DCIT, New Delhi V. Sh. Mahesh Kumar, New Delhi

ITA 173/DEL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4290 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 02-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DUM KANUNJNA
• Keywords: Capital asset; Business income; Salary income; Source of fund
• Section: 5(2); 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY/ D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM ITA NO. 173/DEL/2012 : ASSTT. YEAR : 2008 - 09 DCIT, CIRCLE - 21(1), NEW DELHI VS SH. MA HESH KUMAR, C - 13/170, SECTOR - 3, ROHINI, DELHI - 110085 (APPELLANT) (RESPONDENT) PAN NO. A A LPK4117B ASSESSEE BY : SH. VED JAIN, ADV. REVENUE BY : SH. P. DUM KAN UNJN A, CIT DR DATE OF HEARING : 1 6 .09 .201 6 DATE OF PRONOUNCEMENT : 13 . 12 .201 6 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 17.10.2011 OF LD. CIT(A) - XXII , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTAN CES OF THE CASE THE LD. CIT(A) HAS ERRED IN TREATING THE SURPLUS AMOUNT OF RS.81,27,237/ - FROM SALES OF SHARES AS SHORT TERM CAPITAL GAINS AS AGAINST BUSINESS INCOME TREATED BY THE ASSESSING OFFICER. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE BY NOT RECOGNIZING THE FACT THAT THIS IS A CASE WHERE THE SHARES HAVE BEEN SOLD WITH AN INTENTION TO EARN PR OFITS WITHOUT ANY INVESTMENT AN D NOT WITH AN INTENTION TO INVEST AND EARN DIVIDEND. ITA NO. 173 /DEL /201 2 MAHESH KUMAR 2 3. WHET HER ON THE FACTS AND C IRCUMSTANC ES OF THE CASE THE ID. CIT(A) HAS ERRED IN DIRECTING THE AO TO DROP THE PENALTY PROCEEDINGS INI TIATED U/S 271A & 271B OF THE ACT. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ALL OR ANY OF THE AFORESAID GROUNDS OF APPE AL AND ADD ANY OTHER GROUND OF APPEAL. 3. GROUND NOS. 1 & 2, THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE ACTION OF THE LD. CIT(A) IN DIRECTING THE AO TO TREAT THE SURPLUS AMOUNT OF RS. 81,27,237/ - FROM SALES OF SHARES AS SHORT TERM CAPITAL GAINS AS AGA INST BUSINESS INCOME TREATED BY THE AO. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E - FILED RETURN OF INCOME ON 31.07.2008 DECLARING AN INCOME OF RS.84,34,174/ - WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 01.08.2009. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED TO HAVE EARNED SHORT TERM CAPITAL GAIN OF RS.81,14,850/ - DURING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF SALES OF SHARES. HE ASKED THE ASSESSEE TO FURNISH THE DETAIL OF SHORT TERM CAPITAL GAIN. IN RESPONSE, THE ASSESSEE SUBMITTED THAT INADVERTENTLY FIGURE OF SHORT TERM CAPITAL GAIN ON SALE OF SHARE WAS TAKEN AT RS.18,14,850/ - INSTEAD OF ITA NO. 173 /DEL /201 2 MAHESH KUMAR 3 RS.81,27,2 37/ - AND OFFERED ADDITIONAL SUM OF RS.12,887/ - FOR TAXATION AND PAID THE ADDITIONAL TAX. THE AO OBSERVED THAT THE ASSESSEE BAD BOUGHT 50000 SHARES OF INDIA BULL REAL ESTATE ON 20.06.20 07 WHICH WERE SOLD ON 17.07.2007 WITHIN A PERIOD OF ONE MONTH AND THE TR ANSACTION STATEMENT OF M/S CONSORTIUM SECURITIES (P) LTD. FILED ON 25.11.2010 REVEALED THAT SHARES WERE BOUGHT ON 20.06.2007 BUT THE ASSESSEE HAD NOT INVESTED THE CONSIDERATION WHICH WAS OUTSTANDING AND THAT THE STATEMENT SHOWS A PAYMENT OF RS.32, 00,000/ - ON 26.06.2007 WHICH HAS BEEN SHOWN TO HAVE RETURNED BACK BY THE BANK ON 19.07.2007 I.E. AFTER THE SHARES WHICH WERE BOUGHT ON 20.06.2007 WERE SOLD ON 17.07.2007. THE AO FURTHER OBSERVED THAT THE AFORESAID TRANSACTION STATEMENT REVEALED THAT ASSESSEE HAD GI VEN A PAYMENT OF RS.40,00,000/ - ON 26.06.2007 BUT THE BANK ACCOUNT REVEALED THAT THIS CHEQUE WAS CLEARED ONLY ON 19.07.2007 I.E. AFTER THE SALE OF SHARES ON 17.07.2007 WHICH WERE BOUGHT ON 20.06.2007. HE ALSO OBSERVED THAT THE BANK STATEMENT OF PUNJAB NATI ONAL BANK REVEALED THAT THE CHEQUE OF RS.32,00,000/ - WAS NEVER RETURNED BY THE BANK . HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY SHORT TERM CAPITAL GAIN ON SALE AND PURCHASE OF SHARE S MAY NOT BE TREATED AS BUSINESS INCOME. IN RESPONSE, THE ASSES SEE STATED THAT WHETHER THE HOLDING OF SHARES WERE BY WAY OF INVESTMENT OR FORMED PART OF STOCK - IN - TRADE WAS A MATTER WHICH WAS WITHIN THE KNOWLEDGE OF ITA NO. 173 /DEL /201 2 MAHESH KUMAR 4 THE ASSESSEE WHO HELD THE SHARES. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD EARNED A PROFIT ON SALE OF SHARES AND TREATED THE SAME AS CAPITAL GAIN AND THAT THE REASONS FOR NON - PAYMENT OF BALANCE AMOUNT DUE AND SECURITY TO M/S CONSORTIUM SECURITIES (P) LTD. WAS THE MUTUAL UNDERSTANDING BETWEEN THE ASSESSEE AND THE SHARE BROKER AND THAT THE NON - PAYMENT OF SECURITY WAS DUE TO CORDIAL RE L A TIONS AND A MATTER OF TRUST BETWEEN THEM. THE ASSESSEE ALSO FILED COPIES OF THE D - MAT ACCOUNT ON 24.12.2010 WHICH REVEALED THAT THE SHARES WERE SHOWN TO HAVE BE EN TRANSFERRED IN THE D - MAT ACCOUNT ONLY ON 16.07.2007 I.E. THE DAY BEFORE THE SAME WERE SOLD AND WERE RE - TRANSFERRED/SOLD TO M/S CONSORTIUM SECURITIES PVT. LTD. ON 18.07.2007. ACCORDING TO THE AO THE DIFFERENCE ALONG WITH RS.40,00,000/ - SHOWN TO HAVE BEEN PAID AGAINST THE PURCHASE OF THE SHARES WAS CLEARED ONLY ON 20 .06.2007 I.E. AFTER THE SALE/TRANSFER OF SHARES TO M/S CONSORTIUM SECURITIES PVT. LTD. THE AO WAS OF THE VIEW THAT SALE AND PURCHASES OF THE SHARES SHOWN BY THE ASSESSEE WAS NOTHING BUT AN ACCOMMODATION ENTRY SINCE THE ASSESSEE HAD NOT INVESTED ANY AMOUNT BEFORE THE PURCHASE OF SHARES, AFTER THE PURCHASE OF SHARES AND HAD ACTUALLY GIVEN THE ADVANCE/MARGIN MONEY ONLY AFTER THE SALE OF SHARES AND HAD GIVEN A COLOR TO THE TRANSACTIONS. THE AO ALSO POINTED OUT THAT THE COPY OF ACCOUNT OF THE BROKER REVEALED THA T THE BROKER HAD DEBITED THE ASSESSEE AN AMOUNT OF RS.1,74,150/ - ITA NO. 173 /DEL /201 2 MAHESH KUMAR 5 AS PENAL CHARGES FOR NON - PAYMENT OF THE AMOUNT DUE . ACCORDING TO THE AO, IT WAS HIGHLY IMPROBABLE THAT AN INVESTOR WOULD BORROW FUNDS, NOT TAKE DELIVERY OF SHARES FOR MORE THAN EVEN A MONTH F ROM THE DATE OF PURCHASE AND ALSO WOULD SELL THE SO CALLED INVESTMENT WITHIN A SHORT SPAN OF ONLY 27 DAYS WITHOUT WAITING TO DERIVE ANY DIVIDEND. THE AO WAS OF THE VIEW THAT THE SHARES HAD BEEN SOLD WITH AN INTENTION TO EARN PROFIT WITHOUT ANY INVESTMENT A ND NOT WITH AN INTENTION TO INVESTMENT AND EARN DIVIDEND. HE ALSO POINTED OUT THAT THE SHARES WERE TRANSFERRED TO D - MAT ACCOUNT ONLY ON 16.07.2007 WHEREAS THE SAME WERE PURCHASED ON 20.06.2007 WHICH CONFIRMED THE INTENTION OF THE ASSESSEE TO SELL THE SHARE S RIGHT FROM THE DAY ONE AND THAT THE SHARES GOT TRANSFERRED TO D - MAT ACCOUNT JUST BEFORE THE SALE WAS NOTHING BUT A COLORABLE TRANSACTION FOR CLAIMING THE SAME TO BE SHORT TERM CAPITAL GAIN FOR TAKING THE BENEFIT OF PROVISIONS OF SECTION 111A OF THE ACT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: G. VENKATASWAMI NAIDU AND CO. VS CIT (1959) 35 ITR 594 (SC) INDRAMANI BAI (SMT.) VS ADDL. CIT 200 ITR 594 (SC) CIT VS V. S. P. BALASUBRAMANIAM 250 ITR 127 (MAD.) IMMORTAL FINANCIAL SERVICES P. LTD. VS DCI T IN ITA NO. 4094/MUM/2010 ORDER DATED 20.10.2010 SMT. REKHA KHANDELWAL VS ACIT IN ITA NO. 785/MUM/2009 ORDER DATED 17.03.2010 ITA NO. 173 /DEL /201 2 MAHESH KUMAR 6 DCIT - 5(2) VS M/S PENTAGON BUILDERS PVT. LTD. IN ITA NO. 6045/MUM/2009 ORDER DATED 22.12.2010 SADHANA NABERA VS ACIT IN ITA NO. 2586/MUM/2009 ORDER DATED 26.03.2010 5. THE AO TREATED THE AMOUNT OF RS.81,27,237/ - AS BUSINESS INCOME OR ADVENTURE IN THE NATURE OF TRADE INSTEAD OF SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO TH E LD. CIT(A) AND SUBMITTED AS UNDER: ' I. THE APPELLANT IS AN INDIVIDUAL AND WAS ENGAGED IN WHOLE TIME EMPLOYMENT WITH M / S P P BUILDWELL PRIVATE LIMITED FROM WHERE HE HAS EARNED SALARY AMOUNTING TO RS. 2,10,000/ - WHICH WAS SHOWN IN THE RETURN OF IN COME OF A SSESSMENT YEAR 2008 - 09. THE APPELLANT MOSTLY DEVOTED HIS TIME AND EFFORTS IN THE JOB OF THE SAID COMPANY. THE SOURCES OF INCOME OF THE APPELLANT CONSIST OF INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAIN, DIVIDEND AND INTEREST INCOME FOR THE FINANCIAL YEA R UNDER CONSIDERATION. II . THE APPELLANT HAS NEITHER INCURRED NOR CLAIMED ANY EXPENSES LIKE SALARY, CONSULTANCY, SECURITIES TRANSACTION TAX, INTEREST PAID, RENT, OFFICE MAINTENANCE, STAFF WELFARE, PRINTING & STATIONERY ETC., WHICH ARE BASIC EXPENSES TO CA RRY OUT ANY BUSINESS ACTIVITY. THE APPELLANT ALSO NOT ADJUSTED THE VALUE OF INVESTMENT IN HAND AS ON THE LAST DAY OF THE FINANCIAL YEAR AND ALWAYS SHOWN THE SAME AT COST PRICE. THE TRANSACTIONS OF SHARES ARE COMPLETED BY DELIVERY OF SHARES. THESE FACTS SHO W THE APPELLANT HAS NEVER ITA NO. 173 /DEL /201 2 MAHESH KUMAR 7 INTENDED TO CARRY OUT ANY BUSINESS ACTIVITY RELATED TO SALE / PURCHASE OF SHARES. II I . THE APPELLANT HAS TRANSACTED IN ONLY TWO SHARES DURING THE FINANCIAL YEAR UNDER CONSIDERATION, WHICH RESULTED IN TURNOVER AGGREGATING TO RS 2, 82,13,169/ - AND NET SHORT - TERM CAPITAL GAIN OF RS 81,27, 737/ - ON SALE OF SHARES HELD AS INVESTMENT, BEING SHORT TERM CAPITAL ASSET. THE APPELLANT PURCHASED 50000 SHARES OF INDIA BULLS REAL ESTATE LIMITED ON 22/06/2007 THROUGH SHARE BROKER CONSORTIUM SECU RITIES PRIVATE LIMITED AND MADE PAYMENTS OF RS 32,00,000/ - AND 40,00,000/ - TO THE SAID BROKER ON 26/06/2007. HOWEVER, THE SAID BROKER ON ITS OWN DID NOT DEPOSIT THE SAME IN THE BANK ACCOUNT FOR CLEARANCE TILL 18/07/2007, ONE OF WHICH WAS ALSO CLEARED ON 19 /07 /2007. THE SAID BROKER ALSO NOT TRANSFERRED THE SAID SHARES TO THE D - MAT ACCOUNT OF THE APPELLANT TILL 16/07/2007 DUE TO THE FACT THAT THE SAID BROKER HAS NOT DEPOSITED THE CHEQUES FOR CLEARANCE. THE APPELLANT HAS PAID SECURITIES TRANSACTION TAX AMOUNTI NG TO 60,353/ - ON TAXABLE SECURITIES TRANSACTION DURING THE FINANCIAL YEAR UNDER CONSIDERATION. IV . SINCE THE APPELLANT HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY OF SALE / PURCHASE OF SHARES, BUT INVESTED ITS FUND IN SHARES TO MAXIMIZE ITS WEALTH BY EARNI NG DIVIDEND AND APPRECIATION FROM SHARES, IT HAS SHOWN THE SURPLUS EARNED ON SALE OF SHARES HELD AS INVESTMENT AS CAPITAL GAIN AND PAID TAX IN ACCORDANCE WI TH THE PROVISIONS OF SECTION 111 A OF THE INCOME TAX ACT, 1961. ITA NO. 173 /DEL /201 2 MAHESH KUMAR 8 V . THE LEARNED ASSESSING OFFICER ASK ED THE APPELLANT TO FURNISH DETAILS IN RESPECT OF INCOME, BANK ACCOUNTS ETC. VIDE QUESTIONNAIRE DATED 23/08/2010. VI . THE APPELLANT SUBMITTED DETAILS ASKED BY THE LEARNED ASSESSING OFFICER VIDE REPLIES DATED 18/10/2010, 25/11/2010, 21/12/2010 AND 24/12/20 10 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. VII . THE LEARNED ASSESSING OFFICER ASKED THE APPELLANT VIDE ORDER SHEET ENTRY DATED 16/12/2010 TO SHOW CAUSE AS WHY THE CAPITAL GAIN ON SALE OF SHARES SHOULD NOT BE TREATED AS INCOME FROM BUSINESS OR ADVENTUR E IN THE NATURE OF BUSINESS. VIII . IN RESPONSE, THE APPELLANT SUBMITTED VIDE REPLY DATED 21/12/2010 THAT WHETHER A PARTICULAR HOLDING OF SHARES BY WAY OF IN VESTMENT OR FORMS PART OF STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES. THE CONDUCT OF THE ASSESSEE ASSUMES SIGNIFICANCE IN THIS REGARD. IX . HOWEVER, THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THE SUBMISSIONS MADE BY THE APPELLANT. THOUGH THE PROFIT MOTIVE IN ENTERING INTO A TRANSACTION IS NOT DE CISIVE, FOR AN ACCRETION TO CAPITAL DOES NOT BECOME TAXABLE INCOME MERELY BECAUSE AN ASSET WAS ACQUIRED IN THE EXPECTATION THAT IT MAY BE SOLD AT A PROFIT, THE LEARNED ASSESSING OFFICER RELIED UPON RATIOS OF VARIO US CASES DECIDED BY NON - JURIS DICTIONAL BE NCH OF ITAT MUMBAI, WHOSE FACTS AND CIRCUMSTANCES WERE ALTOGETHER DIFFERENT FROM THAT OF THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND TREATED THE SURPLUS ON SALE OF SHARES HELD AS INVESTMENT AS BUSINESS INCOME OF THE APPELLANT INSTEAD OF CA PITAL GAIN AS CLAIMED BY THE APPELLANT ITA NO. 173 /DEL /201 2 MAHESH KUMAR 9 ONLY ON THE BASIS OF CONJECTURE AND SURMISES. THE LEARNED ASSESSING OFFICER ALLEGED IN T HE IMPUGNED ORDER: I N VIEW OF THE FACTS DISCUSSED ABOVE, THE SHO RT TERM CAPITAL GAIN ALLEGEDLY SHOWN AT RS 81,27, 237 / - IS TREA TED AS BUSINESS INCOME OR ADVENTURE IN THE NATURE OF TRADE. 7. THE ASSESSEE ALSO STATED IN HIS WRITTEN SUBMISSIONS THAT THE REASONS ON THE BASIS OF WHICH THE AO TREATED THE CAPITAL GAIN ON SALE OF SHARES AS BUSINESS INCOME WHICH ARE REPRODUCED BY THE LD. CIT(A) AT PAGE NOS. 8 TO 10 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAME ARE NOT REPRODUCED HEREIN. THE ASSESSEE MET OUT THE OBJECTIONS OF THE AO , THE LD. CIT(A) INCORPORATED THE SUBMISSIONS OF THE ASSESSEE IN THE IMPUGNED ORDER AS UNDER: XI THE APPELLANT CONTENDED THAT ON ANALYSIS OF THE ABOVE SAID ALLEGATION AND CONTENTIONS OF THE LEARNED ASSESSING OFFICER, IT IS QUITE EVIDENT THAT THE LEARNED ASSESSING OFFICER TREATED THE ASSESSEE A TRADER OF SHARES AND NOT AN INVESTOR, SO THE CAPITAL G AIN CLAIMED BY THE APPELLANT IS ACTUALLY BUSINESS INCOME OR ADVENTURE IN THE NATURE OF TRADE. XII THE APPELLANT FURTHER CONTENDED THAT THE LEARNED ASSESSING OFFICER ALLEGED IN PARA 10 THAT IT IS HIGHLY IMPROBABLE THAT AN INVESTOR WOULD BORROW FUNDS, NOT T AKEN DELIVERY OF SHARES FOR MORE THAN EVEN A MONTH FROM THE DATE OF PURCHASE AND ALSO WOULD SELL THE SO CALLED INVESTMENT WITHIN A SHORT SPAN OF ONLY 27 DAYS ITA NO. 173 /DEL /201 2 MAHESH KUMAR 10 WITHOUT WAITING TO DERIVE ANY DIVIDEND THIS IS THUS A CLEAR CASE WHEREIN THE SHARES HAVE BEEN SOLD WITH AN INTENTION TO EARN PROFIT WITHOUT ANY INVESTMENT AND NOT WITH AN INTENTION TO INVESTMENT AND EARN DIVIDEND. XIII THE APPELLANT ALSO CONTENDED THAT NON RECEIPT OF DIVIDEND ON THE INVESTMENTS MADE BY A PERSON CANNOT BE A YARDSTICK TO DETERMINE THAT THE INVESTMENTS WERE MADE FOR BUSINESS PURPOSE AS RECEIPT OF DIVIDEND IS COMPLETELY BEYOND THE CONTROL OF AN INVESTOR AND DEPENDENT COMPLETELY ON PERFORMANCE OF THE COMPANY AND DECLARATION OF DIVIDEND BY THE SAID COMPANY. IT IS ALSO PERTINENT TO NOTE THAT THE RECEIPT OF DIVIDEND IS ALSO DEPENDS ON THE FACT THAT WHETHER THE INVESTOR HOLDING THE SHARES ON RECORD DATE OR NOT AS INVESTOR WHO HAS MADE INVESTMENT FOR EVEN 364 DAYS, BUT NOT HOLDING SHARE ON THE RECORD DATE HE IS NOT ENTITLED TO RECEIVE DIVIDEND. T HERE ARE SO MANY INSTANCES THAT AN INVESTOR MADE INVESTMENT IN SHARES FOR SO MANY YEARS, BUT HAS NOT RECEIVED ANY DIVIDEND DURING THE HOLDING PERIOD OF SHARES DOES NOT MAKE SUCH INVESTMENT AS STOCK IN TRADE INSTEAD OF INVESTMENT. SO, THE BASIS OF THE LEARN ED ASSESSING OFFICER FOR TREATING CAPITAL GAIN AS BUSINESS INCOME DUE TO NON RECEIPT OF DIVIDEND IS TOTALLY MISCONCEIVED, IRRATIONAL AND UNREASONABLE. XIV THE LEARNED ASSESSING OFFICER FURTHER ALLEGED THAT IT IS CRYSTAL CLEAR THAT SALE AND PURCHASE OF SHA RES ALLEGEDLY SHOWN BY THE ASSESSEE IS NOTHING BUT AN ACCOMMODATING ENTRY SINCE THE ASSESSEE HAS NOT INVESTED ANY AMOUNT BEFORE THE PURCHASE OF SHARES, AFTER THE PURCHASE OF SHARES AND HAS ACTUALLY GIVEN THE ADVANCE/ MARGIN MONEY ONLY AFTER THE SALE OF SHA RES AND HAS GIVEN A COLOR TO THE TRANSACTIONS. ITA NO. 173 /DEL /201 2 MAHESH KUMAR 11 XV THE APPELLANT CONTENDED THAT HE HAS NOT TAKEN ANY ACCOMMODATION ENTRY FROM THE SHARE BROKER AS ALL THE TRANSACTIONS WERE THROUGH RECOGNIZED STOCK EXCHANGE. IT IS ALSO PERTINENT TO NOTE THAT THE LEARNED ASS ESSING OFFICER ALSO FAILED TO BRING ANY EVIDENCE ON RECORD THAT THE SAID INCOME WAS ACCOMMODATION ENTRY EXCEPT ON THE BASIS OF DOUBT, SUSPICION CONJECTURES AND SURMISES. XVI THE LEARNED ASSESSING OFFICER FURTHER ALLEGED THAT THE HOLDING PERIOD OF SHARES I S JUST 27 DAYS. IT IS ALSO PERTINENT TO NOTE THAT THE HOLDING PERIOD OF SHARES IS NOT DECISIVE FOR TREATMENT OF CAPITAL GAIN AS BUSINESS INCOME. IN THIS RESPECT RELEVANT SECTIONS RELATED TO CAPITAL ASSET, LONG TERM CAPITAL ASSET, SHORT TERM CAPITAL ASSET, LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN SHOULD BE ANALYZED. IT IS ALSO PERTINENT TO MENTION THAT SECTION 43(5) OF THE INCOME TAX ACT, 1961 PRESCRIBES THAT ANY TRANSACTION WHICH IS SETTLED WITHOUT ACTUAL DELIVERY BE TREATED AS SPECULATION TRANSAC TION AND ANY GAIN FROM SUCH TRANSACTION BUSINESS INCOME. THE APPELLANT HAS ALSO REPRODUCED THE RELEVANT PORTION OF THE SECTIONS 2(14), 2(29A), 2(29B), 2(42A) AND 2(42B) AND 43(5) OF THE INCOME TAX ACT, 1961. XVII THE APPELLANT CONTENDED THAT ON COMBINED R EADING OF THE SAID SECTIONS, IT IS QUITE EVIDENT THAT THE ACT DOES NOT PRESCRIBE ANY PROVISION, WHICH SPECIFIES THAT THE PERIOD OF HOLDING SHOULD BE DECISIVE FACTOR FOR DETERMINING WHETHER THE ASSET IN A CAPITAL ASSET OR STOCK IN TRADE. IT IS ALSO PERTINEN T TO NOTE THAT THE ACT ONLY PRESCRIBED THAT IF SHARES ARE HELD IN A COMPANY FOR NOT MORE THAN TWELVE MONTHS SHOULD BE TREATED AS SHORT TERM CAPITAL ASSET. SO, AS PER THE ITA NO. 173 /DEL /201 2 MAHESH KUMAR 12 PROVISIONS OF THE INCOME TAX ACT, 1961, PERIOD OF HOLDING IS NOT DECISIVE FOR TREATMEN T OF CAPITAL ASSET, BUT PERIOD OF HOLDING IS DECISIVE FOR WHETHER A CAPITAL ASSET IS A LONG TERM CAPITAL ASSET OR SHORT TERM CAPITAL ASSET. ANY MINIMUM PERIOD OF HOLDING IS NOT PRESCRIBED FOR TREATMENT OF ANY ASSET AS SHORT TERM CAPITAL ASSET. THEREFORE, H OLDING FOR ANY PERIOD, QUALIFY AN ASSET TO BE REGARDED AS SHORT TERM CAPITAL ASSET. XVIII THE APPELLANT HAS CONTENDED THAT HE HAS NOT MADE ANY TRANSACTION WITHOUT ACTUAL DELIVERY OF SHARES DURING THE FINANCIAL YEAR UNDER CONSIDERATION. SO, THE LEARNED ASSE SSING OFFICER ERRED IN LAW IN TREATING BUSINESS INCOME ONLY ON THE BASIS OF SHORT PERIOD OF HOLDING AS SHORT PERIOD OF HOLDING OF SHARES MAKES A CAPITAL ASSET AS SHORT TERM CAPITAL ASSET FROM THE DATE OF PURCHASE TO COMPLETION OF TWELVE MONTHS. XIX THE LE ARNED ASSESSING OFFICER FURTHER ALLEGED IN THE IMPUGNED ORDER THAT THE APPELLANT HAS MADE INVESTMENT IN SHARES AGAINST WHICH PAYMENT HAS NOT BEEN MADE TO BROKER. IT IS PERTINENT TO NOTE THAT THE APPELLANT HAS MADE PAYMENT OF R S 32,00,000/ - AND RS 40,00,000 / - TO THE BROKER M/S CONSORTIUM SECURITIES PRIVATE LIMITED ON 26/06/2007 I.E. IMMEDIATELY AFTER THE SHARES WERE PURCHASED BY THE APPELLANT. HOWEVER, THE SAID BROKER DID NOT DEPOSIT THE CHEQUES IMMEDIATELY AS THE SAID BROKER ASKED FOR FULL PAYMENT, WHICH TH E APPELLANT WAS NOT WILLING TO PAY BECAUSE THE APPELLANT ONLY PLACED ORDER FOR PURCHASE OF 10000 SHARES OF INDIA BULLS REAL ESTATE LIMITED TO THE BROKER, BUT DUE TO MISTAKE COMMITTED BY THE COMPUTER OPERATOR OF THE BROKER SAME HAS BEEN ENTERED AS 50000 SHA RES OF INDIA BULLS REAL ESTATE LIMITED RESULTING IN AMOUNT PAYABLE OF RS 2,01,09,951/ - TO THE ITA NO. 173 /DEL /201 2 MAHESH KUMAR 13 SAID BROKER. IT IS PERTINENT TO NOTE THAT THE APPELLANT WAS ABLE TO PAY ONLY RS 40,00,000/ - WHICH HE WAS ACTUALLY LIABLE TO PAY. HOWEVER, THE SAID BROKER KEPT ASK ING FOR COMPLETE PAYMENT, WHICH THE APPELLANT WAS NOT ABLE TO PAY, SO THE BROKER SOLD THE SHARES ON 17/07/2007 AND CHARGED PENAL CHARGES ALSO. SINCE, THE APPELLANT PURCHASED THE SAID SHARES FOR INVESTMENT PURPOSE, BUT DUE TO MISTAKE COMMITTED BY THE COMPUT ER OPERATOR, THE APPELLANT WAS ABLE TO HOLD THE SHARES IN ITS NAME AS THE SAID BROKER DID NOT TRANS FER THE SHARES IN APPELLANT'S DE MAT ACCOUNT TO PROTECT ITS FINANCIAL INTEREST ONLY AS THE APPELLANT WAS NOT ABLE TO PAY THE ADDITIONAL LIABILITY. SO, WHEN IT WAS MUTUALLY DECIDED BETWEEN THE SAID BROKER AND THE APPELLANT THAT SHARES TO RECOVER THE AMOUNT DUE BY SELLING THE SHARES THEN ONLY THE BROKER HAS TRANSFERRED THE SHARES TO THE DEMAT ACCOUNT OF THE APPELLANT ON 16/07/2007 AND SHARES WERE SOLD ON 17/07/20 07. HENCE, FROM THE FACTUAL MATRIX OF THE TRANSACTIONS, IT IS QUITE EVIDENT THAT THE APPELLANT PURCHASED THE SHARES AS AN INVESTMENT, BUT DUE TO MISTAKE COMMITTED BY THE COMPUTER OPERATOR, THE APPELLANT HAD TO SELL THE SHARES IN A SHORT SPAN OF TIME. SINCE , THE INTENTION OF THE APPELLANT WAS TO INVEST IN SHARES, THE APPELLANT HAS RIGHTLY SHOWN GAIN ON SALE OF SAID SHARES AS SHORT TERM CAPITAL GAIN AS IT IS WELL SETTLED IN LAW AND WHICH FURTHER STRENGTHEN BY THE CIRCULAR NO 4/2007 DATED 15/06/2007 THAT WHETH ER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR FORMS PART OF THE STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND THE CONDUCT OF THE ASSESSEE ASSUMES SIGNIFICANCE IN THIS REGARD. IT IS ALSO PER TINENT TO NOTE THAT THE ASSESSEE IS AN INVESTOR AND PURCHASED SHARES FOR ONLY INVESTMENT PURPOSE CAN BE FURTHER CORROBORATED FROM ITA NO. 173 /DEL /201 2 MAHESH KUMAR 14 THE DEMAT ACCOUNT OF THE APPELLANT WHICH S HOWS THAT THE APPELLANT HOLDING ONLY 3 SCRIPS, OUT OF WHICH 2 SCRIPS WERE PURCHASED THROUGH IPO AND ONLY SCRIP IS PURCHASED THROUGH STOCK EXCHANGE THROUGH BROKER AND THE SAID PURCHASE IS SINGLE PURCHASE IN THE ENTIRE FINANCIAL YEAR. THE APPELLANT HOLD THE SAID INVESTMENT FOR QUITE A LONG PERIOD EXCEPT THE ALLEGED TRANSACTION, WHICH HAD TO BE MADE DUE TO MISTAKE COMMITTED BY COMPUTER OPERATOR OF THE BROKER ONLY. SO, THE SAID TRANSACTION CANNOT BE TREATED AS BUSINESS TRANSACTION OF THE APPELLANT. 8. IT WAS FURTHER SUBMITTED THAT THE RATIO OF THE JUDGMENTS RELIED BY THE AO WAS NOT APPLICABL E TO THE FACTS OF THE ASSESSEE S CASE BECAUSE IN THOSE CASES THE EFFORTS WERE MADE TO EARN BUSINESS PROFIT WHILE THE ASSESSEE HAD MADE THE INVESTMENT IN SHARES WHICH HAD TO BE SOLD DUE TO MISTAKE COMMUTED BY THE COMPUTER OPERATOR OF THE SHARE BROKER. IT WA S FURTHER SUBMITTED THAT THE VARIOUS DECISIONS OF THE DIFFERENT BENCHES OF ITAT ON WHICH THE AO RELIED WERE NOT HAVING SIMILAR FACTS THEN THAT OF THE ASSESSEE S CASE. IT WAS FURTHER SUBMITTED THAT GAIN FROM SALE/PURCHASE OF SHARES WAS TAXABLE AS CAPITAL GA IN INSTEAD OF BUSINESS INCOME AND THAT THE ASSESSEE SHOULD HAVE BEEN TREATED AS INVESTOR INSTEAD OF TRADER OF THE SHARES EVEN WHEN THERE WAS LOW HOLDING PERIOD AND LOW DIVIDEND, SHARES BOUGHT AND SOLD IN THE SAME YEAR ETC. THE RELIANCE WAS PLACED ON THE FO LLOWING CASE LAWS: ITA NO. 173 /DEL /201 2 MAHESH KUMAR 15 INCOME TAX OFFICER V ROHIT ANAND AND SONS (HUF) [2009] 34 SOT 42 (ITAT - DELHI) MAINA DEVI KARNANI V ASSISTANT COMMISSIONER OF INCOME - TAX [2011] 12 TAXMANN.COM 147 (NEW DELHI - ITAT) ASSISTANT COMMISSIONER OF INCOME TAX V M/S DEVASAN INV ESTMENTS PRIVATE LIMITED , ITA NOS . 3494 & 3430 (ITAT - DELHI) AMIT JAIN V ASSISTANT COMMISSIONER OF INCOME TAX , ITA NO 309/ DEL / 2010 (ITAT - DELHI) DEPUTY COMMISSIONER OF INCOME TAX V M/S CONSOLIDATED PHOTO & FINVEST LIMITED I . T.A. NO.5519/D/2010 (ITAT - DELHI) ASSISTANT COMMISSIONER OF INCOME TAX V M/S. DATAVISION SYSTEM LIMITED, ITA NO. 5957/DEL/2010 (ITAT - DELHI) M/S. C N B FINWIZ LIMITED V ASSTT. COMMISSIONER OF INCOME - TAX , IT A NO. 1962 (DEL) OF 2009 (ITAT - DELHI) DEPUTY COMMISSIONER OF INCOME - TAX V SECURITIE S CAPITAL INVESTMENT INDIA LIMITED[2011] 12 TAXMANN.COM 321 (ITAT - MUMBAI) COMMISSIONER OF INC OME TAX V ESS JAY ENTERPRISES (P ) LIMITED 173 TAXMAN 1 HIGH COURT OF DELHI DEPUTY COMMISSIONER OF INCOME TAX V KSSJAY ENTERPRISES (P) LIMITED [2006] 9 SOT 695 (IT AT - DELHI) ASSISTANT COMMISSIONER OF INCOME - TAX V JAGDISH MASTER, HUF (ITAT - MUMBAI) (ITA - 3233 AND 3420 (MUM.) OF 2009) NAGINDAS P SHETH (HUF) V ASSISTANT COMMISSIONER OF INCOME TAX (IT AT - MUMBAI) (ITA - 961/MUM/2010 ) NEHAL V SHAH V ASSISTANT COMMISSION ER OF INCOME TAX (ITAT, MUMBAI)(ITA NO - 2733/MUM/2009) P.M. MOHAMMED MEERAKHAN V COMMISSIONER OF INCOME TAX , KERALA, [1969] 73 ITR 735 ITA NO. 173 /DEL /201 2 MAHESH KUMAR 16 KHAN BAHADUR AHMED ALLADIN AND SONS V. COMMISSIONER OF INCOME TAX, ANDHRA PRADESH, [1968] 68 ITR 573 COMMISSIONER OF INC OME TAX, NAGPUR V M/S SUTLEJ COTTON MILLS SUPPLY AGENCY LTD., (1975) 100 ITR 706 (SUPREME COURT) COMMISSIONER OF INCOME TAX V NIRAJ AMIDHAR SURTI (238 CTR 294) (HC - GUJARAT) COMMISSIONER OF INCOME TAX V MADAN GOPAL RADHEY LAL, [1969] 73 ITR 652 (SC) INCOME TAX OFFICER V RADHA BIRJU PATEL (ITAT - MUMBAI) (ITA NO . 5382/ MUM/ 2009) COMMISSIONER OF INCOME T AX V TRISHUL INVESTMENTS LIMITED 305 ITR 434 (HC - MADRAS) S BALAN @ SHANMUGAM BALKRISHNAN CHETTIAR V DEPUTY COMMISSIONER OF INCOME TAX [2009] 120 ITD 469 (ITAT - PUNE) COMMISSIONER OF INCOME TAX V MI THLESH KUMARI [1973] 92 ITR 9 (H C - DELHI) ASSISTANT COMMISSIONER OF INCOME TAX V MRS SHEELA CHINIWALA [2011] 9 TAXMANN.COM 279 (ITAT - MUMBAI) COMMISSIONER OF INCOME TAX V GULMOHAR FINANCE LIMITED 170 TAXMAN 483 HIGH COU RT OF DELHI SARNATH INFRASTRUCTURE (P) LIMITED V ASSISTANT COMMISSIONER OF INCOME TAX 120 TTJ 216 (ITAT - LUCKNOW) JANAK S RANGWALLA V ASSISTANT COMMISSIONER OF INCOME TAX [2007] 11 SOT 627 (ITAT - MUMBAI) VINOD K NEVATIA V COMMISSIONER OF INCOME TAX (ITA NO.6556/MUM/2009)(LTAT - MUMBAI) GOPAL PUROHIT V JOINT COMMISSIONER OF INCOME TAX 2009 29 SOT 117 (ITAT, MUMBAI) COMMISSIONER O F INCOME TEA V NSS INVESTMENT (P ) LIMITED 158 TAXMAN 13 (HC - MADRAS) ITA NO. 173 /DEL /201 2 MAHESH KUMAR 17 JANKI RAM BAHADUR RAM V COMMISSIONER OF INCOME TAX [1965] 57 ITR 21(SC) COMMISSIONER OF INCOME TAX V VIKRAM COTTON MILLS LIMITED [1988] 169 ITR 597(SC) VINOD M SHAH V ADDITIONAL COMMISSIONER OF INCOME TAX [2010] 38 SOT 503 (ITAT - MUMBAI) COMMISSIONER OF INCOME T AX V LAXMI SURGICAL (P) LIMITED [1993] 202 ITR 601 (H C - BOMBAY) DEPUTY COMMISSIONER OF INCOME TAX V M/S. SMK SHARES & STOCK BROKING PRIVATE LIMITED (ITA NO.799/MUM./2009) (ITAT - MUMBAI) CITADELL AGENCIES (P) LTD. V ASSISTANT COMMISSIONER OF INCOME TAX 2007 11 SOT 273 (ITAT, MUMBAI) BOMBAY GY MKHANA LIMITED V INCOME TAX OFFICER 115 TTJ 639 (ITAT - MUMBAI) G VENKATASWAMI NAIDU AND CO . V COMMISSIONER OF INCOME TAX [1959] 35 ITR 594 (SC) COMMISSIONER OF INCOME TAX V PKN CO . LIMITED [1966] 60 ITR 65 (SC) GUSTAD DINSHAW IRANI V COMMISSIONER OF INCOME T AX [1957] 31 ITR 92 (BOMBAY) MRS DM ALEXANDER V COMMISSIONER OF INCOME TAX [ 1952] 22 ITR 379 (MADRAS) SAROJ KUMAR MAZUMDAR V COMMISSIONER OF INCOME TAX [1959] 37 ITR 242 (SC) JANKI RAM BAHADUR RAM V COMMISSIONER OF INCOME TAX [1965] 57 ITR 21 (SC) COMMISS IONER OF INCOME TAX V JAGARNATH PRASAD CHHAWCHHARIA 176 ITR 217 (HC - PATNA) COMMISSIONER OF INCOME - TAX V ASSOCIATED INDUSTRIAL DEVELOPMENT CO . (P) LIMITED (1971) 82 ITR 586 (SC) SHAH - LA INVESTMENT AND FINANCIAL CONSULTANTS (P) LIMITED V DEPUTY COMMISSIONER OF INCOME TAX [2005] 2 SOT 371 (ITAT - HYDERABAD) ITA NO. 173 /DEL /201 2 MAHESH KUMAR 18 GEETA DEVL MAHIPAL V INCOME TAX OFFICER [2004] I SOT 468 (ITAT - JODHPUR) HITESH SATISHCHANDRA DOSHI ETEMIA V JOINT COMMISSIONER OF INCOME TAX (ITA NO. 6497 /MUM/2009) ITAT, MUMBAI MAHENDRA C. SHAH V ASSISTAN T COMMISSIONER OF INCOME TAX (IT APPEAL NO. 6289/MUM./2008)(ITAT - MUMBAI) MANAGEMENT STRUCTURE & SYSTEMS PRIVATE LIMITED V INCOME TAX OFFICER (ITA NO. 6966/MU M/2007)(ITAT - MUMBAI) SHRI RAMESH BABU RAO V ASSISTANT COMMISSIONER OF INCOME TAX (ITA NO. 3719/MUM /2009) (ITAT - MUMBAI) ASSISTANT COMMISSIONER OF INCOME TAX V NAISHADH V VACHHARAJANI (IT.A. NO. 6429/MUM/2009 & CO . NO. 136/MUM/2010) (ITAT - MUMBAI) COMMISSIONER OF INCOME T AX V NEO POLY PACK (P) LIMITED (2000) 245 1TR 492 (HC - DELHI) COMMISSIONER OF IN COME TAX V JUBILANT SECURITIES (P) LIMITED (ITA NO. 588/2011) (HC - DELHI) INCOME, TAX OFFICER V NEERAJ VANIJYA PRIVATE LIMITED (I .T.A NO. L622/KOL/2010 )(ITAT - KOLKATA) 9. IT WAS FURTHER SUBMITTED TO THE LD. CIT(A) THAT FROM THE FACTS OF THE AS SESSEE S CASE, THE FOLLOWING CONCLUSIONS COULD BE ARRIVED AT: (A) SHARES OF ONLY 2 COMPANIES HAD BEEN BOUGHT AND SOLD BY THE ASSES SEE DURING THE PREVIOUS YEAR. THE APPELLANT DID NOT CARRY OUT TRANSACTIONS REPEATEDLY AND FREQUENTLY IN THE SHARES AND CARRI ED OUT TRANSACTION OF PURCHA SE ONLY ONCE IN CASE OF 2 SCRIPS, OUT OF 2 SCRIPS DEALT DURING THE FINANCIAL YEAR. ITA NO. 173 /DEL /201 2 MAHESH KUMAR 19 (B) THE PERIOD OF HOLDING WAS NOT VERY SHORT AND IT WAS REASONABLE TO PRESUME THAT THE PURCHASE W A S MADE WITH AN INTENTION TO MAKE INVESTMENT. (C) THE SCALE OF ACTIVITY WAS NOT SUBSTANTIAL. (D) THE TRANSACTIONS WERE NOT CONTINUOUS AND REGULAR B UT WERE SPORADIC. (E) BORROWED FUNDS HAD NOT BEEN USED FOR PURCHASE OF SHARES. THE APPELLANT HAS NOT PAID ANY INTEREST TO ANY ONE ON ACCOUNT OF INVESTMEN T MADE IN SHARES AND ONLY PAID PENAL CHARGES DEBITED BY BROKER. (F) THE ASSESSEE HAD TREATED THE SHARES AS INVESTMENTS. THE ASSESSEE HAS NOT CLAIMED ANY STT PAID ON SHARE TRANSACTIONS AS EXPENSES IN COMPUTATION OF TAXABLE INCOME. (G) ALL TRANSACTIONS WER E DELIVERY BASED TRANSACTIONS AND THE ASSESSEE DID NOT INDULGE IN TRANSACTIONS WITHOUT ACTUAL DELIVERY. THE APPELLANT WAS NOT ENGAGED IN F & O AND SPECULATIVE DEALING. (H) THE APPELLANT HAS CARRIED OUT TRANSACTION OF SALE IN ONLY IN 2 SHARES DURING THE EN TIRE FINANCIAL YEAR AND ENTERED INTO TRANSACTION ONLY 4 DAYS OUT OF 250 DAYS APPROXIMATELY OF TRADING SESSIONS IN THE STOCK EXCHANGE, SO THE APPELLANT CANNOT BE TREATED AS TRADER OF SHARES.' 10. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE DIRECTED THE AO TO TREAT THE SURPLUS RECEIVED FOR ITA NO. 173 /DEL /201 2 MAHESH KUMAR 20 SALE/PURCHASE OF SHARES AS SHORT TERM CAPITAL GAIN BY OBSERVING IN PARA 5.3 OF THE IMPUGNED ORDER AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND OBSERVATION OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER. 1 HAVE ALSO GONE THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENT CITED BY THE A/R IN THE SUBMISSION ON THIS ISSUE. IT IS SEEN THAT APPELLANT IS A SALARIED EMPLOYEE WHO HAS NEITHER INCURRED NOR CLAIMED ANY BASIC EXPENSES TO CARRY OU T ANY BUSINESS ACTIVITY. THE APPELLANT HAS TRANSACTED ONLY IN THE SHARES OF 2 COMPANIES DURING THE FINANCIAL YEAR UNDER CONSIDERATION WHICH RESULTED IN TURNOVER OF RS.2,82,13,169/ - AND EARNED A NET SHORT TERM CAPITAL GAIN OF RS.81 ,27,737/. ON THIS CAPITAL GAIN THE APPELLANT HAS PAID TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTION 111A OF THE ACT. THE APPELLANT HAS CLAIMED THAT HE HAS HELD THE SAID SHARES AS INVESTMENT. THE APPELLANT HAS CLAIMED THAT WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVES TMENT OR FORMS PART OF STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE PERSON WHO HOLDS THE SAME. THE APPELLANT HAS CLAIMED THAT AO HAS RELIED ON VARIOUS CASES DECIDED BY THE NON JURISDICTIONAL BENCH OF IT AT, MUMBAI AND TREATED THE SURPLUS ON SALE OF SHARES HELD AS INVESTMENT AS BUSINESS INCOME. THE APPELLANT HAS DISCUSSED THE FACTS OF THE SAID CASES IN HIS SUBMISSION AND HAS POINTED OUT THAT THE FACTS OF THOSE CASES ARE DIFFERENT FROM THE CASE OF THE APPELLANT. THE APPELLANT HAS POINTED OUT THAT IN THE CASES RELIED UPON BY THE ASSESSING OFFICER THE CONCERNED PARTIES WERE DIRECTLY OR INDIRECTLY, ENGAGED IN THE BUSINESS OF TRADING IN SHARES THROUGH THEIR OTHER BUSINESS CONCERNS OR IN PREVIOUS FINANCIAL ITA NO. 173 /DEL /201 2 MAHESH KUMAR 21 YEARS. IT IS SEEN FROM THE ASSESSMENT ORD ER THAT THE AO HAS MADE ADDITION ONLY ON THE BASIS THAT THE PERIOD OF HOLDING OF SHARES WHICH IS VERY SHORT IN THE CASE OF PURCHASE OF SHARES OF INDIA B ULLS REAL ESTATE LTD. IT IS THE CONTENTION OF ASSESSING OFFICER THAT IN THE PURCHASE OF THESE SHARES APP ELLANT HAS NOT MADE ANY PAYMENT FOR PURCHASE OF SHARES AND HENCE, NOT MADE ANY INVESTMENT IN THE SAME. AS DISCUSSED ABOVE IN THE SUBMISSION OF THE APPELLANT, THE SHARES OF INDIA B ULLS WERE PURCHASE D MORE THAN WHAT WAS ORDERED BY THE APPELLANT TO THE BROKER M/S CONSORTIUM SECURITIES. THE APPELLANT HAD PLACED ORDER FOR PURCHASE OF 10 THOUSAND OF INDIA BULLS REAL ESTATE L TD./SHARES TO THE BROKER, BUT DUE TO THE MISTAKE COMMITTED BY THE COMPUTER OPERATOR OF THE BROKER SAME WAS ENTERED AS 50 THOUSAND SHARES OF I NDIA B ULLS REAL E STATE LTD. THIS RESULTED INTO THE AMOUNT PAYABLE OF RS.2,01,09,951/ - TO THE SAID BROKER BY THE APPELLANT. IT MAY BE SEEN THAT APPELLANT HAD PLACED ORDER ONLY FOR 10 THOUSAND SHARES AND FOR THAT HE WAS ABLE TO PAY ONLY RS.40 LAKHS. HOWEVER, THE BROKER K EPT ON ASKING COMPLETE PAYMENT OF THE PURCHASE OF 50 THOUSAND SHARE WHICH APPELLANT WAS NOT IN A POSITION TO PAY. THE BROKER ALSO CHARGED THE PENALTY FOR NOT MAKING PAYMENT ON TIME. THE APPELLANT HAD PURCHASED THE SAID SHARES FOR INVESTMENT PU RPOSE, BUT DUE TO THE MISTAKE COMMITTED BY THE COMPUTER OPERATOR, THE APPELLANT WAS NOT ABLE TO HOLD THOSE SHARES IN HIS NAME AS THE SAID BROKER DID NOT TRANSFER SHARES IN APPELLANT'S D - MAT ACCOUNT TO PROTECT HIS FINANCIAL INTEREST AS THE APPELLANT WAS NOT ABLE TO PAY THE FULL AMOUNT OF THE SHARES PURCHASED. IT WAS THEREFORE MUTUALLY DECIDED BETWEEN THE BROKER AND THE APPELLANT THAT TO RECOVER THE AMOUNT DUE ON THE APPELLANT , THE SHARES TO B E SOLD IN THE MARKET THEN ITA NO. 173 /DEL /201 2 MAHESH KUMAR 22 ONLY THE BROKER TRANSFERRED THE SHARES TO THE D - MAT ACCOUNT OF THE APPELLANT ON 16.07.2007 AND ON 17.07.2007 SHARES WERE SOLD. KEEPING IN VIEW OF THE FACT THAT THE IMPUGNED TRANSACTION AND GAIN RESULTED THEREON WAS DUE TO ERROR COMMITTED BY THE STAFF OF STOCK BROKER, IT IS QUITE EVIDENT THAT THE APPELLANT HAS NOT PURCHASED SHARES FOR TRADING PURPOSE, BUT FOR THE INVESTMENT PURPOSES. HOWEVER, HE HAD TO SELL THE SAID SHARES DUE TO THE CHANGED CIRCUMSTANCES. THE APPELLANT HAS CARRIED OUT TRANSACTIONS ONLY 4 DAYS OUT OF APPROXIMATELY 250 DAYS OF TRADI NG SESSIONS IN THE STOCK EXCHANGE, WHICH ITSELF PROVE THAT THE APPELLANT IS NOT A TRADER BUT AN INVESTOR. H AD HE BEEN A TRADER, HE WOULD HAVE TRANSACTED ALMOST EVERY DAY IN THE STOCK EXCHANGE BUT APPELLANT HAS DEALT IN ONLY TWO SCRIPS IN ENTIRE YEAR. THIS ITSELF PROVE THAT HE IS NOT A TRADER IN SHARES. FURTHER APPELLANT HAS NOT CLAIMED ANY EXPENDITURE ON ACCOUNT OF ANY ESTABLISHMENT FOR CARRYING OUT TRADING ACTIVITIES. THIS ALSO ESTABLISHES THAT HE IS NOT A REGULAR TRADER IN SHARES BUT AN INVESTOR. KEEPING IN VIEW THE MATERIAL PLACED ON RECORD AND CONTENTIONS RAISED BY THE APPELLANT AND VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT IN HIS SUBMISSION DISCUSSED SUPRA, I AM OF THE CONSIDERED OPINION, THAT THE ACTION OF THE AO WAS NOT JUSTIFIED IN TREATING THE SHORT TERM CAPITAL GAIN ON SALE/PURCHASE OF SHARES AS BUSINESS INCOME. FURTHER THE APPELLANT HAS PURCHASED SHARES OF ONLY 2 COMPANIES AND WAS NOT INVOLVED IN FREQUENT BUYING AND SELLING OF SHARES. I AM IN FULL AGREEMENT WITH THE SUBMISSION O F THE APPELLANT THAT PERIOD OF HOLDING OF SHARES AND NON - RECEIPT OF DIVIDEND INCOME IS NOT A DECISIVE FACTOR FOR TREATMENT OF A PARTICULAR TRANSACTION AS INVESTMENT OR ITA NO. 173 /DEL /201 2 MAHESH KUMAR 23 TRADING TRANSACTION. ONE HAS TO SEE THE INTENTION OF THE PERSON WHO IS DOING SALE AND PU RCHASE OF SHARES. THE CIRCULAR ISSUED BY THE CBD T ALSO DOES NOT PRESCRIBE ANY PARTICULAR TIME LIMIT FOR HOLDING OF SHARES WHERE SHARES ARE PURCHASED FOR INVESTMENT PURPOSES. IT IS CLEARLY MENTIONED IN THE CIRCULAR THAT A PERSON CAN HAVE TWO PORTFOLIOS ONE FOR INVESTMENT PURPOSES AND ANOTHER FOR TRADING PURPOSES. IN THE CASE OF APPELLANT THE CIRCUMSTANCES CLEARLY SUGGEST THAT HE HAD PURCHASED SHARES FOR INVESTMENT PURPOSES AND NOT FOR TRADING PURPOSES. IN THE ENTIRE YEAR HE HAS DEALT ONLY IN TWO SHARES. IN V IEW OF FACTS STATED ABOVE, IT IS CLEARLY ESTABLISHED THAT THE SHARES PURCHASED BY THE APPELLANT WERE FOR INVESTMENT PURPOSES AND CAPITAL GAIN RECEIVED ON SUCH SALES IS LIABLE TO BE TAX UNDER THE HEAD SHORT TERM CAPITAL GAIN. HENCE, THE ACTION OF THE AO OF TREATING THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME WAS NOT JUSTIFIED. I THEREFORE, DIRECT THE ASSESSING OFFICER TO TREAT THE SURPLUS RECEIVED ON SALE/PURCHASE OF SHARES AS SHORT TERM CAPITAL GAIN AS CLAIMED BY THE APPELLANT. AS A RESULT THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 11. NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR REITERATED THE OBSERVATIONS OF THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER DATED 27.12.2010. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE DID NOT MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR INVESTMENT AND TRADING PURPOSES . THEREFORE, IT WAS NOT BELIEVABLE THAT ONLY IN RESPECT OF THE TRANSACTION RELATING TO THE PURCHASE AND SALES OF THE SHARES UNDER CONSIDERATION, THE ASSESSEE WAS THE INVESTOR AND NOT DOING THE TRADE. IT W AS ITA NO. 173 /DEL /201 2 MAHESH KUMAR 24 FURTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE WAS TO EARN THE PROFIT FROM SALE/PURCHASE OF THE SHARES AND NOT TO EARN DIVIDEND, THEREFORE, THE SURPLUS WAS BUSINESS PROFIT OF THE ASSESSEE AND NOT THE SHORT TERM CAPITAL GAIN. IT WAS FURTHER SUBMITT ED THAT THE FINDINGS GIVEN BY THE LD. CIT(A) WERE ERRONEOUS, THEREFOR E, THE ACTION OF THE AO IN TREAT ING THE SURPLUS AS BUSINESS PROFIT MAY BE UPHELD. 12. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT A TRADER AND INVESTED IN THE SHARES OF ONLY TWO COMPANIES THROUGH D - MAT ACCOUNT AND THERE WAS ONLY THIS SOLITARY TRANSACTION OF SELLING THE SHARES DURING THE YEAR UNDER CONSIDERATION WHI CH SHOWS THAT THE ASSESSEE WAS PURELY A N INVESTOR AND NOT THE TRADER. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE PAID THE BROKERAGE ON THE SALE/PURCHASE OF THE SHARES WHICH HAD BEEN ACCEPTED AND THE RE WERE NO FREQUENT TRANSACTION, T HEREFORE, THE LD. CIT(A) RIGHTLY DIRECTED THE AO TO TREAT THE SURPLUS AS SHORT TERM CAPITAL GAIN AND NOT THE BUSINESS PROFIT AS ALLEGED BY THE AO. IT WAS SUBMITTED THAT THE ASSESSEE PURCHASED THE SHARE S THROUGH A BROKER , NAMELY, M/S CON SORTIUM SECURITIES (P) LTD. AND PLACED AN OR DER TO PURCHASE 10,000 SHARES OF INDIA BULL S REAL ESTATE, H OWEVER, DUE TO THE MISTAKE COMMITTED BY THE ITA NO. 173 /DEL /201 2 MAHESH KUMAR 25 COMPUTER OPERATOR OF THE BROKER, THE SAID ORDER WAS PLACED FOR 50,000 SHARES , DUE TO THIS ERROR , THE AMOUNT OF RS.2 ,0 1,09,951/ - STOOD AS PAYABLE TO THE B ROKER IN THE HANDS OF THE ASSESSEE. IT WAS CLARIFIED THAT THE ASSESSEE PLACED AN ORDER FOR 10,000 SHARES ONLY , FOR WHICH THE PAYMENT OF RS.40,00,000/ - WAS MADE. HOWEVER, THE BROKER INSISTED TO MAKE THE FULL PAYMENT , WHICH WAS NOT PAID BY THE ASSESSEE , CONS TITUENT TO WHICH PENALTY WAS ALSO LEVIED BY THE BROKER. IT WAS STATED THAT THE SHARES WERE PURCHASED BY THE ASSESSEE FOR INVESTMENT PURPOSES ONLY, H OWEVER, DUE TO MISTAKE OF THE COMPUTER OPERATOR , THE ASSESSEE WAS NOT ABLE TO HOLD THE SHARES. T HEREFORE, TH OSE WERE TRANSFERRED BY THE BROKER IN THE D - MAT ACCOUNT OF THE ASSESSEE AND THEREAFTER SOLD ON 17.07.2007. THE ASSESSEE FURNISHED COPY OF D - MAT ACCOUNT ALONGWITH THE CONTRACT NOTES WHICH ARE PLACED AT PAGE NOS. 17 & 18 AND 21 TO 74 OF THE ASSESSEE S PAPER BOOK. THE SAID DOCUMENTS REVEALED THAT THE ASSESSEE HAD CARRIED OUT TRANSACTION ON 4 DAYS ONLY IN THE WHOLE YEAR . T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS FACT CORROBORATED THAT THE ASSESSEE WAS NOT A TRADER BUT AN INVESTOR. IT WAS FURTHER SUBM ITTED THAT THE PERIOD OF HOLDING OF THE SHARES AND NON - RECEIPTS OF DIVIDEND INCOME A RE NOT THE DECISIVE FACTORS FOR TREATING THE PARTICULAR TRANSACTION AS A N INVESTMENT OR TRADING TRANSACTION BECAUSE TO JUDGE THE NATURE OF TRANSACTION, T HE ITA NO. 173 /DEL /201 2 MAHESH KUMAR 26 INTENTION OF THE PERSON WHO WAS CARRYING OUT SALE/PURCHASE OF SHARE S WAS TO BE CONSIDERED AND IN THE PRESENT CASE THE INTENTION OF THE ASSESSEE WAS TO HOLD THE SHARES AS INVESTMENT BUT THE SAME COULD NOT BE DONE BY THE ASSESSEE DUE TO THE MISTAKE OF THE BROKER. THE LD. CO UNSEL FOR THE ASSESSEE REFERRED TO THE CIRCULAR NO. 4/2007 DATED 15.06.2007 ISSUED BY THE CBDT AND STATED AS UNDER: (I) WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR FORMS PART OF THE STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOW LEDGE OF THE ASSESSEE WHO HOLDS THE SHARES. IN THE PRESENT CASE, CONSIDERING THE SUBMISSIONS MADE ABOVE, IT IS CLEARLY EVIDENT THAT THE INTENTION OF THE ASSESSEE WAS TO HOLD THESE SHARES AS INVESTOR AND NOT AS A TRADER. (II) THE MAGNITUDE OF PURCHASES AND SALES WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTIONS. IN THE PRESENT CASE, THE DEMAT ACCOUNT OF THE ASSESSEE (PB 17 - 18) SHOWS THAT THE ASSESSEE IS HOLDING ONLY 3 SCRIPS, OUT OF WHICH 2 SCRIPS WERE PURCHASED THROUGH IPO AND ONE SCRIP IS PURCHASED THROUGH STOCK EXCHANGE, WHICH IS THE SINGLE PURCHASE IN THE ENTIRE FINANCIAL YEAR. THE SAID INVESTMENT HAS BEEN HELD BY THE ASSESSEE FOR 27 DAYS, AND HAD TO BE SOLD OUT ONLY DUE TO THE MISTAKE COMMITTED BY THE COMPUTER OPERATOR OF THE BROKER. 13. IT WAS FURTHER SUBMITTED THAT THERE WERE ONLY FEW SCRIPS IN WHICH THE ASSESSEE HAD INVESTED , THERE WAS NO FREQUENT TRANSACTION IN THE SAME SCRIPS AND THERE WAS NO ORGANIZED ITA NO. 173 /DEL /201 2 MAHESH KUMAR 27 ACTIVITIES TO OBTAIN PROFIT AS BUSINESS TRANSACTION . IT WAS FURTHER STATED TH AT NO ENTRA - DAY TRANSACTION WAS CARRIED OUT BY THE ASSESSEE AND ALL THE SHARES HAD BEEN SOLD AFTER KEEPING THE SAME FOR A SUBSTANTIAL PERIOD OF TIME. THEREFORE, THE LD. CIT(A) RIGHTLY DIRECTED THE AO TO TREAT THE SURPLUS AS SHORT TERM CAPITAL GAIN AND NOT THE BUSINESS PROFIT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: RADIALS INTERNATIONAL VS ACIT IN ITA NO. 485/2012 ORDER DATED 25.04.2014 RAJA BAHADUR KAMAKHYA NARAIN SINGH VS CIT (1970) 77 ITR 253 (SC) CIT VS ROHIT ANAND (2010) 327 ITR 445 (DEL) C IT - IV VS DEVASAN INVESTMENT (P.) LTD. (2015) 229 TAXMAN 496 (SC) CIT - IV VS DEVASAN INVESTMENT (P.) LTD. (2014) 365 ITR 452 (DEL) CIT VS CONSOLIDATED FINVEST AND HOLDING LTD. (2011) 337 ITR 264 (DEL.) 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, THE ONLY CONTROVERSY TO BE RESOLVED IS AS TO WHETHER THE SURPLUS RECEIVED BY THE ASSESSEE ON THE SALE OF SHARES WAS A SHOT TERM CAPITAL GAIN OR A BUSINESS PROFIT. IN THE INSTANT CASE, THE PURCHASE AND SALE PRICE OF THE SHARES UNDER CONSIDERATION IS NOT IN DISPUTE, THE ASSESSEE PURCHASED 10,000 SHARES OF INDIA BULLS REAL ESTATE. HOWEVER, DUE TO MISTAKE OF THE BROKER, THE ORDER WAS PLACED FOR 50,000 ITA NO. 173 /DEL /201 2 MAHESH KUMAR 28 SHARES FOR THAT REASO N THE ASSESSEE WAS COMPELLED TO SELL THE SHARES IN A S H ORT SPAN OF 27 DAYS . T HE SAID PURCHASE OF SHARES NEVER BECAME STOCK - IN - TRADE. THE ASSESSEE W AS HAVING ONLY 3 SCRIPS WHICH IS EVIDENT FROM PAGE NOS. 17 & 18 OF THE ASSESSEE S PAPER BOOK OUT OF THOSE SCR IPS 2 WERE PURCHASED THROUGH IPO AND ONE SCRIPS THROUGH STOCK EXCHANGE WHICH WAS SINGLE PURCHASE IN THE FINANCIAL YEAR UNDER CONSIDERATION. IN THE PRESENT CASE, THE INTENTION OF THE ASSESSEE FROM THE VERY BEGINNING WAS TO HOLD THE SHARES AS INVESTMENT AND NOT AS A STOCK - IN - TRADE . THE AO CONSIDERED THE SURPLUS ON THE SALE OF THOSE SHARES AS BUSINESS INCOME FOR THE REASON THAT NO DIVIDEND WAS RECEIVED BY THE ASSESSEE. IN OUR OPINION, THE RECEIPT OF THE DIVIDEND CANNOT BE CRITERIA TO HOLD THE SHARES AS STOCK - I N - TRADE AND NOT THE INVESTMENT. IN THE INSTANT CASE, T HE ASSESSEE SOLD THE SHARES IN SHORT SPAN FOR THE REASON THAT THE COMPUTER OPERATOR OF THE BROKER THROUGH WHOM SHARES WERE PURCHASED PLACED THE ORDER FOR 50,000 SHARES INSTEAD OF 10,000 SHARES ORDERED B Y THE ASSESSEE TO BE PURCHASED AND THE BROKER INSISTED TO MAKE FULL PAYMENT WHICH THE ASSESSEE WAS NOT ABLE TO PAY . CONSEQUENT TO WHICH PENALTY WAS ALSO LEVIED BY THE BROKER AND ULTIMATELY THE ASSESSEE SOLD THE SHARES WITHIN A SHORT SPAN OF 27 DAYS, THEREF ORE, ONLY ON THIS BASIS THAT HOLDING PERIOD WAS VERY LESS , IT CANNOT BE HELD THAT THE SHARES WERE PURCHASE D FOR THE BUSINESS PURPOSES AND NOT AS AN INVESTMENT. IN OUR OPINION, ITA NO. 173 /DEL /201 2 MAHESH KUMAR 29 ON THE AFORESAID BASIS , THE ACTION OF THE AO IN TREATING THE TRANSACTION AS TRAD ING TRANSACTION WAS NOT JUSTIFIED. 15. ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS CONSOLIDATED FINVEST AND HOLDING LTD. (2011) 337 ITR 264 (SUPRA) HELD AS UNDER: THAT THE ASSESSEE HAD ACQUIRED THOSE SHARES IN A PUBLIC ISSUE AND HAD, IN FACT, SHOWN THEM IN THE BOOKS OF ACCOUNT AS INVESTMENT AND WERE BOOKED UNDER THE HEAD 'NON - TRADE' AND NOT 'TRADING' INVESTMENT. THE INTENTION TO ACQUIRE THOSE SHARES AS INVESTMENT COULD BE REFLECTED FROM THE FACT THAT IT WAS HOLDING MOST OF THE SHARES OF OTHER COMPANIES SINCE LONG PERIOD OF TIME AND WAS NOT ENTERING INTO FREQUENT BUSINESS OF SALE AND PURCHASE OF SHARES. FROM THE FACTS, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL ARRIVED AT A FINDING OF FACT THAT THE ACQUISITION OF SUCH SH ARES IN PUBLIC ISSUE WITH THE INTENT OF HOLDING THEM FOR A LONG PERIOD OF TIME TO ACHIEVE LONG - TERM APPRECIATION AND THE MERE FACT THAT THE SHARES WERE SOLD IN A SHORT SPAN OF TIME OF ITS ACQUISITION DUE TO STEEP AND UNANTICIPATED RISE IN STOCK MARKET DID NOT MEAN THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES WAS NOT TO HOLD THEM FOR A LONG PERIOD OF TIME OR TO DEAL IN THEM. THIS WAS A PURE QUESTION OF FACT ARRIVED AT BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. THE PROFIT ARISEN F ROM SALE OF SHARES DURING THE RELEVANT PREVIOUS YEAR WAS TO BE TREATED UNDER THE HEAD 'CAPITAL GAINS' AND NOT 'PROFIT OR GAIN FROM BUSINESS OR PROFESSION. 16 . IN THE PRESENT CASE ALSO THE ASSESSEE PURCHASED THE SHARE AS AN INVESTMENT AND WAS NOT ENTERING INTO FREQUENT PURCHASES ITA NO. 173 /DEL /201 2 MAHESH KUMAR 30 AND SALES OF SHARES. THE ASSESSEE SOLD THE SHARES IN A SHORT SPAN OF 27 DAYS FOR THE REASON THAT THE COMPUTER OPERATOR OF BROKER PLACED THE ORDER FOR 50,000 SHARES INSTEAD OF 10,000 SHARES ORDERED BY THE ASSESSEE AND THE BROKER WAS INSISTING FOR PAYMENT WHICH THE ASSESSEE WAS NOT IN A POSITION TO MAKE, THEREFORE, THOSE SHARES WERE SOLD IN A SHORT SPAN. AS SUCH THE SURPLUS RECEIVED BY THE ASSESSEE ON SALE OF THOSE SHARES OF M/S INDIA BULLS REAL ESTATE WAS A SHORT TERM CAPITAL GAIN. W E, THEREFORE, DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND AS SUCH DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 1 7 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON O UNCED IN THE COURT ON 13 / 12 /2016 ) SD/ - SD/ - ( BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 13 /12 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR