The DCIT, Central Circle-1(3), Ahmedabad V. Shri Bahubali S.Shah, Ahmedabad

ITA 171/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94746 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset; Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NOS: 171 & 212/AHD/2011 (ASSESSMENT YEAR: 2007-08) DY. CIT, CENTRAL CIRCLE 1(3), AHMEDABAD V/S SHRI BAHUBALI SHANTILAL SHAH GUJARAT SAMACHAR BHAVAN, KHANPUR, AHMEDABAD (APPELLANT) (RESPONDENT) ITA NOS: 847 & 1361/AHD/2010 (ASSESSMENT YEAR: 2006-07) SHRI BAHUBALI SHANTILAL SHAH GUJARAT SAMACHAR BHAVAN, KHANPUR, AHMEDABAD V/S ACIT, CENTRAL CIRCLE 1(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AINPS8897E APPELLANT BY : SHRI DINESH SINGH, SR. D.R . RESPONDENT BY : SHRI S.N. SOPARKAR, A.R. ( )/ ORDER DATE OF HEARING : 13-10-2015 DATE OF PRONOUNCEMENT : 04 -12-2015 ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 2 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THESE 4 APPEALS OF WHICH 2 ARE FILED BY THE ASSESSE E AND 2 APPEALS ARE FILED BY THE REVENUE ARE AGAINST THE ORDER OF CIT(A)-I AH MEDABAD, DATED 24.02.2010 & 09.12.2010 FOR A.YS. 2006-07 & 2007-08 RESPECTIVELY. 2. BEFORE US, AT THE OUTSET LD. A.R. SUBMITTED THAT TH OUGH THE APPEALS RELATE TO TWO DIFFERENT ASSESSMENT YEARS BUT THE ISSUES INVOL VED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE AMOUNTS AND ASSESSMENT YEARS AND THEREFORE HE HAS COMMON SUBMISSIONS TO MAKE AND THEREFORE ALL TH E APPEALS CAN BE HEARD TOGETHER. LD. D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSIONS OF LD. A.R. WE THEREFORE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF ALL THE APPEALS BY A CONSOLIDATED ORDER AND THUS PROCEED WITH THE F ACT FOR A.Y. 2006-07. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOM E FROM SALARY, BUSINESS OF SHARE TRADING, CAPITAL GAINS AND OTHER SOURCES. ASS ESSEE FILED HIS RETURN OF INCOME FOR AY 2006-07 ON 30.12.2006 DECLARING TOTAL INCOME OF RS 2,48,57,450/-. THE CASE WAS SELECTED FOR SCRUTINY A ND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 3 0.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT THE RS 2,46,96,280/- BY IN TER ALIA TREATING THE GAINS EARNED FROM SALE OF SHARES AS BUSINESS INCOM E INSTEAD OF SHORT TERM CAPITAL GAINS AS CONSIDERED BY ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO VID E ORDER DATED 24.2.2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED B Y THE ORDER OF LD. CIT(A), ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 3 ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. T HE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 847/AHD/2010 READS AS UNDER :- 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIRMIN G THE INCOME OF RS.28,52,583/- ARISING ON ACCOUNT OF SALE OF SHARES AS BUSINESS IN COME INSTEAD OF CAPITAL GAIN. IT IS SUBMITTED THAT THE INCOME OF THE ASSESSEE BE TREATE D AND TAXED AS CAPITAL GAIN ONLY AND NOT AS BUSINESS INCOME. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C.I.T. (APPEALS) ERRED IN HOLDING THAT THE ASSESSEE HAD DERIVED THE SURPLUS OF RS.28,52,583/- IN THE PURCHASE AND SALE OF SHARES OF THE COMPANIES, WHICH WERE ACQUIRED THROUGH TWO E NTITIES, WHO WERE CHARGING FEES FOR SUCH ACTIVITIES AND THEREFORE, THE POINT FOR DE TERMINATION IS THAT IT IS A SYSTEMATIC ACTIVITY OF FINANCING AND MAKING APPLICATIONS IN TH E IPO, GETTING THE SHARES IN IPO AND SELLING THEM COULD BE TERMED AS BUSINESS OR ADV ENTURE IN THE NATURE OF TRADE. THE ENTIRE FINDING AND OBSERVATION ARE INCORRECT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IN VIEW OF THIS THE TREATMENT OF RS.28,52,583 /- AS BUSINESS INCOME IS INCORRECT ON THE FACTS AND ON LAW AND THE SAME BE DELETED AND THE INCOME BE TAXED AS SHORT TERM CAPITAL GAIN AS TREATED AND OFFERED BY THE ASS ESSEE. 3. THE ORDER PASSED BY THE LEARNED C.I.T. (APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT T HE SAME BE HELD SO NOW. 5. ON THE OTHER HAND THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 1361/AHD/2010 READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING THE A.O. TO TAX SURPLUS OF RS. 1,29,68,597/- ARISING FROM SALE OF SHARES AND SECUR ITIES AS SHORT TERM CAPITAL GAINS AS PER THE PROVISIONS OF SECTION 111A AND NOT AS BUSIN ESS INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 6. SINCE THE GROUNDS RAISED BY ASSESSEE AND REVENUE IN THEIR RESPECTIVE APPEALS ARE INTERCONNECTED, BOTH THE APPEALS ARE CO NSIDERED TOGETHER. ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 4 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAD SOLD SHARES AND HAD EARNED PROFIT WHICH WERE CONSID ERED BY THE ASSESSEE AS CAPITAL GAINS. OF THE CAPITAL GAINS, THE PROFIT ON SALE OF SHARES WHICH WERE HELD BY THE ASSESSEE FOR MORE THAN 12 MONTHS WERE C ONSIDERED AS LONG TERM CAPITAL GAINS (LTCG) (BEING RS 85,21,36,058/- ) AND THE PROFIT ON SALE OF SHARES WHICH WERE HELD BY THE ASSESSEE FOR LESS THAN 12 MONTHS WERE TREATED AS SHORT TERM CAPITAL GAINS (STCG) (BEING RS 1,58,21,181/-). THE TREATMENT OF ASSESSEES CLAIM OF LTCG WAS ACCEPTED BY THE AO BUT ON PERUSING THE DETAILS OF THE TRANSACTIONS THAT HAD R ESULTED INTO GAINS AND THAT WERE CONSIDERED BY ASSESSEE AS STCG, AO NOTICED THA T THE TRANSACTIONS OF PURCHASES WERE OF RS 9.30 CRORE AND SALES VALUE WER E OF RS 10.89 CRORES AND THUS CONSIDERING THE VOLUME INVOLVED, AO CONCLUDED THE SHARES TO BE IN THE NATURE OF COMMODITY FOR THE ASSESSEE. HE ALSO NOTIC ED THAT ASSESSEE HAD SOLD THE SHARES WITHIN A SHORT PERIOD OF THEIR ACQUISITI ON (THE LIST OF SHARES ARE REPRODUCED AT PAGE 15 & 16 OF THE ASSESSMENT ORDER) , THE MAIN SOURCE OF THE ASSESSEE WAS CAPITAL GAINS ON PURCHASE/SALE OF SHAR ES. HE ALSO NOTICED THAT ASSESSEE HAD UTILIZED BORROWED FUNDS FOR MAKING PUR CHASE OF SHARES AND HAD ALSO OBTAINED OVERDRAFT FACILITIES AND THE INTEREST COST INCURRED WAS ADDED TO THE COST OF SHARES OR DEBITED THE INTEREST ACCOUNT AND THAT THE ASSESSEE HAD ADVANCED FUNDS TO THE PERSONS INVOLVED IN IPO SCAM FOR SUBSCRIBING TO THE IPO AND THEN IN TURN OBTAINED THE SHARES FROM THOSE PERSONS AND WERE SOLD BY ASSESSEE. A.O WAS THEREFORE OF THE VIEW THAT THE INTENTION OF HOLDING THE SHARES FOR A LONGER PERIOD AND ENJOYING ITS BENEFIT WAS MISSING IN THE CASE OF ASSESSEE. HE ACCORDINGLY CONCLUDED THAT THE MOTIVE OF THE ASSESSEE WAS TO EARN MAXIMUM PROFITS AND THEREFORE THE PROFITS ON S ALE OF SHARES COULD NOT TREATED AS CAPITAL GAINS BUT HAS TO BE TREATED AS BUSINESS INCOME. HE THEREFORE CONSIDERED THE PROFIT ON SALE OF SHARES O F RS 1,58,21,181/- AS PROFIT ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 5 OF BUSINESS AS AGAINST THE SHORT TERM CAPITAL GAINS CONSIDERED BY ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DECIDED THE ISSUE PARTLY IN FAVOUR OF THE ISSUE BY HOLDING AS UNDER:- 8.1 BEFORE DECIDING THE MAIN ISSUE, THE FACTS ARE REQUI RED TO BE RECAPITULATED. THE FACTS EMERGING IN THE PRESENT CASE ARE :- THE APPELLANT, IN THE PREVIOUS YEAR UNDER CONSIDERA TION, HAS GOT SURPLUS OF RS.1,58,21,180/- IN THE SHARE TRANSACTIONS. IN THE RETURN, THE AFORESAID SURPLUS AMOUNT HAS BEEN OFFERED TO TAX AS STCG, WHICH IS TAXED @ 1 0%. THE APPELLANT HAS NOT DIRECTLY ADVANCED ANY FUNDS T O RUPAL PANCHAL AND OTHERS, WHO ARE INVOLVED IN THE IPO SCAM. THIS HAS BEEN CATEGORICAL LY STATED BY THE APPELLANT VIDE SUBMISSIONS MADE ON 10.02.2010. THE SAME HAS BEEN R EPRODUCED AT PARA 7 OF THE INSTANT APPELLATE ORDER. OUT OF TOTAL SURPLUS AMOUNT OF RS.1,58,21,180/-, TH E SURPLUS AMOUNT OF RS.28,52,583/- HAS BEEN GENERATED IN THE SALE / PURCHASE OF SHARES OF IDFC LTD. AND YES BANK LTD. THESE SHARES WERE ACQUIRED BY MAKING APPLICATION IN THE I POS OF THESE COMPANIES THROUGH IL&FS AND J.M. FINANCIAL SERVICES PVT LTD. THE IL&F S AND M/S. J.M. FINANCIAL SERVICES PVT. LTD. HAD ALSO PARTLY FINANCED SUCH ACTIVITY. T HE APPELLANT HAS PROVIDED PART FINANCE TO M/S. IL&FS AND M/S. J.M. FINANCIAL SERVICES PVT. LTD. FOR MAKING APPLICATION IN THE IPOS OF IDFC LTD. AND YES BANK LTD. AFTER ACQUISITI ON OF THESE SHARES, THESE SHARES HAVE BEEN SOLD AS PER THE DETAILS MENTIONED BY THE ASSES SING OFFICER AT PAGE 19 OF THE ASSESSMENT ORDER. 8.2 IN THE LIGHT OF THESE FACTS, THE ISSUE FOR DETE RMINATION IS AS TO WHETHER THE SURPLUS OF RS.1,58,21,180/- IS TO BE TAXED AS STCG @10% OR THE SAME SHOULD BE SUBJECTED TO TAX AS BUSINESS INCOME AT NORMAL RATES. THE ITAT, AHMEDABA D (A BENCH) IN THE CASE OF ACIT VS. HIPOLIN LTD. (ITA NO.4259/AHD/2007) HAS DECIDED A SIMILAR ISSUE FOR A.Y.2004-05 VIDE ORDER DATED 04.09.2009. THE OPERATIVE PART OF THE JUDGMENT (PARA 17 TO 23) READS AS UNDER :- . 8.3 IN THE LIGHT OF PRINCIPLES LAID DOWN BY HONBLE ITAT, AHMEDABAD IN THE ORDER IN THE CASE OF M/S. HIPOLIN LTD., SUPRA, THE FACTS IN THE PRESENT CASE ARE REQUIRED TO BE EXAMINED. IN THE PRESENT CASE, THE APPELLANT HAS DE RIVED SURPLUS OF RS. 28,52,583/- IN THE ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 6 SALES/PURCHASE OF SHARES OF THE COMPANIES, THE SHAR ES OF WHICH WERE ACQUIRED THROUGH IPOS BY APPLYING FOR THE SAME THROUGH M/S. IL&FS AN D M/S. J.M. FINANCIAL SERVICES PVT. LTD. THE FINANCING FOR SUCH IPOS IS PARTLY BORNE BY APPELLANT AND PARTLY BY IL&FS AND M/S. J. M. FINANCIAL PVT. LTD. THESE ENTITIES ARE ALSO CHARGING FEE OF SUCH ACTIVITIES. THEREFORE, THE POINT FOR DETERMINATION IS WHETHER S UCH A SYSTEMATIC ACTIVELY OF FINANCING, AND MAKING APPLICATIONS IN THE IPO AND THEREBY, GET TING SHARES IN THE IPO, COULD BE TERMED AS BUSINESS OR ADVENTURE IN THE NATURE OF TR ADE. INCIDENTALLY, THE BUSINESS, AS DEFINED IN SECTION 2(13), 'INCLUDES ANY TRADE, COMM ERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANU FACTURE.' THE WORD 'ADVENTURE' IS DEFINED IN THE SHORTER OXFORD DICTIONARY AS A PECUN IARY VENTURE .................. AND THE WORD PECUNIARY VENTURE, IN ITS TURN, IS DEFINED AS 'A CO MMERCIAL ENTERPRISE IN WHICH THERE IS CONSIDERABLE RISK OF LOSS AS WELL AS CHANCE OF GAIN .' 8.4 IN THE PRESENT CASE, THE APPELLANT HAS PARTLY F INANCED IN THE IPOS OF CERTAIN COMPANIES TO M/S. J. M. FINANCIAL PVT. LTD. AND M/S . IL&FS. AFTER ALLOTMENT, THESE SHARES HAVE BEEN TRANSFERRED TO APPELLANT. SUCH AN ACTIVITY HAS TO BE TERMED AS AN ORGANIZED AND SYSTEMATIC ACTIVITY, CARRIED ON CONTI NUOUSLY WITH A VIEW TO EARN PROFITS. THE SOLE INTENTION AT THE TIME OF ACQUISITION OF SH ARES THROUGH SUCH MODE WAS TO SELL THESE SHARES AT A PROFIT. SUCH AN ACTIVITY HAS TO BE CONS TRUED AS ADVENTURE IN THE NATURE OF TRADE! IN SUCH SITUATION, THE SURPLUS OF.RS.28,52,5 83/- HAS TO BE TAXED AS GAIN FROM THE ADVENTURE IN THE NATURE OF TRADE AND SAME HAS TO BE TAXED AS BUSINESS INCOME. THE ASSESSING OFFICER IS DIRECTED TO TAX RS.28,52,583/- AT THE RATES APPLICABLE IN THE CASE OF BUSINESS AND PROFESSION. 8.5 AS REGARDS TO BALANCE SURPLUS AMOUNT OF RS.1,29 ,68,597/-, THIS SURPLUS HAS ARISEN AS THE APPELLANT HAD MAINLY INVESTED IN SHARES IT'S OW N FUNDS. IT IS ALSO NOTICED THAT INVESTMENT IN SHARES IS SHOWN BY THE APPELLANT IN T HE ACCOUNT UNDER THE HEAD INVESTMENT AND NOT STOCK IN TRADE. THUS, THE APPELLANT'S INTEN TION OF MAKING INVESTMENT WAS CLEAR. THE APPELLANT HAS NOT INCURRED ANY SUBSTANTIAL INTE REST ON BORROWINGS FOR SUCH INVESTMENT. THERE IS NO MOTIVE OF TRADING IN SHARES ESTABLISHED BY THE ASSESSING OFFICER EXCEPT REFERRING TO THE VOLUME AND NUMBER OF TRANSA CTIONS. I ALSO APPRECIATE THE ARGUMENTS THAT THE ASSESSING OFFICER'S CONTENTION A BOUT PERIOD OF HOLDING ARE NOT CORRECT PARTICULARLY IN VIEW OF THE FACT THAT DEFINITION OF SHORT TERM CAPITAL ASSET IN RESPECT OF ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 7 SHARES AND SECURITIES ITSELF SPECIFICALLY PROVIDES THAT THE PERIOD OF HOLDING WOULD BE LESS THAN ONE YEAR. THIS ITSELF SUGGEST THAT THE SHORT P ERIOD OF HOLDING IS NOT THE CRITERIA TO BE CONSIDERED AS TRADING TRANSACTIONS. APART FROM THIS , THE SECTION 111A ALSO PROVIDES FOR SPECIFIC TREATMENT OF TAX IN RESPECT OF SHORT TERM CAPITAL ASSET, PARTICULARLY WHEN STT HAS BEEN PAID. IN APPELLANT'S CASE, THE TRANSACTIONS AR E SUBJECTED TO STT. REFERENCE MAY ALSO BE MADE TO THE BOMBAY ITAT DECISION IN THE CASE OF GOPAL PUROHIT 29 SOT 117, WHICH SUPPORTS THE APPELLANT'S EXPLANATION. IN THE CIRCUM STANCES, MERELY BECAUSE THE APPELLANT HAS SOLD THE SHARES WHICH WERE PURCHASED IN THE BOO MING PERIOD AND IT EARNED SURPLUS BY WAY OF CAPITAL GAIN, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING IT AS A BUSINESS PROFIT. HE IS DIRECTED TO TAX SUCH SURPLUS OF RS. 1 ,29,68,597/- AS SHORT TERM CAPITAL GAINS AS PER PROVISIONS OF SECTION 111A. THE DEDUCTION FO R STT, IF ALREADY ALLOWED, SHOULD BE DEALT WITH AS PER LAW. 8. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVE NUE ARE NOW BEFORE US. 9. BEFORE US, THE LD AR APART FROM REITERATING THE SUB MISSIONS MADE BEFORE AO AND CIT(A) FURTHER SUBMITTED THAT THERE ARE ONLY 57 TRANSACTIONS DURING THE YEAR AND THE AVERAGE NUMBER OF TRANSACTIONS IN A MONTH ARE ONLY 5 AND ASSESSEE HAD ALSO EARNED HUGE DIVIDEND OF RS 91.66 LACS. HE ALSO SUBMITTED ON PERUSING THE BALANCE SHEET IT CAN BE SEEN THAT A GAINST THE INVESTMENT OF RS 25.20 CRORES AS ON 31.3.2006, ASSESSEES OWN CAP ITAL WAS RS 28.99 CRORE MEANING THEREBY THAT MOST OF THE INVESTMENTS ARE OU T OF OWN FUNDS AND NOT BORROWED FUNDS. HE FURTHER SUBMITTED THAT ASSESSEE HAD TREATED THE SHARES AS INVESTMENT IN HIS BALANCE SHEET SINCE PAST 15 YEA RS AND IN ALL THOSE YEARS, THE TREATMENT AS MADE BY THE ASSESSEE HAS BEEN ACCE PTED BY THE REVENUE. HE THEREFORE SUBMITTED THAT THERE ARE NO CHANGE IN THE FACTS AS COMPARED TO EARLIER YEARS AND WITHOUT CHANGE IN MATERIAL FACTS, THE REVENUE CANNOT TAKE A DIFFERENT STAND. HE ALSO RELIED ON THE DECISIONS IN THE CASE OF SUNIL KUMAR ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 8 GANERIWAL VS DCIT (2012) 134 ITD 179 (BOM), ACIT VS SMT GARGI S PATEL (2012) 13 ITR (TRIB) 386 (AHM), DEV ASHOK KARVAT VS DCIT (2012) 50 SOT 167 (MUM) AND CIT VS ROHIT ANAND (2010) 327 ITR 445 (DEL). HE FURTHER SUBMITTED THAT AO IS WRONG IN OBSERVING THA T THE ASSESSEE HAS ADVANCED MONEY TO PEOPLE INVOLVED IN IPO SCAM AND S UBMITTED THAT ASSESSEE HAD NOT ACQUIRED ANY SHARES FROM THE PERSO NS INVOLVED IN IPO SCAM AND THAT THE OBSERVATION OF THE AO WAS FACTUAL LY INCORRECT. HE FURTHER SUBMITTED THAT ON IDENTICAL FACTS, IN THE CASE OF S MT. SMRUTI SHAH, WHO IS SISTER IN LAW OF ASSESSEE, THE TRIBUNAL BY ITS DECI SION DATED 26.6.2015 IN ITA NOS. 3214/A/2009 & OTHERS, HAD DECIDED THE ISSUE IN HER FAVOUR AND AGAINST THE REVENUE. HE ALSO PLACED ON RECORD THE COPY OF T HE AFORESAID DECISION AND SUBMITTED THAT SINCE THE FACTS OF THE CASE ARE SIMI LAR TO THAT OF SMRUTI SHAH (SUPRA) FOLLOWING THE DECISION OF THE COORDINATE BE NCH IN THE CASE OF SMT. SMRUTI SHAH (SUPRA) THE MATTER BE DECIDED IN FAVOU R OF THE ASSESSEE. 10. THE LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND FURTHER SUBMITTED THAT IN THE PRESENT CASE, OF THE TOTAL PR OFITS WHICH HAVE BEEN CLAIMED BY THE ASSESSEE AS STGG, ASSESSEE HAS EARNE D RS 71.80 LACS FROM THE SALE OF SHARES WHERE THE HOLDING PERIOD OF SHAR ES RANGED BETWEEN 0 TO 33 DAYS, THAT THE ASSESSEE HAS ALSO INDULGED IN SPECUL ATION OF SHARES AS IS EVIDENT FROM THE COMPUTATION OF INCOME AND THAT THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THAT OF MANOJ SAMDERIA REPORTED IN (2012) 27 TAXMANN.COM 102 (DEL) AND OTHER DECISIONS. HE THUS SUPPORTED TH E ORDER OF A.O 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE TREATMENT TO BE GIVEN TO THE PROFITS EARNED ON SALE OF SHARES I.E. WHETHER IT IS TO BE C ONSIDERED AS BUSINESS ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 9 INCOME OR CAPITAL GAINS. AS FAR AS THE PROFITS EARNED ON THE SALE OF SHARES THAT HAVE BEEN HELD BY THE ASSESSEE FOR MORE THAN 1 2 MONTHS AND CONSIDERED BY THE ASSESSEE AS LTCG, THERE IS NO DISPUTE BETWEE N BOTH THE PARTIES. THE DISPUTE IS ONLY WITH RESPECT TO THE TREATMENT TO BE GIVEN TO PROFITS THAT HAVE BEEN EARNED ON SALE OF SHARES WHICH HAVE BEEN HELD FOR LESS THAN 12 MONTHS I.E. WHETHER THE PROFITS ARE TO BE CONSIDERED AS B USINESS INCOME OR SHORT TERMS CAPITAL GAINS. THE TOTAL PROFITS OF RS. 1,58 ,21,180/- IS ALSO NOT IN DISPUTE. WE FIND THAT LD. CIT(A) HAS NOTED AND WHIC H IS NOT DISPUTED BY THE ASSESSEE IS THAT RS. 28,52,583/- HAS BEEN EARNED BY THE ASSESSEE ON SALE OF SHARES OF IDFC LTD. AND YES BANK LTD. LD. CIT(A) HA S NOTED THAT THE SHARES WERE ACQUIRED BY THE ASSESSEE IN IPO, ILFS LTD. AND J M FINANCIAL SERVICES PVT. LTD. HAD PARTLY FINANCED THE ACQUISITION OF T HOSE SHARES, THE ENTITIES WHO HAD FINANCED HAD CHARGED FEES AND THE SHARES WERE S OLD SHORTLY AFTER THEIR ACQUISITION. THE ACTIVITY OF ASSESSEE WAS HELD BY T HE LD. CIT(A) TO BE IN AN ORGANIZED AND SYSTEMATIC ACTIVITY WITH AN INTENTION TO EARN PROFITS AND THE ACTIVITY TO BE IN THE NATURE OF TRADE AND THEREFORE IT WAS CONSIDERED TO BE A BUSINESS ACTIVITY. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO CONTROVERT THE FINDINGS OF LD. CIT(A). IN VIEW OF THE AFORESAID FACTS AND THE REASONING GIVEN BY LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN HIS ORDER. AS FAR AS THE TREATMENT OF THE SURPLUS OF RS. 1,29,68,597/- WHICH IS HELD TO BE STCG IS CONCERN ED, WE FIND THAT LD. CIT(A) HAS GIVEN A FINDING OF FACT THAT THE UNDERLY ING SHARES HAVE BEEN ACQUIRED BY ASSESSEES OWN FUNDS AND NO BORROWED FU NDS HAVE BEEN USED, THE ASSESSEE HAD TREATED THE SHARES AS INVESTMENTS AND NOT AS STOCK IN TRADE AND THE MOTIVE OF TRADING IN THOSE SHARES HA VE NOT BEEN ESTABLISHED BY THE A.O AND MERELY BY REFERRING TO THE VOLUME AND N UMBER OF TRANSACTIONS DOES NOT ESTABLISH THE MOTIVE OF ASSESSEE TO BE A T RADER OF SHARES. THESE ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 10 FINDING OF FACT OF LD. CIT(A) HAS NOT BEEN CONTROVE RTED BY REVENUE. BEFORE US, LD. A.R. HEAVILY RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF SMT. SMRUTI SHAH (SUPRA) AND SUBMITTED THAT THE FACTS ARE IDENTICAL. WE DO NOT AGREE WITH THE SUBMISSION OF LD. A.R. OF THE FACTS OF THE PRESENT CASE BEING SIMILAR TO THAT OF SMT. SMRUTI SHAH MORE SO IN VIEW OF THE FACT THAT IN THE PRESENT CASE, WE FIND THAT LD. CIT(A) H AS GIVEN A CLEARLY FINDING ABOUT THE ACQUISITION OF SHARES IN IPOS WERE WITH T HE HELP OF PART FINANCE TAKEN FROM ILFS & J.M. FINANCIAL SERVICES AND THE A CTIVITY OF ASSESSEE WAS SYSTEMATIC ACTIVITY SO AS TO TREAT IT IN THE NATURE OF BUSINESS WHEREAS IN THE CASE OF SMT. SMRUTI SHAH (SUPRA) WE DO NOT FIND ANY SUCH FINDING OF FACT. APART FROM THE AFORESAID, WE ALSO FIND THAT THE CAS E LAWS RELIED UPON BY REVENUE AND ASSESSEE ARE DISTINGUISHABLE ON FACTS A ND ARE THEREFORE NOT APPLICABLE TO THE FACTS OF PRESENT CASE. CONSIDERIN G THE TOTALITY OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WIT H THE ORDER OF LD. CIT(A) AND THUS THE APPEAL ASSESSEE AND REVENUE ARE DISMIS SED. 12. AS FAR AS APPEALS OF ASSESSEE AND REVENUE FOR A.Y. 07-08 ARE CONSIDERED, SINCE BOTH THE PARTIES BEFORE US HAVE HAD SUBMITTED THAT THE FACTS OF THE CASE ARE IDENTICAL TO THAT OF A.Y. 06-07, WE THEREFORE F OR THE REASONS GIVEN HEREINABOVE, WHILE DECIDING THE APPEALS FOR A.Y. 06 -07 AND FOR SIMILAR REASONS DISMISS THE APPEALS OF ASSESSEE AND REVENUE . ITA NOS. 847 & 1361/A/ 10 & 171 & 212/A/11 . A.YS. 2006-0 7 & 2007-08 11 13. IN THE RESULT, ALL THE APPEAL OF REVENUE AND ASSESS EE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04- 12 - 201 5. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD