROM ABOVE IT IS CLEAR THAT THE ACTIVITY OF THE ASSESSEE IS NEVER AN INVESTMENT ACTIVI TY BUT A BUSINESS ACTIVITY. THUS, THERE IS A SYSTEMATIC ACTIVITY WHICH IS BEING CARRIED OUT. AN ORGANIZED AND REGULAR ACTIVITY TO THE EXTENT CARRIED OUT BY THE ASSESSEE IS ESSENTIALLY A BUSINESS ACTIVITY, ALSO GETS SUPPORT FROM THE FOLLOWING JUDICIAL DECIS ION. IN LAXMINARAYAN RAM GOPAL VS. GOVERNMENT OF HYDERABAD 25 ITR 449, THE SUPREME COURT HAS OBSERVED THAT BUSINESS CONNOTES SOME REAL, SUBSTANTIVE AND SYSTEMATIC COURSE OF ACTIVITY OF CONDUCT WITH SET PURPOSE. IN WERLE & CO. VS. COLQUHOUN 2 TC 402, IT IS HELD THAT THE HABITUAL DOING OF FACT CAPABLE OF PRODUCING PROFITS IS TRADE OR BUSINESS. FURTHER IN RAJA BAHADUR VISHESHWARA SINGH (DECEASED) AND OTHER VS. CIT 41 ITR 685, THE SUPREME COURT HAS OBSERVED THAT THE MAGNITUDE AND FREQUENCY AND THE RATIO OF SALES TO PURCHASES AND TOTAL HOLDINGS IS EVIDENCES FROM WHICH THE TAX AUTHORITIES CAN COME TO THE CONCLUSION AS TO TRUE NATURE OF THE ASSESSEE'S ACTIVITIES. IN CIT VS. MOTILAL HIRABHAI SPINNING AND WEAVING CO. LTD. 113 ITR 173, THE GUJARAT HIGH COURT HAS HELD THAT WHETHER A PERSON IS CARRYING ON BUSINESS IN PARTICULAR COMMODITY WILL DEPEND UPON THE VOLUME CONSIDERING VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF THE TRANSACTIONS, ON WHETHER ORDINARILY SPEAKING, A PROFIT MOTIVE PERVADES THE WHOLE OF THE T RANSACTIONS AND OR WHETHER THE ASSESSEE'S ACTIVITY COULD BE SAID TO A SORT OF ORGANIZED ACTIVITY. IN BHARAT DEVELOPMENT (P) LTD. VS. CIT 4 TAXMAN 58, IT IS HELD THAT TO REGARD AN ACTIVITY AS BUSINESS THERE MUST BE A COURSE OF DEALING CONTINUED OR CONTEMPL ATED TO BE CONTINUE WITH A PROFIT MOTIVE AND NOT FOR SPORT OF PLEASURE. 6 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE IN PUNJAB CO - OPERATIVE BANK LTD. VS. CIT, (1940) 8 ITR 635 (PC), IT IS HELD THAT IN ORDER TO RENDER PROFITS REALIZED ON SALES OF INVESTMENTS AS BUSINESS INCOME. IT IS NOT NECESSARY TO ESTABLISH THAT THE TAX PAYER HAS BEEN CARRYING ON WHAT MAY BE CALLED A SEPARATE BUSINESS EITHER OF BUYING OR SELLING INVESTMENTS OR MERELY REALIZING THEM. 4.11 THE ASSESSEE IS ENGAGED IN SHARE TRANSACTION AND THIS IS HIS MAIN SOURCE OF INCOME AS HE IS GET TING MEAGER INCOME FROM ANY OTHER SOURCE OF INCOME. THE MAJOR INCOME EARNED IS OUT OF THESE TRANSACTIONS OF SHARES SALE AND PURCHASE. THIS CLEARLY INDICATES THAT THE ASSESSEE HAS EARNED INCOME FROM A SINGLE MAJOR ACTIVITY I.E. SALES AND PURCHASE OF SHARES. ASSESSEE IS CONDUCTING SHARE TRADING ON A REGULAR BASIS. HOWEVER WHILE FILING THE RETURN OF INCOME THE SAID PROFIT HAS BEEN SHOWN AS SHORT TERM CAPITAL GAINS. 4.12 TO CLASSIFY ANY INCOME AS INCOME FROM BUSINESS OR PROFESSION THERE HAS 4O BE AN UNDERLYING PRINCIPLE OF SYSTEMATIC ACTIVITY CONTINUE OR COMPLETED TO BE CONTINUED WITH A PROFIT MOTIVE. IN VIEW OF THE DISCUSSION MADE ABOVE IT IS CLEAR THAT THE ASSESSEE'S ACTIVITY IS SYSTEMATIC AND CONDUCTED WITH A PROFIT MOTIVE. THE SHARES DEALING BY THE ASSESSEE CANNOT BE SAID TO BE AN INVESTMENT ACTIVITY BUT IS ESSENTIALLY A TRADING / BUSINESS ACTIVITY. THEREFORE, IT IS HELD THAT THE PROFIT OF RS.50,45,981/ - IS REQUIRED TO BE TAXED AS BUSINESS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. SINCE THE AS SESSEE HAS FILED INACCURATE PARTICULARS OF ITS INCOME, SEPARATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT ARE BEING INITIATED. 5. THE ASSESSING OFFICER ASSESSED THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME. THE ASSESSE E CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESSES. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT THE SECURITIES IN QUESTION WHICH WERE SOLD DURING THE YEAR WERE HELD BY THE ASSESSEE NOT AS INVESTMENTS BUT AS STOCK - IN - TRADE. IN COMING TO THE SAID CONCLUSION, THE CIT(A) HAS GIVEN THE FOLLOWING REASONS: 3.7.(I). THE ISSUE AS TO WHETHER TRANSACTION OF PURCHASE AND SALE OF SHARES IN A GIVEN CASE IS AN INVESTMENT OR A BUSINESS ACTIVITY 7 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE O R ADVENTURE IN THE NATURE OF TRADE, IT IS WELL SETTLED AS PER THE CONSISTENT JUDICIAL OPINION, THAT NO UNIVERSAL RULE OR PRINCIPLE CAN BE APPLIED BUT EACH CASE HAS TO BE DECIDED BY TAKING INTO ACCOUNT THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE . IN THE APPELLANT'S CASE, IT IS SEEN THAT THE BUSINESS OF PURCHASE AND SALE OF SECURITIES IS THE ONLY BUSINESS CARRIED OUT DURING THE LAST SEVERAL YEARS. THE SAME IS NEITHER OCCASIONAL NOR SEASONAL BUT HAS BEEN DONE CONTINUOUSLY OVER A LONG PERIOD OF MORE THAN FIVE YEARS FROM A.Y. 2006 - 07 TO 2010 - 11. THE AVERAGE HOLDING PERIOD OF THE SHARES TRADED IN IS AROUND 2 TO 2 AND 1/2 DAYS. (II) ALTHOUGH THE SHARES ARE CHARACTERIZED AS INVESTMENT IN THE BALANCE SHEET, THIS ALONE IS NOT INDICATIVE OF THE ACTUAL TRA NSACTIONS CARRIED OUT VIS - A - VIS THE SAME. THE COURTS HAVE CONSISTENTLY HELD THAT THERE CANNOT BE ANY DISPUTE ABOUT THE BASIC PROPOSITION THAT ENTRIES IN THE BOOKS OF ACCOUNT ALONE ARE NOT CONCLUSIVE IN DETERMINING THE NATURE OF INCOME. THE RELIANCE IS PLAC ED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD. VS CIT REPORTED IN 82 ITR 363 WHEREIN IT WAS HELD THAT WHETHER AN ASSESSEE IS ENTITLED TO A PARTICULAR DEDUCTION OR NOT IS DEPEND ON THE PROVISION OF THE LAW RELATI NG THERETO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN THE BOOKS OF ACCOUNTS BE DECISIVE OR CONCLUSIVE OF THE MATTER. IT IS TO BE NOTED THAT ONLY A FEW SCRIPS HAVE BEEN CONTINUOUSLY HELD BY THE APPELLANT FOR MORE THAN FIVE YEARS I.E. FROM 31/3/2006 UP TO 31/3/2011. A TOTAL OF 16 SCRIPS OF THE FACE VALUE OF RS.4,38,895 ARE FOUND TO BE HELD BY THE APPELLANT FOR A PERIOD OF UPTO 5 YEARS (A.Y. 2006 - 07 UPTO A.Y. 2010 - 11), WHICH CAN, AT BEST, PERHAPS BE DESCRIB ED AS AN INVESTMENT PORTFOLIO. THE SCRIPS ARE AS UNDER: SI. NO. NAME OF SCRIP QUANTITY AMOUNT (IN RS.) 1 ARCHANA SOFTWARE 2100 17,500 / - 2 SHRI BALAJI R STEELS 500 11,000 / - 3 INTEGRATED HITECH 900 9,000 / - 4 ARCHANA SOFTWARE LTD DETAILS NOT AV AILABLE 12,000/ - 5 ASKSHA SHARE - SEC. PVT LTD DETAILS NOT AVAILABLE 200,000/ - 6 BANGLORE SOFTSELL LTD DETAILS NOT AVAILABLE 32,500 / - 7 BARON INDOTECH LTD DETAILS NOT AVAILABLE 1,000 / - 8 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE 8 CONTECH SOFTWARE LTD DETAILS NOT AVAILABLE 6,000 / - 9 DSQ BIOTECH DETAILS NOT AVAILABLE 18,189 / - 10 FORE C SOFTWARE DETAILS NOT AVAILABLE 3,200 / - 11 FRONTLINE SOFTWARE LTD DETAILS NOT AVAILABLE 1,000 / - 12 GDR SOFTWARE LTD DETAILS NOT AVAILABLE 61,000 / - 13 INFOBAHN TECHNOLOGIES LTD DETAILS NOT AV AILABLE 2,000 / - 14 INTERTECH COMMUNICATIONS DETAILS NOT AVAILABLE 48,000 / - 15 JANATA SAH. BANK SHARES DETAILS NOT AVAILABLE 12,506 / - 16 TYCHE PERIPHERAL LTD DETAILS NOT AVAILABLE 4,000 / - TOTAL 4,38,895 / - THE INVESTMENT PORTFOLIO AS INTENDE D BY THE APPELLANT AND HELD AS PER ABOVE CHART HAS NOT BEEN TRADED DURING THE YEAR AT ALL. THE APPELLANT HAS ARGUED THAT AS PER THE STATEMENT OF STCG FURNISHED, THE SHARES OF AAKRUTI NIRMAN (SR.NO.1), BEST AND CROMPT (SR.NO.18), BF UTILITIES (SR.NO.21), CI NEMAX INDIA (SR.NO.35), FINOLEX INDUSTRIES (SR.NO.46), HINDALCO (SR.NO.55), ISMT (SR.NO.82), ITC LTD (SR.NO.83), KALYANI STEELS (SR.NO.94), PARSHWANATH DEVELOPERS (SR.NO.129), RAJ TELEVISION (SR.NO.134), SOBHA DEVELOPERS (SR.NO.151), TELE DATA (SR.NO.158), TATA STEEL (SR.NO.160), TWILIGHT LITAK , (SR.NO.161); UB ENGG.(SR.NO.176) HAVE ALL BEEN ACQUIRED IN EARLIER ASSESSMENT YEAR I.E. A.Y.07 - 08 AND WERE TREATED AS INVESTMENTS AS ON 31 - 03 - 2007. THE GAIN ARISING THEREFORE, ON ACCOUNT OF SALE OF THESE SHARES WILL HAVE TO BE TREATED AS STCG. HOWEVER, IT IS SEEN THAT THESE SCRIPS WERE PURCHASED EITHER IN THE MONTHS OF FEBRUARY OR MARCH 2008 ONLY TO BE SOLD WITHIN A FEW MONTHS (2 - 3 MONTHS). THESE CANNOT BE REGARDED AS INVESTMENTS PER SE, BEING INTENDED TO BE SOLD AS SOON AS THEY REACHED AN ATTRACTIVE PRICE. (III). THE ASSESSING OFFICER HAS RECORDED A FINDING OF FACT THAT THE APPELLAN T HAS ACQUIRED THE SHARES OUT OF BORROWED FUNDS. AN EXAMINATION OF THE BALANCE SHEET FOR THE YEAR ENDING 31/3/2006 SHOWS THAT THE APPELLA NT HAD BANK OVERDRAFT ACCOUNT OF RS.61,21,580 AS ALSO CURRENT LIABILITIES AMOUNTING TO RS.80,09,636. AS AGAINST THE SAME, THE APPELLANT'S CAPITAL ACCOUNT SHOWS RS.90,07,120 AS CLOSING BALANCE. THEREFORE, IT IS OBVIOUS THAT THE INVESTMENT IN SHARES IS OUT O F BORROWED MONEY. THE ONLY INCOME AVAILABLE TO THE APPELLANT DURING THE YEAR ARE INTEREST INCOME OF RS.2,96,248 AND PROFIT ON SALE OF PROPERTY AMOUNTING TO 9 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE RS.9,40,790, THESE INCOMES ARE GROSSLY INADEQUATE TO FUND THE INVESTMENTS MADE DURING THAT YEAR, THE CLOSING BALANCE OF WHICH STANDS AT RS.61,18,376. IN ANY CASE THE NATURE OF FUNDS USED TO PURCHASE SHARES IS NOT AT ALL RELEVANT IN THE PRESENT CASE. WHAT IS RELEVANT IS THAT INTENTION OF THE APPELLANT IN ACQUIRING THE SHARES. (IV). THE APPELLANT IS SEEN T O HAVE INVESTED IN SEVERAL IPOS DURING THE YEAR. NORMALLY INVESTMENT IN IPOS IS MADE WITH THE LONG TERM PERSPECTIVE OF HOLDING THEM FOR A REASONABLE AMOUNT OF TIME. HOWEVER, MOST OF THE IPOS HAD BEEN SOLD BY THE APPELLANT WITHIN A FEW DAYS OF PURCHASE. T HIS ASPECT HAS BEEN TOUCHED UPON BY THE ASSESSING OFFICER BUT IS ELABORATED FURTHER IN THE TABLE BELOW. SI. NO. NAME OF THE COMPANY QUANTITY PURCHASE DATE QUANTITY SALE DATE 1 ALLIED COMPUTER 500 21/11/2007 500 23/11/2007 2 ANKIT M ET & POWER 1757 6/7/2007 1757 10/7/2007 3 BEML 33 15/7/2007 ' 33 17/7/2007 4 CELESTIAL LABS 471 12/7/2007 471 17/7/2007 5 CIRCUITS SYSTEMS 502 28/10/2007 502 2/1 1/2007 6 HDIL 157 21/7/2007 157 24/7/2007 7 ICICI BAN K 108 5/7/2007 108 9/7/2007 8 KOUTONS RETAIL 17 9/10/2007 17 12/10/2007 9 MANJUSHREE EXT. 6300 25/2/2008 6300 28/2/2008 10 ROMAN TARMAT 40 7/7/2007 40 9/7/2007 11 SPICE COMM 564 19/7/2007 564 19/7/2007 12 SUPREME INFRS 60 15 /10/2007 60 18/10/2007 13 TIME TECHNOPLAST 451 9/6/2007 24 427 13/6/2007 13/6/2007 THIS BEHAVIOUR OF THE APPELLANT CLEARLY INDICATES THAT HIS INTENTION WAS TO TRADE IN THE SECURITIES AND NOT TO HOLD ON TO THEM AS INVESTMENTS. NO LONG TERM CAPITAL GAIN HAS BEEN DISCLOSED DURING THESE YEARS, INCLUDING THE PRESENT ASSESSMENT YEAR NOR HAS DIVIDEND BEEN RECEIVED ON THESE SHARES. THIS INDEED CLEARLY SHOWS THE INTENTION OF THE APPELLANT WAS NOT TO HOLD ON TO THE SHARES AS INVESTMENTS BUT TO DERIVE SHORT TERM PROFITS FROM TRADING IN THE SHARES. 10 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE (V). THE APPELLANT'S RELIANCE ON GOPAL PUROHIT'S CASE IS MISPLACED. IN THAT PARTICULAR CASE INVOLVING AY 2005 - 06, THE REVENUE AUTHORITIES HAD TAKEN THE VIEW THAT THE INCOME OF THE ASSESSEE WAS ASSESSABLE UNDER THE H EAD BUSINESS INCOME ALTHOUGH HE HAD OFFERED BOTH BUSINESS INCOME AS WELL AS CAPITAL GAIN INCOME ARISING OUT OF INVESTMENT IN SHARES. THE ITAT AND BOMBAY HIGH COURT UPHELD THE CONTENTION OF THE ASSESSEE THAT HE WAS MAINTAINING TWO SEPARATE PORTFOLIOS, ONE R ELATING TO INVESTMENT IN SHARES AND ANOTHER RELATING TO BUSINESS DEALINGS IN SHARES AND INCOMES ARISING OUT OF THESE SEPARATE PORTFOLIOS WERE TO BE ASSESSED AS CAPITAL GAINS AND BUSINESS INCOMES RESPECTIVELY. IN THE PRESENT CASE, IT IS SEEN THAT THE APPELL ANT HAS NOT MADE ANY ATTEMPT TO DIFFERENTIATE BETWEEN HIS INVESTMENT PORTFOLIO AS DISCUSSED IN THIS PARA AT (II) ABOVE AND HIS TRADING PORTFOLIO ON THE BASIS OF WHICH CERTAIN SHORT TERM CAPITAL GAIN HAS BEEN EARNED. IN FACT, ALTHOUGH THE APPELLANT DOES MAI NTAIN AN INVESTMENT PORTFOLIO, NO SUCH DISTINCTION IS AVAILABLE IN THE APPELLANT'S BOOKS EVEN FOR THE PREVIOUS AYS 2006 - 07 AND 2007 - 08 OR IN THE SUBSEQUENT AYS 2009 - 10 & 2010 - 11. FURTHER IN GOPAL PUROHIT'S CASE, THE HIGH COURT, WHILE UPHOLDING THE PRINCIPL E THAT NORMALLY RES JUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDINGS, WENT INTO THE ISSUE OF UNIFORMITY IN TREATMENT AND CONSISTENCY BY THE REVENUE WHERE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. THIS WAS PRIMARILY DUE TO THE FACT THAT FOR THE AY 2001 - 02 AND 2003 - 04, REVENUE HAD ACCEPTED THE CONTENTION OF THE APPELLANT UNDER SECTION 143(3) OF THE ACT WHEREIN INTEREST EXPENDITURE HAS BEEN ALLO WED AS INCURRED TOWARDS EARNING OF BUSINESS INCOME AND THE LONG - TERM CAPITAL GAIN AND SHORT - TERM CAPITAL GAIN HA D BEEN ACCEPTED AS SUCH. IN THE PRESENT CASE, THE EARLIER YEARS HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 143(3). THEREFORE IT IS HELD THAT THE DECISION OF THE MUMBAI HIGH COURT IN GOPAL PUROHIT'S CASE IS NOT APPLICABL E TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. (VI). THE MUMBAI HIGH COURT DECISION IN THE CASE OF CIT VS SURESH R. SHAH IN ITA NO. 6267/MUM/2009 FOR THE AY 2006 - 07 IS ALSO FOUND TO BE DISTINGUISHABLE. ON AN EXAMINATION OF THE FACTS OF THE CASE IT W AS FOUND THAT THE APPELLANT HAD NOT BORROWED ANY FUNDS FOR HIS INVESTMENTS, THAT LONG TERM CAPITAL GAIN WERE ATTRIBUTABLE TO ONLY SHARES OF FOUR COMPANIES AND THAT THREE OF THEM WERE HELD FOR A PERIOD OF ABOUT 5 TO 12 YEARS. SO FAR AS SHORT TERM CAPITAL GA IN IS 11 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE CONCERNED IT WAS FOUND THAT 93% OF THE SAME WERE ATTRIBUTABLE TO SHARES OF SIX COMPANIES AND IN ANY CASE, ALL THE SHARES WERE HELD FOR PERIOD IN EXCESS OF ONE MONTH. IN THE PRESENT CASE, IT IS A MATTER OF RECORD THAT EVEN SHARES SUBSCRIBED DURING IP O HAVE BEEN SOLD WITHIN A PERIOD OF TWO TO FIVE DAYS. THE MAXIMUM HOLDING PERIOD IN THE APPELLANT'S CASE IS VERY LOW COMPARED TO SURESH R. SHAH'S CASE. THERE IS ALSO NO LONG TERM CAPITAL GAIN RETURNED BY THE APPELLANT IN ANY OF THE YEARS FROM AY 2006 - 07 TO 2010 - 11. THE APPELLANT HAS ALSO NOT SHOWN ANY DIVIDEND INCOME WORTH MENTIONING, THE ONLY DIVIDEND INCOMES SHOWN ARE RS.46,887 FOR THE AY 2007 - 08, RS.37,551 FOR THE IMPUGNED AY 2008 - 09, RS.1,54,251 FOR AY 2009 - 10 AND RS.2,031 FOR AY 2010 - 11. (VII). THE APPELLANT'S RELIANCE ON THE MUMBAI ITAT DECISION IN SMK SHARES AND STOCK BROKING PVT. LTD. FOR THE PROPOSITION THAT LARGE VOLUME OF PURCHASE AND SALE OF SHARES DOES NOT PER SE MEAN THAT THE ACTIVITY CARRIED OUT IS BUSINESS ACTIVITY, IS OF NO HELP TO THE AP PELLANT. IN THE CASE BEFORE THE MUMBAI ITAT THE ASSESSEE COMPANY WAS THE MEMBER OF THE BOMBAY STOCK EXCHANGE AND DISCLOSED BOTH LONG TERM AND SHORT TERM CAPITAL GAINS ON A LARGE TURNOVER/VOLUME OF SHARES FOR THE AY 2005 - 06. ON THE BASIS OF FACTUAL FINDIN GS THAT OUT OF THE MORE THAN 300 TRANSACTIONS DURING THE YEAR, THE ASSESSEE HAD HELD THE SHARES FOR MORE THAN 300, 200 AND 100 DAYS AND ONLY IN A VERY SMALL NUMBER OF CASES SHARES WERE SOLD DURING 10 DAYS AS ALSO THE FINDINGS THAT THE ASSESSEE HAD CLEARLY MAINTAINED THE DISTINCTION BETWEEN SHARES HELD AS STOCK IN TRADE AND AS INVESTMENT, THE ITAT HELD THAT WHILE THE VOLUME OF TRANSACTION IS AN IMPORTANT INDICATOR OF THE INTENTION OF THE ASSESSEE, AS TO WHETHER HE IS TRADING IN THEM OR MERELY INVESTING IN T HEM, IT IS CERTAINLY NOT THE SOLE CRITERIA. IT WAS HELD UNDER THESE FACTS AND CIRCUMSTANCES AS ALSO THE FACT THAT THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER U/S 143(3) FOR AYS 2001 - 02 AND 2004 - 05 DID N OT DISPUTE THE ASSESSEE'S CLAIM REGARDING CA PITAL GAINS OFFERED. IT WAS THUS HELD THAT SINCE THE ASSESSEE HAS MAINTAINED SEPARATE INVESTMENT PORTFOLIO THAT ALL THE SALES OUT OF THIS PORTFOLIO ARE IDENTIFIABLE TO THE PURCHASES MADE IN THE SAID PORTFOLIO AND THIS CLAIM HAD BEEN ACCEPTED BY THE ASSESSI NG OFFICER IN THE PAST, ALL THESE FACTORS OUTWEIGHED THE TEST OF FREQUENCY OF TRANSACTIONS BEING UNDERTAKEN BY THE ASSESSEE IN DECIDING THE TRUE INTENTION THEREIN. AS ALREADY DISCUSSED IN THE PRECEDING 12 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE PARAGRAPHS, THE APPELLANT'S CASE IS DISTINGUISHABLE SI NCE HE HAS UNDERTAKEN A CONTINUOUS AND SYSTEMATIC ACTIVITY OF TRADING AND IS HELD TO HAVE NOT TRADED IN THOSE SHARES WHICH COULD BE STATED TO HAVE BEEN HELD AS INVESTMENT. NEITHER HE HAS BEEN CONCLUSIVELY ABLE TO PROVE THAT NO BORROWED FUNDS HAVE BEEN UTIL IZED FOR MAKING THE SAID INVESTMENTS. THERE IS ALSO NO INCONSISTENCY ON THE PART OF THE ASSESSING OFFICER BY ACCEPTING THE APPELLANT'S CLAIM REGARDING PROFITS ON SALE OF INVESTMENTS IN THE PAST, SIMPLY BECAUSE THIS ISSUE HAS NOT BEEN LOOKED AT CLOSELY IN A NY SCRUTINY ASSESSMENT IN THE PAST. (VIII). DURING THE COURSE OF APPELLATE PROCEEDINGS THE LEARNED AR HAS FURNISHED THE COPY OF PUNE ITAT ORDER IN THE CASE OF SONI GURUMUKH SUKHWANI IN ITA NOS. 16 & 17/PN/2011 DATED 14/6/2012 STATING THAT ON EXACTLY IDENTI CAL FACTS AND CIRCUMSTANCES, THE HON'BLE ITAT HAS ACCEPTED THE CONTENTION OF THE APPELLANT. PERUSAL OF THE ORDER OF THE ITAT HOWEVER REVEALS THAT THERE ARE SEVERAL DISTINGUISHING FEATURES IN THE CASE DECIDED UPON. THE FIRST IS THE FINDING THAT NO MONEY HAD BEEN BORROWED FOR INVESTMENT IN SHARES, SECOND BEING THAT IN THE ASSESSMENT ORDER ITSELF THERE WAS FINDING OF THE FACT THAT PROFIT ON SALE OF SHARES HAD BEEN ACCEPTED AS SHORT TERM OR LONG TERM CAPITAL GAIN IN THE PAST AND FINALLY THERE IS ALSO A FINDING THAT THE SHARES WERE HELD FOR CONSIDERABLY LONGER PERIODS OF TIME, RANGING FROM 3 TO 6 MONTHS. NEEDLESS TO SAY, FOR THE REASONS DESCRIBED IN THE PRECEDING PARAS, THESE FACTS ARE DISTINGUISHABLE IN THE PRESENT CASE AND THE RATIO OF THIS DECISION WOULD NOT B E APPLICABLE. 3.8. HAVING REACHED THE CONCLUSION IN THE PRECEDING PARA 3.7 THAT THE INCOME ARISING IN THE HANDS OF THE APPELLANT OUT OF THE SALE OF THE IMPUGNED SHARES IS IN RESPECT OF SHARES HELD AS STOCK IN TRADE AND NOT AS INVESTMENT, IT IS CLEAR THAT T HE INCOME OF THE APPELLANT HAS ARISEN OUT OF SYSTEMATIC AND CONTINUOUS BUSINESS ACTIVITY OF PURCHASE AND SALE OF SHARES, OBJECT OF SUCH ACTIVITY BEING NOT WEALTH MAXIMIZATION BUT INCOME MAXIMIZATION, AS DEMONSTRATED BY THE CONDUCT OF THE APPELLANT. THEREFO RE, THE ASSESSING OFFICER'S ACTION IN ASSESSING THIS INCOME AS BUSINESS INCOME IN THE HANDS OF THE APPELLANT IS HEREBY AFFIRMED. GROUND OF APPEAL NO. 1 IS TREATED AS DISMISSED. 13 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIO NS OF THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL ARGUES THAT THE ASSESSEE IS MAKING THE REGULAR INVESTMENT IN THE SHARES. THE ASSESSEE HAS ALSO DECLARED THE LONG TERM CAPITAL GAIN WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THE LD. COUNSE L HAS FILED THE DETAILS IN RESPECT OF THE LONG TERM CAPITAL GAIN IN THE FORM OF CHART WHICH IS PLACED ON RECORD. HE ARGUES THAT THE ASSESSEE HAS ONLY ONE PORTFOLIO. HE FURTHER SUBMITS THAT THE ASSESSING OFFICER HIMSELF H AS ACCEPTED THAT THE ASSESSEE IS H OLDING THE SHARES AS AN INVESTMENT IN HIS BALANCE SHEET AND THAT SHOWS THE INTENTION OF THE ASSESSEE NOT TO DO THE TRA DING BUT TO DO THE ONLY INVESTMENT . HE SUBMITS THAT THE ASSESSEE HAS MAINLY USED HIS OWN FUNDS BUT WHENEVER THERE WAS SHORTAGE OF FINANCE THEN HE HAS TAKEN THE SHORT TERM BRIDG E FINANCE AGAINST HIS OWN FD S WHICH A RE KEPT WITH THE BANK. HE SUBMITS THAT THERE IS NO EXTRA EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT EXCEPT THE BANK CHARGES AND DEMAT CHARGES. HE ARGUES THAT IN RESPECT O F THE STCG THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER. HE PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE GOPAL PUROHIT (SUPRA). WE HAVE ALSO HEARD THE LD. DR, WHO SUBMITS THAT NOW THE ASSESSEE HAS GIVEN THE IDENTICAL TREATMENT IN THE PAST BUT THERE WAS NO OCCASION TO VERIFY THE NATURE OF THE ACTIVITY AS ALL THE RETURNS WERE ACCEPTED U/S. 143(1) OF THE ACT. HE PLEADED FOR CONFIRMING THE ORDER OF THE LD. CIT(A). 7. LAW IS WELL SETTLED THAT FREQUENCY OF THE TRANSACTION S IS NOT ONLY DECISIVE FACTOR. IT IS TRUE THAT THE ASSESSEE IS TAK ING SOME BRIDGE FINANCE AS SUBMITTED BY THE LD. COUNSEL WHENEVER THE RE IS SHORTAGE OF FUND S , BUT AT THE SAME TIME THE SAID BRIDGE FINANCE IS TAKEN AGAINST THE FIXED DEPOSIT MAINTAINED WITH THE BANK. IN SHORT, THE ASSESSE E HAS HIS OWN SUFFICIENT FUNDS TO DEAL IN THE SHARE TRANSACTIONS. THE ASSESSING OFFICER 14 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE HAS ACCEPTED THAT ALL THE SECURITIES SHARES ARE HELD BY THE ASSESSEE UNDER ONE PORTFOLIO I.E. INVESTMENT. IT IS ALSO SEEN THAT THIS PORTFOLIO IS CONSISTENTLY MAINTAIN ED IN THE PRECEDING YEARS ALSO AND THE SAME IS BROUGHT FORWARD. NOWHERE IT IS THE CASE OF THE AUTHORITIES BELOW THAT THE ASSESSEE HAS CONVERTED THE INVESTMENT INTO STOCK - IN - TRADE. ANOTHER ASPECT OF THE ASSESSEES CASE IS THAT THE ASSESSEE HAS ALSO DECLAR ED LONG TERM CAPITAL AND ON THAT THERE IS NO WHISPER BY BOTH THE AUTHORITIES BELOW. IN OUR OPINION THE PRINCIPLES LAID DOWN IN THE CASE OF GOPAL PUROHIT (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE AND DISTINCTION MADE BY THE LD. CIT(A) IS TOTAL LY MISPLACED. 8. IN THE CASE OF GOPAL PUROHIT (SUPRA) THE HON'BLE HIGH COURT HAS HELD AS UNDER: 3. INSOFAR AS QUESTION (B) IS CONCERNED, THE TRIBUNAL HAS OBSERVED IN PARA 8.1 OF ITS JUDGMENT THAT THE ASSESSEE HAS FOLLOWED A CONSISTENT PRACTICE IN REGAR D TO THE NATURE OF THE ACTIVITIES, THE MANNER OF KEEPING RECORDS AND THE PRESENTATION OF SHARES AS INVESTMENT AT THE END OF THE YEAR, IN ALL THE YEARS. THE REVENUE SUBMITTED THAT A DIFFERENT VIEW SHOULD BE TAKEN FOR THE YEAR UNDER CONSIDERATION, SINCE THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO ASSESSMENT PROCEEDINGS. THE TRIBUNAL CORRECTLY ACCEPTED THE POSITION THAT THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED SINCE EACH ASSESSMENT YEAR IS SEPARATE IN ITSELF. THE TRIBUNAL HELD THAT THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL, PARTICULARLY IN THE CASE OF THE ASSESSEE. THIS APPROACH OF THE TRIBUNAL CANNOT BE FAULTED. THE REVENUE DID NOT FURNISH ANY JUSTIFICATION FOR ADOPTING A DIVERGENT APP ROACH FOR THE ASSESSMENT YEAR IN QUESTION. QUESTION (B), THEREFORE, DOES NOT ALSO RAISE ANY SUBSTANTIAL QUESTION . 9. WE ALSO FIND THAT THE ASSESSEES CASE IS WELL SUPPORTED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SURESH R. SHAH INCOME TAX APPEAL NO. 1974 OF 2011 DATED 20 TH JUNE, 2012. WE, ACCORDINGLY, ALLOW THE GROUND TAKEN BY THE ASSESSEE AND DIRECT THE 15 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE ASSESSING OFFICER TO ACCEPT THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE. 10. NOW, WE TAKE UP THE ASSESSEE S APPEAL FOR THE A.Y. 2010 - 11 BEING ITA NO.1332/PN/2013. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT, THAT SHORT TERM CAPITAL GAIN DERIV ED ON SALE OF SHARES OF RS. 25,64,724/ - SHOULD HAVE BEEN TAXED AS SHORT TERM CAPITAL GAIN ONLY AND NOT AS THE INCOME FROM BUSINESS TREATED BY THE AO & CONFIRMED BY CIT(A). JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT ON THIS SCORE. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT & HAVING REGARD TO THE FACT PREVAILING IN IMMEDIATELY PRECEDING ASSESSMENT YEAR IT BE HELD THAT, CONSISTENT TREATMENT SHOULD HAVE BEEN GIVEN TO THE SIMILAR FACTS & THE CURRENT YEARS INCOME ON ACCOUNT OF SALE OF SHARES SHOULD HAVE BEEN SET OFF AGAINST THE PAST LOSSES. 11. IN THIS YEAR , THE FACTS ARE IDENTICAL AS IN THE A.Y. 2008 - 09. IN THIS YEAR THE ASSESSEE DECLARED THE SHORT TERM CAPITAL GAIN TO THE EXTENT OF RS.25,64,724/ - . THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE HEAD BUSINESS INCOME AND ALSO DECLINE D TO ALLOW THE SET OFF OF THE BROUGHT FORWARD LOSSES. SO FAR AS THE GROUND NO. 2 IS CONCERNED AS THE FACTS ARE IDENTICAL AS IN THE A.Y. 2008 - 09 WE, THEREFORE, FOLLOW ING OUR REASONS IN THE SAID ASSESSMENT YEAR WHILE DECIDING THE ASSESSEES APPEAL , I N THIS YEAR ALSO H O LD THAT THE SHORT TERM CAPITAL GAIN (STCG) DECLARED BY THE ASSESSEE CANNOT BE ASSESSED AS A BUSINESS INCOME AND WE, ACCORDINGLY, DIRECT THE ASSESSING OFFI CER TO ACCEPT THE STCG ON THE SHARE TRANSACTIONS AND ACCORDINGLY ASSESSED. THE NEXT GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS NOT ALLOWED THE SET OFF OF THE BROUGHT FORWARD LOSSES U/S. 74 OF THE ACT AS WE ARE ALREADY HELD THAT THE 16 ITA NO S. 1 331 & 1332 /PN/2013, ASHOK B SHAH, PUNE SHORT TERM CAPITAL GAIN IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER ALSO TO GIVE THE BENEFIT OF SET OFF U/S. 74 OF THE INCOME - TAX ACT AFTER VERIFYING THE RECORD IN RESPECT OF THE BROUGHT FORWARD CAPITAL LOSS. AC CORDINGLY, BOTH THE GROUNDS TAKEN BY THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 14 - 0 8 - 201 4 SD/ - SD/ - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER J UDICIAL MEMBER RK /PS PUNE , DATED : 14 TH AUGUST, 20 1 4 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I, PUNE 4 THE CIT - I, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDE R PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE