The ACIT, Circle-6, Ahmedabad V. Smt. Gargi Shitalkumar Patel, Ahmedabad

ITA 1911/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50895 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAVANSHI
• Keywords: Capital asset; Business income; Salary income; Rule of consistency; Source of fund; Advance ruling; Question of law; Revenue expenditure
• Section: 143(3); 11A; 2(14); 28

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , . .! ' , #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ./ I.T.A. NO.1911/AHD/2009 ( ' ' ' ' / / / / ASSESSMENT YEAR : 2006-07) THE ACIT CIRCLE-6 AHMEDABAD / VS. SMT.GARGI SHITALKUMAR PATEL 36, SWAMI AKHANDAND SOCIETY NR.KK NAGAR, RANNA PARK GHATLODIA, AHMEDABAD ( #$ ./!) ./ PAN/GIR NO. :AGUPP 9148 A ( (* / // / APPELLANT ) .. ( +,(*/ RESPONDENT ) (* - #/ APPELLANT BY : SHRI G.S.SOURYAVANSHI, SR.D.R. +,(* . - # / RESPONDENT BY : SHRI PRITESH SHAH / . 0$/ // / DATE OF HEARING : 10/08/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 31.10.2011 O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XI, AHMEDABA D DATED 18/03/2009 PASSED FOR ASSESSMENT YEAR 2006-07. THE FOLLOWING GROUNDS WERE RAISED BY THE REVENUE IN ITS APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX(A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO TREAT THE INCOME OF RS.15,53,886/- AS SHORT TERM CAPITAL GAIN INSTEAD O F BUSINESS INCOME. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 2 - 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO TREAT THE INCOME OF RS.2,88,757/- AS LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME . 2. ASSESSEE IS AN INDIVIDUAL AND THE SOURCES OF INCOME ARE TRADING IN SHARES AND SALARY INCOME. FACTS IN BRIEF AS EMERGE D FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT DATED 10/11/2008 WERE THAT THE RETURN WAS FILED DECLARING AN INCOME OF RS.11,29,870/- AS AGAINST THAT THE ASSESSMENT WAS M ADE ON ASSESSED INCOME OF RS.14,28,796/-. IT WAS NOTED BY THE AS SESSING OFFICER THAT THE ASSESSEE HAD DECLARED AN INCOME OF RS.15,53,886/- ON ACCOUNT OF SHORT-TERM CAPITAL GAIN AND OF RS.2,88,757/- AS INC OME FROM LONG- TERM CAPITAL GAIN FROM THE ACTIVITIES OF PURCHASE A ND SALE OF EQUITIES. THE ASSESSEE HAS FILED THE DETAILS OF SHARES PURCHA SED AND SOLD IN RESPECT OF THE SHORT-TERM CAPITAL GAIN DISCLOSED. AS PER AS SESSING OFFICER, CONSIDERING THE NUMBER OF TRANSACTIONS, IT WAS TO D ECIDE WHETHER INCOME FROM PURCHASE AND SALE TO BE TREATED AS BUSI NESS INCOME OR CAPITAL GAINS. THE ASSESSING OFFICER HAS REFERRED A CBDT CIRCULAR NO.4/2007 DATED 15/06/2007, WHEREIN CERTAIN GUIDELINES HAVE BEEN ISSUED TO RESOLVE WHETHER THE ACTIVITY OF SHARES O F SALE AND PURCHASE CONSTITUTE A BUSINESS ACTIVITY OR NOT. AFTER CONS IDERING THE NATURE OF TRANSACTION, MAGNITUDE OF TRANSACTION AND FREQUENCY OF TRANSACTION, THE ASSESSING OFFICER HAS TAKEN A DECISION THAT BUYING AND SELLING OF SHARES WAS FOR THE PURPOSE OF EARNING OF PROFIT, HENCE TO BE TAXED AS BUSINESS INCOME. INCOME FROM BUSINESS IN SHARE TRADING WAS THEREFORE, CALCULATED AT RS.18,42,643/- AND AFTER ALLOWING CERTAIN EXPENS ES AS PER PROFIT & LOSS ACCOUNT OF RS.5,22,522/- THE BALANCE RS.13,20, 121/- WAS TAXED IN ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 3 - ASSESSEES HAND AS BUSINESS OF SHARE TRADING . B EING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY. 3. BEFORE LEARNED CIT(APPEALS), A DETAILED DISCUSSION WAS MADE AND IT WAS INFORMED THAT NUMBER OF SHARES WERE HELD FOR A SHORT PERIOD WHICH WERE NOT FOR MORE THAN ONE YEAR BUT A DEMAT A CCOUNT WAS OPERATED AND THE ASSESSEE HAS TAKEN THE DELIVERY OF THE SHAR ES. THE SHARES WHICH WERE HELD FOR A SHORT PERIOD WERE THEREFORE OFFERED UNDER THE HEAD SHORT- TERM CAPITAL GAIN. IT WAS CLARIFIED THAT SERVICE TRANSACTION TAX WAS PAID. AFTER CONSIDERING FEW DECISIONS, THE LEARNED CIT(APPEALS) HAS HELD AS UNDER:- 3.3. HAVING VERIFIED THE DETAILS FURNISHED BY THE A.R. AND ALSO AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A.R. I AM OF THE VIEW THAT THE A.O. IS NOT CORRECT IN TREATING THE I NCOME ARISING FROM SALE OF SHARES AS BUSINESS INCOME ON THE GROUN D THAT THE APPELLANT HAD FREQUENT PURCHASE AND SALE OF TRANSAC TIONS. THE A.O. HAS TREATED THE ENTIRE TRANSACTIONS AS BUSINES S TRANSACTIONS WITHOUT CONSIDERING THE FACTS THAT THE APPELLANT HAD TAKEN THE DELIVERY OF THESE SHARES. THEREFORE, AS IT COULD BE SEEN FROM THE FACTS OF THE CASE, THAT THE APPELLANT HAD TAKEN THE DELIVERY OF THESE SHARES IN DEMAT ACCOUNT AND THEREAFTER ONLY THE SHA RES WERE SOLD. SALE OF THESE SHARES, HENCE, CANNOT BE SAID AS A NO RMAL BUSINESS TRANSACTIONS FOR TREATING THE SAME AS BUSINESS INCO ME. THE SHARES WERE BOUGHT AND SOLD WITH A GAP OF SOME TIME AFTER TAKING THE DELIVERY OF THE SHARES. THEREFORE, I AM INCLINED T O DIRECT THE A.O. TO TREAT THE ABOVE INCOME AS SHORT TERM CAPITAL GAI N. 4. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR. G.S.SOURYAVANSHI APPEARED AND AT THE OUTSET HAS REFERRED THE GUIDELI NES ISSUED BY CBDT CIRCULAR NO.4/207 DATED 15/06/2007 AND HIGHLIGHTED THE FOLLOWING POINTS:- ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 4 - I) WHERE A COMPANY PURCHASES AND SELLS SHARES, IT SHOULD BE SHOWN THAT THEY WERE HELD AS STOCK IN TRADE, FOR THE ACTIVITY TO CONSTITUTE BUSINESS. II) THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE MA NNER OF MAINTAINING OF BOOKS OF ACCOUNTS, THE MAGNITUDE OF PURCHASE AND SALE AND THE RATIO BETWEEN PURCHASE AN D SALE OF SHARES NEEDS TO BE LOOKED INTO. III) WHETHER THE MOTIVE BEHIND PURCHASE AND SALE OF SHA RES WAS EARNING PROFIT OR INCOME BY WAY OF DIVIDEND, ETC. HE HAS VEHEMENTLY CONTESTED THAT IN THESE TYPE OF C ASES WHERE THERE ARE FREQUENT TRANSACTION OF SHARES, THE REVEN UE DEPARTMENT HAS CONSTANTLY TAKEN A VIEW THAT THE ASSESSEE HAS TRADE D THE SHARES AS BUSINESS, THEREFORE, THE AO WAS RIGHT IN COMPUTING THE SHARE TRADING INCOME AS BUSINESS INCOME. 5. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LD.AR MR.PRITESH SHAH APPEARED AND IN SUPPORT OF THE DECISION OF LD.CIT(A ) NARRATED ON THE FOLLOWING POINTS:- 1. ASSESSEE HAS DIVIDED IN SHARE ACTIVITY IN TWO PARTS (1) SPECULATION AND (2) INVESTMENTS ACCORDINGLY SHARES WERE PURCHASED AS INVESTMENTS AND THE SAME HAVE BEEN ENTERED UNDER THE HEAD OF INVESTMENTS IN THE BOOKS OF ACCOUNTS. SPECULATIVE TRANSACTIONS HAVE BEEN TREATED AS SPECULATION BUSINESS INCOME. 2. BOOKS OF ACCOUNTS HAVE BEEN AUDITED DUE TO SPECULAT ION BUSINESS. THE TAX AUDITOR HAS SIGNED THE BALANCE S HEET IN WHICH SHARES HAVE BEEN SHOWN AS INVESTMENTS. 3. INVESTMENTS HAVE BEEN VALUED AT COST . IF THE SHARES HAVE BEEN TREATED AS STOCK IN TRADE, THE CLOSING ST OCK COULD HAVE BEEN VALUED AT LOWER OF COST OR ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 5 - MARKET VALUE. THE ASSESSEE HAS NOT AVAILED THE BENEFIT OF REDUCTION IN MARKET VALUE OF SHARES WHIL E VALUING THE CLOSING STOCK. 4. SHARES WERE TREATED AS INVESTMENTS AND THE INCOMES FROM LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAINS WAS ALSO SHOWN IN THE LAST YEAR (I.E. IN ASSESSMENT YEAR: 2005/06) AND THE SAME WAS ALSO ACCEPTED IN LA ST YEAR. 5. DELIVERY OF THE SHARES HAVE BEEN TAKEN AND THE ENTRIES ARE THERE IN DEMAT ACCOUNT. COPIES OF DEMAT ACCOUN TS WERE SUBMITTED BEFORE AO AS WELL AS CIT(A). BROKE RS NOTES WERE ALSO PRODUCED BEFORE BOTH THE AUTHORITIE S. 6. DEPARTMENT HAS NOT PUT ANY EVIDENCE ON RECORDS WHICH PROVES THAT THE FACTS OF CURRENT YEAR ARE DIFFERENT THAT THE FACTS OF THE PREVIOUS YEAR. IF THE SALE OF INVESTM ENTS WAS TREATED AS LONG TERM & /OR SHORT TERM CAPITAL GAIN IN LAST YEAR, THEN WHY THE STAND IS DIFFERENT IN CURRE NT YEAR. 7. DESCRIPTION OF BORROWINGS:- RS.50,69,201/- AMOUNT OF BORROWED FUNDS BANK OVERDRAFT AND UNSECURED LOANS RS. 1,37,872/- INTEREST ON BANK OVERDRAFT RS.2,72,772/- INTEREST ON UNSECURED LOAN RS.4,10,644/- TOTAL AMOUNT OF INTEREST EXPENSES DEBITED TO P&L A/C. IN THE STATEMENT OF INCOME, ASSESSEE HAS DISALLOWED INTERESTS AND ADDED BACK TO THE BUSINESS INCOME. T HUS, THE ASSESSEE HAS NOT CLAIMED THE INTEREST OF RS.4,1 0,644/- AS REVENUE EXPENDITURE, SINCE SHE HAS TREATED SHARE S AS INVESTMENT. 8. THE TRANSACTIONS ARE NOT 500 BUT LESS, SINCE SI NGLE TRANSACTION OF SALE HAS BEEN SPLIT BY COMPUTERS TRA DING OF THE STOCK EXCHANGES INTO MANY SMALLER TRANSACTIONS BUT THAT DOES NOT MEAN THAT ASSESSEE HAS CARRIED SO MANY TRANSACT IONS. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 6 - 5.1. IN SUPPORT OF THE ABOVE ARGUMENTS, FEW CASES OF THE TRIBUNAL CITED ARE AS UNDER:- SL.NO(S) DECISION IN THE CASE OF IN ITA NOS 1. RAMESH BABU RAO VS. ACIT 4084, 5318 & 5319/MUM/2009 DATED 13/04/2011 2. MR.NEHAL V.SHAH VS. DCIT 2733/MUM/2009 DATED 15/12/2010 3. DCIT VS. M/S.SMK SHARES & STOCK BROKING PVT.LTD. 799/MUM/2009 DATED 24/11/2010 4. DCIT VS. M/S.SMK SHARES & STOCK BROKING PVT.LTD. 4591/MUM/2009 DTD. 30/11/2010 5. NAGINDAS P.SHETH (HUF) VS. ACIT & ACIT VS. NAGINDAS P.SHETH (HUF) 961/MUM/2010 & 1836/MUM/2010 DTD 05/04/2011 6. ACIT VS. NAISHADH V.VACHHARAJANI 6429/MUM/2009 DATED 25/02/2011 7. ITO VS. RADHA BIRJU PATEL 5382/MUM/2009 DATED 30/11/2010 5.2. THE LD.AR HAS ALSO REFERRED FEW REPORTED PRECE DENTS AS FOLLOWS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. NIRAJ AMIDHAR SURTI 238 CTR 294[GUJ]:: 48 DTR 33 2. CIT VS. GOPAL PUROHIT 228 CTR 582 (2010) [MUM.] 3. SUGAMCHAND C.SHAH VS. ACIT 37 DTR 345 (AHMEDABAD ITAT) 4. JANAK S.RANGWALLA VS. ACIT 11 SOT 627 ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 7 - (MUMBAI ITAT) 5. BHARAT KUNVERJI KENYA VS. ACIT 130 TTJ 86 (MUMBAI ITAT) 6. SARNATH INFRASTRUCTURE (P) LTD. VS. ADDL.CIT 120 TTJ 216 (LUCKNOW ITAT) 7. MANAGEMENT STRUCTURE & SYSTEMS (P) LTD. VS. ITO 41 DTR 426 (MUMBAI ITAT) 8. ARJUN KAPUR VS. DCIT 71 TTJ 810 (DELHI ITAT) 9. ACIT VS. DINESH K.MEHTA HUF 39 SOT 488 (MUMBAI ITAT) 10. ACIT VS. MERLIN HOLDINGS (P) LTD. 135 TTJ 49 (KOLKATA ITAT) 6. WE HAVE HEARD BOTH THE SIDES AT LENGTH . WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF COMPILATION FILED. THE COMPILATION HAS CONSISTED STATEMENTS SHOWING THE SHARE-WISE DETAILS OF DATE OF PURCHASE, DATE OF SALE, NAME OF THE COMPANY WITH SCRIPT NUMBER , ETC. FOR BOTH THE TYPES OF GAINS, I.E. FOR LON G TERM CAPITAL GAIN AS ALSO FOR SHORT TERM CAPITAL GAIN SEPARATE STATEMENTS ARE FURNISHED. THE COMPILATION ALSO CONSISTED DEMAT S TATEMENT ACCOUNTS. IT HAS ALSO BEEN PLACED ON RECORD THAT FOR A.Y. 2005-06 AS ALSO FOR THE SUBSEQUENT ASSESSMENT YEAR FOR A.Y.2007-08, THE ASSESSEE HAS DISCLOSED CAPITAL GAIN ON SHARE TRANSACTION. FOR A.Y. 2005- 06, THE LONG TERM CAPITAL GAIN WAS DISCLOSED AT RS.3,72,00,532/- AND FOR A.Y. 2007-08 THE ASSESSEE HAS DISCLOSED LONG TERM CAPITAL GAIN AT RS .52,948/-. LD.AR HAS ALSO SPECIFICALLY POINTED OUT THAT THE PURPOSE OF INVESTMENT IN SHARES WAS BASICALLY TO EARN DIVIDEND INCOME , THEREFORE FOR THE A.Y. 2005-06, I.E. IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR DIV IDEND INCOME OF RS.72,083/- AND FOR THE A.Y. 2007-08, I.E. IMMEDIAT E SUCCEEDING ASSESSMENT YEAR DIVIDEND INCOME OF RS.96,036/- WAS DISCLOSED AND ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 8 - ACCORDINGLY ASSESSED. FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2006- 07 THE DIVIDEND INCOME WAS EARNED AT RS.88,970/- . THESE FACTS HAVE BEEN TAKEN INTO CONSIDERATION BY US. THE ACTION O F THE REVENUE AUTHORITIES FOR THE YEAR UNDER CONSIDERATION HAD RA ISED A QUESTION THAT WHY IN THIS PARTICULAR ASSESSMENT YEAR THE REVENUE HAS ALTERED ITS STAND AND WHY THE HEAD OF INCOME HAS BEEN CHANGED FROM C APITAL GAIN TO BUSINESS INCOME. THOUGH THE CHANGE IN THE INCOM E TAX STATUTE HAD HAPPENED THROUGH FINANCE ACT, 2004 BUT THE RELEVANT ASSESSMENT YEARS WERE NOT DISTURBED BY THE REVENUE AUTHORITIES IN TH E CASE OF THE ASSESSEE. WE ARE AWARE OF THE LEGAL POSITION THAT THE LEGISLA TURE HAD IMPOSED SECURITY TRANSACTION TAX ON THE SALE AND PURCHASE O F SHARES. WE ARE ALSO AWARE THAT THE LEGISLATURE HAD EXEMPTED LONG TERM C APITAL GAIN U/S.10(38) OF THE I.T.ACT. THE STATUTE HAS ALSO IMPOSED A CO NCESSIONAL RATE OF TAX, SUBJECT TO THE CONDITION THAT THE TRANSACTION SHOUL D BE COVERED BY SECURITY TRANSACTION TAX. AS FAR AS THE PRESENT CA SE IS CONCERNED, THEREFORE, THERE IS NO DISPUTE THAT THE ASSESSEE HA S CLAIMED EXEMPTION U/S.10(38) OF I.T. ACT AND THEREUPON PAID TAX U/S.1 11A AT CONCESSIONAL RATE. FROM SEVERAL RULINGS, CERTAIN PRINCIPLES H AVE BEEN CULLED-OUT, IN BRIEF, ARE THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES HAS TO BE EXAMINED. IN THIS REGARD, FEW CO URTS HAVE HELD THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE ONE OF THE DEC IDING FACTOR. IT HAS BEEN INFORMED THAT THE ASSESSEE HAS ALWAYS RECORDED THE AMOUNT AS INVESTMENT IN SHARES AND, THEREFORE, STOCK OF SHARES HAS ALWAYS BEEN VALUED AT COST PRICE . IT IS ALSO RELEVANT TO PLACE ON RECORD THAT THE DISCLOSURE OF LONG TERM CAPITAL GAIN WAS THE REGULA R FEATURE IN ASSESSEES CASE. INTENTION OF THE ASSESSEE CAN ALSO BE JUDG ED BY THE FACT THAT THE SHARES HAVE DELIVERED DIVIDEND INCOME WHICH WAS DIS CLOSED YEAR-AFTER- ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 9 - YEAR GIVING A CLEAR INDICATION THAT THE INVESTMENT WAS TO EARN DIVIDEND INCOME. IN A CASE, SUCH AS, IN THE CASE OF THE ASS ESSEE WHERE THE SHARE HOLDING PORTFOLIO IS MIXED WITH SHORT TERM AS ALSO LONG TERM INVESTMENT IT IS A VERY THIN DIFFERENCE TO DRAW A DEMARCATING LINE. HOWEVER, THE COURTS ARE OF THE VIEW THAT FREQUENCY OF TRANSACTIO N, REALIZATION OF SALE PROCEEDS AND MOTIVE BEHIND THE TRANSACTION ARE THE ESSENTIAL INGREDIENTS TO DETERMINE THE EXACT NATURE OF THE TRANSACTION. THE HONBLE COURTS HAVE DULY REALIZED THE DIFFICULTY IN DETERMINING TH E EXACT NATURE OF THE TRANSACTION AND THEREFORE IT WAS COMMENTED THAT NO T ONE OR TWO FACTORS WOULD BE SUFFICIENT TO COME TO A DEFINITE CONCLUSIO N, BUT THE CUMULATIVE EFFECT OF SEVERAL FACTORS HAVE BE TAKEN INTO ACCOUN T. WE HAVE EXAMINED THE FACTS OF THE CASE AND HAVE FOUND THAT THE ASSES SEE HAS CONSISTENTLY SHOWN IN PAST SEVERAL YEARS THE SHARE TRADING INCOM E AS CAPITAL GAIN, EITHER SHORT TERM OR LONG TERM OR BOTH AND THAT HAS NOT BEEN CHALLENGED BY THE DEPARTMENT. THERE IS NO MATERIAL ON RECORD TO HOLD THAT THE ASSESSEE HAS DEVIATED FROM THE SAID ACCEPTED NATURE OF TRANS ACTION OR ADOPTED A DIFFERENT METHOD OF SHARE TRANSACTION MORE AKIN TO BUSINESS TRANSACTION. IN THE ABSENCE OF ANY CONTRARY EVIDENCE, WE ARE OF THE VIEW THAT THERE WAS NO COGENT REASON TO UNSETTLE THE SETTLED METHOD OF RECORDING OF THE SHARE TRANSACTION OF THE ASSESSEE. AS FAR AS THE PERIOD OF HOLDING OF AN INVESTMENT IS CONCERNED, THE ACCEPTED LEGAL POSITIO N IS THAT A DECISION HAS TO BE TAKEN BY THE ASSESSEE HIMSELF SO AS TO REAP T HE MAXIMUM BENEFITS. THE ASSESSEE HAS ADDUCED SEVERAL EVIDENCES AND DISC HARGED THE ONUS OF SHOWING THAT THE SHARES WERE HELD AS AN INVESTMENT AND NOT MEANT TO HOLD THOSE SHARES AS STOCK-IN-TRADE FOR BUSINESS PURPOSE S. IN SUPPORT OF OUR THESE OBSERVATIONS, WE HEREBY PLACE STRONG RELIANCE ON A DECISION OF THE RESPECTED CO-ORDINATE BENCH B ITAT AHMEDABAD IN I TA ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 10 - NO.2076/AHD/2009 FOR A.Y. 2006-07 (ASSESSEES APPEA L SHRI MULCHANDBHAI S.AMIN VS. ACIT) & ITA NO.2218/AHD/20 09 (IN REVENUES APPEAL), DATED 09/09/2011, WHEREIN ONE O F US, I.E., RESPECTED LD.AM IS THE AUTHOR AND HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE ISSUE BEFORE US IS AS TO WHETHER SALE OF SHARES IS TO BE ASSESSED AS BUSINESS INCOME OR AS INCOME FROM CAPIT AL GAIN. THE AO TREATED BOTH LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAINS AS BUSINESS INCOME WHILE THE LD.CIT(A) FOLLOWING HIS O WN ORDER FOR THE PRECEDING YEAR TREATED ONLY SHORT TERM GAINS AS BU SINESS INCOME. HOWEVER, THE ITAT IN THEIR AFORESAID ORDER DATED 13 -05-2011 IN THE ASSESSEES OWN CASE IN ITA NO.127/AHD/2009 FOR THE AY 2005-06 TREATED THE SHORT TERM CAPITAL GAINS AS BUSINESS IN COME. THE LD. AR RELIED UPON THIS ORDER OF THE ITAT, FACTS AND CIRC UMSTANCES BEING SAME IN THE YEAR UNDER CONSIDERATION AS WERE OBTAIN ING IN THE PRECEDING YEAR WHILE THE LD. DR POINTED OUT THAT TH E DECISIONS RELIED UPON BY THE ITAT IN THE PRECEDING YEAR WERE DISTING UISHABLE. TO DETERMINE AS TO WHETHER SALE OF SHARES IS TO BE ASS ESSED AS BUSINESS INCOME OR AS INCOME FROM CAPITAL GAIN , THE MOST IM PORTANT TEST IS WHETHER THE INITIAL ACQUISITION OF THE SHARES WAS W ITH THE INTENTION OF DEALING IN THE SHARES OR IT WAS MADE AS AN INVESTME NT. THE INTENTION OF THE ASSESSEE IS BEST KNOWN TO HIM AND THE DISPUTE C OMES TO THE APPELLATE AUTHORITIES ONLY WHEN THE REVENUE AUTHORI TIES DO NOT ACCEPT THE CLAIM OF THE ASSESSEE. THE APPELLATE AUTHORITIE S HAVE LAID DOWN CERTAIN GUIDELINES ON THE BASIS OF WHICH THE INTENT ION OF THE ASSESSEE CAN BE INFERRED. IN THE CASE OF SARNATH INFRASTRUCT URE PVT. LTD.,122 TTJ 216, THE LUCKNOW BENCH OF THE ITAT HAS LAID VARIOUS PRINCIPLES WHICH MAY BE APPLIED TO DETERMINE WHETHER THE TRANSACTION OF PURCHASE AND SALE OF SHARE IS IN THE NATURE OF TRADE OR INVESTME NT. THE RELEVANT FINDINGS OF THE ITAT READ AS UNDER: THE FOLLOWING PRINCIPLES CAN BE APPLIED ON THE FAC TS OF A CASE TO FIND OUT WHETHER TRANSACTION(S) IN QUESTION ARE IN THE NATURE OF TRADE OR ARE MERELY FOR INVESTMENT PURPOSES: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIME O F PURCHASE OF THE SHARES. THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNTWHETHER IT IS TREATED AS STOCK-IN-TRADE OR INVESTMENT; WHETHER SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVESTMENT OR NON-TRADING ASSET. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 11 - (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHAS E AND PAID INTEREST THEREON. NORMALLY, MONEY IS BORROWED TO PURCHASE GOODS FOR THE PURPOSES OF TRADE AND NOT FOR INVESTI NG IN AN ASSET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DIS POSAL IN THAT PARTICULAR ITEM ? IF PURCHASES AND SALES ARE F REQUENT, OR THERE ARE SUBSTANTIAL TRANSACTIONS IN THAT ITEM, IT WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PU RCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSE E IS TRADING OR INVESTING (HIGH TRANSACTIONS AND LOW HOL DINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HOLDINGS IN DICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE ARE FOR REALIZING PRO FIT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE ? FORMER WILL INDICATE INTENTION OF TRADE AND LATTE R, AN INVESTMENT. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PUR CHASE OF SHARES. A COMMERCIAL MOTIVE IS AN ESSENTIAL INGREDI ENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET ? IF THE ITEMS IN QUESTION ARE VALUED AT COST, IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MARKET VALUE OR NET REALIZABLE VA LUE (WHICHEVER IS LESS), IT WILL INDICATE THAT ITEMS I N QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEM ORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION ? WHETHER F OR TRADE OR FOR INVESTMENT ? IF AUTHORIZED ONLY FOR TRADE, THEN WH ETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY ? AND VICE VERSA. (7) IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SH OW THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT TO THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS: IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY, STOCK-IN-TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPARENT IS NOT REAL. (8) THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHA RES (OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WIL L NOT BE ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 12 - SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SH ARES (OR THE ITEMS IN QUESTION) FOR INVESTMENT. (9) ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISIT ES FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER T HE ASSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREME NTS, IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM ? WHETHER IT HAD SUCH AN INTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR WHEN PURCHASES WERE MADE ? (10) IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 OF 2007 OF 15-6-2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS , ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAI NTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTI VE FEATURES FOR BOTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN T HE TWO PORTFOLIOS. (11) NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIV E EFFECT OF SEVERAL FACTORS HAS TO BE SEEN. THE ASSESSEE-COMPAN Y WAS DEALING IN SHARES AND IT HAD DEALT IN SHARES BOTH A S STOCK-IN- TRADE AS WELL AS INVESTMENT. IT SOLD SHARES FROM TH E INVESTMENT PORTFOLIO AND CLAIMED THAT THE PROFIT ARISING THERE FROM WAS CAPITAL GAIN. THE ASSESSING OFFICER HELD THAT MAIN BUSINESS OF THE ASSESSEE WAS PURCHASE AND SALE IN SHARES. IT WAS NE ITHER A SHARE DEALER NOR A SHARE BROKER. THE DETAILS FOR PU RCHASE AND SALES AFFECTED BY THE ASSESSEE COMPANY REVEALED THA T SALES AND PURCHASES WERE QUITE SUBSTANTIAL AND WOULD NOT BE MADE BY A PERSON WHO INVESTED IN SHARES. FURTHER, THE AS SESSEE DID NOT HAVE SUFFICIENT FUNDS TO MAKE SUCH INVESTMENTS AND THE ASSESSEE WAS CLAIMING TO HAVE MADE INVESTMENT OUT O F BORROWED CAPITAL. HE, THEREFORE, HELD THAT THE PROF IT IN QUESTION WAS ASSESSABLE AS BUSINESS INCOME. HELD THAT THE UN DISPUTED FACT WAS THAT THE ASSESSEE WAS DEALING IN SHARES BO TH AS BUSINESS AS WELL AS INVESTMENT. IT HAD KEPT SEPARAT E ACCOUNTS IN RESPECT OF TWO PORTFOLIOS. NO MATERIAL WAS BROUG HT ON RECORD TO SHOW THAT DEMARCATION LINE BETWEEN BUSINESS AND INVESTMENT WAS HAZY OR THAT THE ASSESSEE HAD NOT MAINTAINED AN INVESTMENT PORTFOLIO AND IT WAS DEALING IN SHARES O NLY LIKE A TRADER. THUS, ON APPRECIATION OF CUMULATIVE EFFECT OF SEVERAL FACTORS PRESENT IT WAS TO BE HELD THAT THE SURPLUS WAS CHARGEABLE TO CAPITAL GAINS ONLY AND THE ASSESSEE W AS NOT TO BE TREATED AS TRADER IN RESPECT OF SALE AND PURCHASE O F SHARES IN THE INVESTMENT PORTFOLIO. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 13 - 5.1 THE ITAT, MUMBAI BENCH IN THE CASE OF JANAK S. RANGWALA , 11 SOT 627 HE LD AS UNDER: THE MERE VOLUME OF TRANSACTION TRANSACTED BY THE A SSESSEE WOULD NOT ALTER THE NATURE OF TRANSACTION. IT IS AN ESTABLISHED PRINCIPLE THAT INCOME IS TO BE COMPUTED WITH REGAR D TO THE TRANSACTION. THE TRANSACTION IN WHOLE HAS TO BE TAK EN INTO CONSIDERATION AND THE MAGNITUDE OF THE TRANSACTION DOES NOR AFTER THE NATURE OF TRANSACTION. THOUGH THE PRINCIP LE OF RES JUDICATA DOES NOT APPLY TO THE INCOME-TAX PROCEEDIN GS AS EACH YEAR IS AN INDEPENDENT YEAR OF THE ASSESSMENT BUT I N ORDER TO MAINTAIN CONSISTENCY, IT IS A JUDICIALLY ACCEPTED P RINCIPLE THAT SAME VIEW SHOULD BE ADOPTED FOR THE SUBSEQUENT YEAR S UNLESS THERE IS A MATERIAL CHANGE IN THE FACTS. (PARA 6] IN THE FACTS OF THE INSTANT CASE, THE ASSESSEE WAS HOLDING THE SHARES AS INVESTMENT FROM YEAR TO YEAR. IT WAS THE INTENTION OF THE ASSESSEE WHICH WAS TO BE SEERS TO DETERMINE THE NATURE OF TRANSACTION CONDUCTED BY THE ASSESSEE. THOUGH THE I NVESTMENT IN SHARES WAS ON A LARGE MAGNITUDE BUT THE SAME WOU LD NOT DECIDE THE NATURE OF TRANSACTION. SIMILAR TRANSACTI ONS OF SALE AND PURCHASE OF SHARES IN THE PRECEDING YEARS HAD B EEN HELD TO BE INCOME FRONT CAPITAL GAINS BOTH ON LONG-TERM AND SHORT-TERM BASIS. TIRE TRANSACTION IN THE YEAR UNDER CONSIDERA TION ON ACCOUNT OF SALE AND PURCHASE OF SHARES WAS SAME AS IN THE PRECEDING YEARS AND THE SAME WAS TO BE ACCEPTED AS SHORT- TERM CAPITAL GAINS. THERE WAS NO BASIS FOR TREATING THE ASSESSEE AS A TRADER IN SHARES, WHEN HIS INTENTION WAS TO HO LD SHARES ITS THE INDIAN COMPANIES AS AN INVESTMENT AND NOT AS ST OCK-IN- TRADE. THE MERE MAGNITUDE OF THE TRANSACTION DOES N OT CHANGE THE NATURE OF TRANSACTION, WHICH ARE BEING ASSESSED AS INCOME FROM CAPITAL GAINS IN THE PAST SEVERAL YEARS: 5.2 SIMILARLY, THE ITAT, MUMBAI BENCH IN THE CASE OF GOPAL PUROHIT V. JCIT [(2009) 29 SOT 117 (MUM)] FOLLOWED THE DECISION OF THE ITAT, LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE PVT. LTD. (SUPRA) AND HELD AS UNDER: FURTHER, ON THE BASIS OF MERITS ALSO, IN VIEW OF T HE RATIO OF THE DECISION OF SARNATH INFRASTRUCTURE P. LTD.S CASE (SUPRA), IT WAS HELD THAT THE DELIVERY BASED TRANSACTION SHOULD BE TREATED AS OF THE NATURE OF INVESTMENT TRANSACTIONS AND PROFIT TH EREFROM SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN OR LON G TERM CAPITAL GAIN DEPENDING UPON THE PERIOD OF HOLDING. IN ADDITION TO THE ABOVE, THE ITAT, MUMBAI BENCH AL SO ACCEPTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IN THE P RECEDING YEAR, ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 14 - SIMILAR CLAIM WAS ACCEPTED BY THE REVENUE. THE RELE VANT FINDINGS OF THE ITAT ARE AS UNDER: THUS, THE NATURE OF ACTIVITIES, MODUS OPERANDI OF THE ASSESSEE, MANNER OF KEEPING RECORDS AND PRESENTATION OF SHARE S AS INVESTMENT AT THE YEAR END WERE SAME IN ALL THE YEA RS, AND, HENCE, APPARENTLY, THERE APPEARED NO REASON AS TO W HY THE CLAIMS MADE BY THE ASSESSEE SHOULD NOT BE ACCEPTED. HOWEVER, THE REVENUE AUTHORITIES HAD TAKEN A DIFFER ENT VIEW IN THE YEAR UNDER CONSIDERATION BY HOLDING THAT PRINCI PLE OF RES JUDICATA WAS NOT APPLICABLE TO THE ASSESSMENT PROCE EDINGS. THERE COULD NOT BE ANY DISPUTE ON THIS ASPECT, BUT THERE IS ALSO ANOTHER JUDICIAL THOUGHT THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY UNDER THE SAME FACTS AND CIRCUMSTANCES AND IT WAS AS ALREADY FOUND THAT FACTS AND CIRCUMSTANCES WERE IDENTICAL EVEN THOUGH A DIFFERENT STAND HAD BEEN TAKEN BY THE REVENUE AUTHORITIES.: 5.2.1 THE REVENUE FILED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AGAINST THE DECISION OF THE ITAT IN THE CASE OF GOPAL PUROHIT (SUPRA) AND A SPECIFIC QUESTION WAS RAISED AGAINST THE RULE OF CONSISTENCY APPLIED BY THE ITAT. THE HONBLE HIGH C OURT VIDE ORDER DATED 6-1-2010, 228 CTR 582 (BOM) UPHELD THE ORDER OF THE ITAT AND HELD AS UNDER: 3. IN SO FAR AS QUESTION (B) IS CONCERNED, THE TRI BUNAL HAS OBSERVED IN PARE 8. OF ITS JUDGMENT THAT THE ASSESS EE HAS FOLLOWED A CONSISTENT PRACTICE IN REGARD TO THE NAT URE OF THE ACTIVITIES, THE MANNER OF KEEPING RECORDS AND THE P RESENTATION OF SHARES AS INVESTMENT AT THE END OF THE YEAR, IN ALL THE YEAR THE REVENUE SUBMITTED THAT A DIFFERENT VIEW SHOULD BE TAKEN FOR THE YEAR UNDER CONSIDERATION, SINCE THE PRINCIPLE O F RES JUDICATA IS NOT APPLICABLE TO ASSESSMENT PROCEEDINGS. THE TR IBUNAL CORRECTLY ACCEPTED THE POSITION THAT THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED SINCE EACH ASSESSMENT YEAR IS SEPA RATE IN ITSELF. THE TRIBUNAL HELD THAT THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES AR E 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 APPROACH FOR THE ASSESSMENT YEAR IN QUESTION. QUESTION (B), THEREFOR E, DOES NOT ALSO RAISE ANY SUBSTANTIAL QUESTION. 5.2.2. ON MERIT ALSO, THEIR LORDSHIPS UPHELD THE FI NDINGS OF THE ITAT HOLDING THE SAME TO BE PURE FINDING OF THE FACT. TH E HONBLE SUPREME COURT VIDE THEIR ORDER DATED 15.11.2010 HAVE DISMI SSED SLP FILED BY ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 15 - THE REVENUE AGAINST THE AFORESAID DECISION OF HONB LE BOMBAY HIGH COURT. 5.3. SIMILAR VIEW IS TAKEN BY THE OTHER BENCHES OF THE ITAT IN THEIR DECISION DATED 18.5.2011 IN SHRI MAHENDRA C SHAH V S. ADDL. CIT IN ITA NO.6289/MUM/2008 FOR A Y 2005-06, AND ITA NO.49 32/MUM/2009 FOR AY 2006-07 AS ALSO DECISION DATED 15.6.2011 IN HITESH SATISHCHANDRA DOSHI VS. JT. CIT IN ITA NO.6497/MUM/ 2009 AND OTHERS. 5.4 IN THE INSTANT CASE, NUMBER OF TRANSACTIONS IS STATED TO BE 1000 IN 255 SCRIPS WHILE IN THE PRECEDING YEAR THEIR NUMBE R WAS 533 IN 275 SCRIPS. THE LD. CIT(A) CONCLUDED THAT FACTS AND CIR CUMSTANCES IN THE INSTANT CASE REMAINED THE SAME AS WERE OBTAINING IN THE PRECEDING YEAR. WHETHER THE TRANSACTIONS WERE 533 OR 1,000, THE FACTS REMAIN THAT THERE WERE FREQUENT TRANSACTIONS OF PURCHASE A ND SALE OF SHARES. HOWEVER, EXCEPT THE PARAMETER OF FREQUENCY IN PURCH ASE/SALE OF SHARES ALL OTHER PARAMETERS INDICATE THAT THE TRANS ACTIONS WERE IN THE NATURE OF INVESTMENT AND NOT THE TRADE TRANSACTIONS . EVEN FOR FREQUENCY, IT WAS EXPLAINED BY THE LEARNED COUNSEL THAT THE ASSESSEE WAS MOSTLY MAKING THE INVESTMENT IN B-GROUP SCRIPS AND TO AVOID RISK HE MADE INVESTMENT IN SEVERAL SCRIPS INSTEAD OF INV ESTING IN ONE SCRIP. HE ALSO STATED THAT SHARES WERE KEPT FOR LONG PERIO D AND THERE IS NO FREQUENT PURCHASE/SALE OF SAME SCRIPS. THE LD. DR A PPEARING BEFORE US DID NOT CONTROVERT THESE CONTENTIONS. IT IS WELL SE TTLED THAT, TO DETERMINE WHETHER THE ASSESSEE IS A TRADER OR INVESTOR IN SHA RES, NO SINGLE TEST IS CONCLUSIVE BUT CUMULATIVE EFFECT OF ALL THE FACTS A RE TO BE SEEN. IN THE CASE OF THE ASSESSEE, ONE FACT I.E. FREQUENT PURCHA SE/SALE OF SHARES CAN NOT BE SAID TO BE AGAINST THE ASSESSEE ESPECIAL LY WHEN IN THE PRECEDING YEARS ALL ALONG THE ASSESSEE HAS BEEN TRE ATED AS INVESTOR. THE PLEA OF THE LD. DR THAT IN THE AY 2003-04 THERE WAS NO DIFFERENCE IN TAX RATES ON SHORT TERM CAPITAL GAINS AND BUSINE SS INCOME AND THEREFORE, THE ISSUE DID NOT ASSUME SIGNIFICANCE , IS NOT RELEVANT ,ESPECIALLY WHEN THE AO ACCEPTED THE CLAIM THAT THE ASSESSEE HAD MADE ONLY INVESTMENT IN SHARES AND WAS NOT A TRADER . EVEN IN SUBSEQUENT YEARS UNTIL AY 2005-06, CLAIM OF THE ASS ESSEE HAS BEEN ACCEPTED. 5.5 WE FIND THAT IN THE CASE OF CIT (CENTRAL), CALC UTTA VS ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY (P) LTD. (82-ITR-58 6), THE HON'BLE SUPREME COURT HELD AS UNDER: WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY O F INVESTMENT OR FORMS PART OF THE STOCK-IN-TRADE IS A MATTER WH ICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND HE SHOULD, IN NORMAL CIRCUMSTANCES, BE IN A POSITION T O PRODUCE EVIDENCE FROM HIS RECORDS AS TO WHETHER HE HAS MAIN TAINED ANY ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 16 - DISTINCTION BETWEEN THOSE SHARES WHICH ARE HIS STOC K-IN-TRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT. 5.6 IN THE CASE OF CIT, BOMBAY VS H HOLCK LARSEN (160-ITR-67), THE HON'BLE SUPREME COURT HAS HELD AS UNDER: IN ORDER TO DETERMINE WHETHER ONE WAS A DEALER IN SHARES OR AN INVESTOR, THE REAL QUESTION WAS NOT WHETHER THE TRA NSACTION OF BUYING AND SELLING THE SHARES LACKS THE ELEMENT OF TRADING, BUT WHETHER THE LATER STAGES OF THE WHOLE OPERATION SHO W THAT THE FIRST STEP THE PURCHASE OF THE SHARES WAS NOT T AKEN AS, OR IN THE COURSE OF, A TRADING TRANSACTION. THE TOTALITY OF ALL THE FACTS WILL HAVE TO BE BORNE IN MIND AND THE CORRECT LEGAL PRINCIPLES APPLIED TO THESE. IF ALL THE RELEVANT FACTORS HAVE BEEN TAKEN INTO CONSIDERATION AND THERE HAS BEEN NO MISAPPLICATION OF THE PRINCIPLES OF LAW, THEN THE CONCLUSION ARRIVED AT B Y THE TRIBUNAL CANNOT BE INTERFERED WITH BECAUSE THE INFERENCE IS A QUESTION OF LAW, IF SUCH AN INFERENCE WAS A POSSIBLE ONE, SUBJ ECT, HOWEVER, THAT ALL THE RELEVANT FACTORS HAVE BEEN DULY WEIGH ED AND CONSIDERED BY THE TRIBUNAL, THE INFERENCE REACHED BY THE TRIBUNAL SHOULD NOT BE INTERFERED WITH. 5.7. EVEN CBDT IN CIRCULAR NO.4/2007 DT.15.6.2007 HAS LAID DOWN THE PRINCIPLES FOR HOLDING AS TO WHEN PROFITS EARN ED FROM TRANSACTIONS IN SHARE SHOULD BE HELD AS BUSINESS OR SHOULD BE TR EATED AS INVESTMENT. THE RELEVANT CIRCULAR READS AS UNDER: CIRCULAR NO. 4/2007, DATED JUNE 15, 2007 SUB : DISTINCTION BETWEEN SHARES HELD AS STOCK-IN-T RADE AND SHARES HELD AS INVESTMENTTESTS FOR SUCH A DISTINCTION. THE INCOME-TAX ACT, 1961 MAKES A DISTINCTION BETWEE N A CAPITAL ASSET AND A TRADING ASSET. 2. CAPITAL ASSET IS DEFINED IN SECTION 2(14) OF THE ACT. LONG-TERM CAPITAL ASSETS AND GAINS ARE DEALT WITH UNDER SECTION 2(29A ) AND SECTION 2(29B). SHORT-TERM CAPITAL ASSETS AND GAINS ARE DEA LT WITH UNDER SECTION 2(42A) AND SECTION 2(42B). 3. TRADING ASSET IS DEALT WITH UNDER SECTION 28 OF THE ACT. 4. THE CENTRAL BOARD OF DIRECT TAXES (CBDT) THROUGH INSTRUCTION NO. 1827 DATED AUGUST 31, 1989, HAD BROUGHT TO THE NOTI CE OF THE ASSESSING OFFICERS HAT THERE IS A DISTINCTION BETW EEN SHARES HELD AS INVESTMENT (CAPITAL ASSET) AND SHARES HELD AS STOCK -IN-TRADE (TRADING ASSET). IN THE LIGHT OF A NUMBER OF JUDICIAL DECISI ONS PRONOUNCED AFTER THE ISSUE OF THE ABOVE INSTRUCTIONS, IT IS PROPOSE D TO UPDATE THE ABOVE ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 17 - INSTRUCTIONS FOR THE INFORMATION OF THE ASSESSEES A S WELL AS FOR GUIDANCE OF THE ASSESSING OFFICERS. 5. IN THE CASE OF CIT V. ASSOCIATED INDUSTRIAL DEVE LOPMENT COMPANY (P) LTD. [1971] 82 ITR 586, THE SUPREME COURT OBSE RVED THAT (HEADNOTE) : 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 KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND HE SHOULD, IN NORMAL CIRCUMSTANCES, BE IN A POSITION TO PRODUCE E VIDENCE FROM HIS RECORDS AS TO WHETHER HE HAS MAINTAINED ANY DISTINC TION BETWEEN THOSE SHARES WHICH ARE HIS STOCK-INTRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT. 6. IN THE CASE OF CIT V. H. HOLCK LARSEN [1986] 160 ITR 67, THE SUPREME COURT OBSERVED (PAGE 87) : THE HIGH COURT, IN OUR OPINION, MADE A MISTAKE IN O BSERVING WHETHER TRANSACTIONS OF SALE AND PURCHASE OF SHARES WERE TR ADING TRANSACTIONS OR WHETHER THESE WERE IN THE NATURE OF INVESTMENT WAS A QUESTION OF LAW. THIS IS A MIXED QUESTION OF LAW AND FACT. 7. THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE ABOVE TWO CASES AFFORD ADEQUATE GUIDANCE TO THE ASSESSING OFF ICERS. 8. THE AUTHORITY FOR ADVANCE RULINGS (AAR) [2007] 288 ITR 641, REFERRING TO THE DECISIONS OF THE SUPREME COURT IN SEVERAL CASES, HAS CULLED OUT THE FOLLOWING PRINCIPLES (PAGE 651) : (I) WHERE A COMPANY PURCHASES AND SELLS SHARES, IT MUST BE SHOWN THAT THEY WERE HELD AS STOCK-IN-TRADE AND THA T EXISTENCE OF THE POWER TO PURCHASE AND SELL SHARES IN THE MEM ORANDUM OF ASSOCIATION IS NOT DECISIVE OF THE NATURE OF TRAN SACTION ; (II) THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE MA NNER OF MAINTAINING BOOKS OF ACCOUNT, THE MAGNITUDE OF PUR CHASES AND SALES AND THE RATIO BETWEEN PURCHASES AND SALES AN D THE HOLDING WOULD FURNISH A GOOD GUIDE TO DETERMINE TH E NATURE OF TRANSACTIONS ; (III) ORDINARILY THE PURCHASE AND SALE OF SHARES WI TH THE MOTIVE OF EARNING A PROFIT, WOULD RESULT IN THE TRANSACTION B EING IN THE NATURE OF TRADE/ADVENTURE IN THE NATURE OF TRADE ; BUT WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY OF DIVIDEND ETC. THEN THE PROFITS ACC RUING BY ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 18 - CHANGE IN SUCH INVESTMENT (BY SALE OF SHARES) WILL YIELD CAPITAL GAIN AND NOT REVENUE RECEIPT. 9. DEALING WITH THE ABOVE THREE PRINCIPLES, THE AAR HAS OBSERVED IN THE CASE OF FIDELITY GROUP AS UNDER (PAGE 661) : WE SHALL REVERT TO THE AFOREMENTIONED PRINCIPLES. T HE FIRST PRINCIPLE REQUIRES US TO ASCERTAIN WHETHER THE PURCHASE OF SH ARES BY A FII IN EXERCISE OF THE POWER IN THE MEMORANDUM OF ASSOCIAT ION/TRUST DEED WAS AS STOCK-IN-TRADE AS THE MERE EXISTENCE OF THE POWER TO PURCHASE AND SELL SHARES WILL NOT BY ITSELF BE DECISIVE OF T HE NATURE OF TRANSACTION. WE HAVE TO VERIFY AS TO HOW THE SHARES WERE VALUED/HELD IN THE BOOKS OF ACCOUNT I.E., WHETHER THEY WERE VAL UED AS STOCK-IN- TRADE AT THE END OF THE FINANCIAL YEAR FOR THE PURP OSE OF ARRIVING AT BUSINESS INCOME OR HELD AS INVESTMENT IN CAPITAL AS SETS. THE SECOND PRINCIPLE FURNISHES A GUIDE FOR DETERMINING THE NAT URE OF TRANSACTION BY VERIFYING WHETHER THERE ARE SUBSTANTIAL TRANSACTION S, THEIR MAGNITUDE, ETC., MAINTENANCE OF BOOKS OF ACCOUNT AND FINDING T HE RATIO BETWEEN PURCHASES AND SALES. IT WILL NOT BE OUT OF PLACE TO MENTION THAT REGULATION 18 OF THE SEBI REGULATIONS ENJOINS UPON EVERY FII TO KEEP AND MAINTAIN BOOKS OF ACCOUNT CONTAINING TRUE AND F AIR ACCOUNTS RELATING TO REMITTANCE OF INITIAL CORPUS OF BUYING AND SELLING AND REALIZING CAPITAL GAINS ON INVESTMENTS AND ACCOUNTS OF REMITTANCE TO INDIA FOR INVESTMENT IN INDIA AND REALIZING CAPITAL GAINS ON INVESTMENT FROM SUCH REMITTANCES. THE THIRD PRINCIPLE SUGGESTS THAT ORDINARILY PURCHASES AND SALES OF SHARES WITH THE MOTIVE OF RE ALIZING PROFIT WOULD LEAD TO INFERENCE OF TRADE/ADVENTURE IN THE NATURE OF TRADE ; WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF COMPANIES IS TO DERIVE INCOME BY WAY OF DIVIDENDS ETC., THE TRANSACTIONS OF PURCHASE S AND SALES OF SHARES WOULD YIELD CAPITAL GAINS AND NOT BUSINESS P ROFITS. 10. THE CENTRAL BOARD OF DIRECT TAXES ALSO WISHES T O EMPHASISE THAT IT IS POSSIBLE FOR A TAX PAYER TO HAVE TWO PORTFOLIOS , I.E., AN INVESTMENT PORTFOLIO COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSETS AND A TRADING PORTFOLIO COMPRISING OF STOCK- IN-TRADE WHICH ARE TO BE TREATED AS TRADING ASSETS. WHERE AN ASSESSEE HAS TWO PORTFOLIOS, THE ASSESSEE MAY HAVE INCOME UNDER BOTH HEADS I.E., CAPITAL GAINS AS WELL AS BUSINESS INCOME. 11. THE ASSESSING OFFICERS ARE ADVISED THAT THE ABO VE PRINCIPLES SHOULD GUIDE THEM IN DETERMINING WHETHER, IN A GIVE N CASE, THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENT (AND THEREFO RE GIVING RISE TO CAPITAL GAINS) OR AS STOCK-IN-TRADE (AND THEREFORE GIVING RISE TO BUSINESS PROFITS). THE ASSESSING OFFICERS ARE FURTHER ADVISE D THAT NO SINGLE PRINCIPLE WOULD BE DECISIVE AND THE TOTAL EFFECT OF ALL THE PRINCIPLES ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 19 - SHOULD BE CONSIDERED TO DETERMINE WHETHER, IN A GIV EN CASE, THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENT OR ST OCK-IN-TRADE. 12. THESE INSTRUCTIONS SHALL SUPPLEMENT THE EARLIER INSTRUCTION NO. 1827 DATED AUGUST 31, 1989. [ F. NO. 149/287/2005-TPL ] 5.8. WE MAY POINT OUT THAT THE HONBLE JURISDICTION AL HIGH COURT IN CIT VS. REVA SHANKER A. KOTHARI 283 ITR 338 (GUJARAT ) LAID DOWN THE FOLLOWING GUIDELINES IN ORDER TO DETERMINE WHETHER PROFITS ARISING ON SALE IS BUSINESS INCOME:- THE TESTS LAID DOWN BY VARIOUS DECISIONS OF THE AP EX COURT INDICATE THAT, IN EACH CASE, IT IS THE TOTAL EFFECT OF ALL RELEVANT FACTORS AND CIRCUMSTANCES THAT DETERMINES THE CHARA CTER OF THE TRANSACTION. EACH CASE HAS TO BE DETERMINED ON THE TOTAL IMPRESSION CREATED ON THE MIND OF THE COURT BY ALL THE FACTS AND CIRCUMSTANCES DISCLOSED IN A PARTICULAR CASE. ONE O F THE PRINCIPAL TESTS IS WHETHER THE TRANSACTION IS RELAT ED TO THE BUSINESS NORMALLY CARRIED ON BY AN ASSESSEE. THE NA TURE OF THE COMMODITY WOULD ALSO BE A RELEVANT FACTOR. IT IS EQ UALLY WELL SETTLED THAT, MERELY BECAUSE THE ORIGINAL PURCHASE WAS MADE WITH THE INTENTION TO RESELL, IF AN ENHANCED PRICE COULD BE OBTAINED, THAT BY ITSELF IS NOT ENOUGH TO INFER THA T AN ASSESSEE IS CARRYING ON BUSINESS. HOWEVER, THOUGH PROFIT MOTIVE IN ENTERING INTO A TRANSACTION IS NOT DECISIVE, IF THE FACTS AN D CIRCUMSTANCES INDICATE THAT THE PURCHASE OF THE ASSET WAS MADE SO LELY AND EXCLUSIVELY WITH AN INTENTION TO RESELL THE ASSET A T A PROFIT, IT WOULD BE A STRONG FACTOR FOR INFERRING THAT THE TRA NSACTION WAS IN THE NATURE OF BUSINESS. IN THE CASE OF PARI MANGALDAS GIRDHARDAS V. CIT [19 77] CTR 647 (GUJ), AFTER ANALYSING VARIOUS DECISIONS OF THE APEX COURT, THIS COURT HAS FORMULATED CERTAIN TESTS TO DETERMIN E AS TO WHETHER AN ASSESSEE CAN BE SAID TO BE CARRYING ON B USINESS. (A) THE FIRST TEST IS WHETHER THE INITIAL ACQUISITION OF THE SUBJECT- MATTER OF TRANSACTION WAS WITH THE INTENTION OF DEA LING IN THE ITEM, OR WITH A VIEW TO FINDING AN INVESTMENT. IF T HE TRANSACTION, SINCE THE INCEPTION, APPEARS TO BE IMPRESSED WITH T HE CHARACTER OF A COMMERCIAL TRANSACTION ENTERED INTO WITH A VIE W TO EARN PROFIT, IT WOULD FURNISH A VALUABLE GUIDELINE. (B) THE SECOND TEST THAT IS OFTEN APPLIED IS AS TO WHY AND HOW AND FOR WHAT PURPOSE THE SALE WAS EFFECTED SUBSEQUE NTLY. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 20 - (C) THE THIRD TEST , WHICH IS FREQUENTLY APPLIED, IS AS TO HOW THE ASSESSEE DEALT WITH THE SUBJECT-MATTER OF TRANSACTI ON DURING THE TIME THE ASSET WAS WITH THE ASSESSEE. HAS IT BEEN TREATED AS STOCK-IN-TRADE, OR HAS IT BEEN SHOWN IN THE BOOKS O F ACCOUNT AND BALANCE SHEET AS AN INVESTMENT. THIS INQUIRY, THOUG H RELEVANT, IS NOT CONCLUSIVE. (D) THE FOURTH TEST IS AS TO HOW THE ASSESSEE HIMSELF HAS RETURNED THE INCOME FROM SUCH ACTIVITIES AND HOW TH E DEPARTMENT HAS DEALT WITH THE SAME IN THE COURSE OF PRECEDING AND SUCCEEDING ASSESSMENTS. THIS FACTOR, THOUGH NOT CONCLUSIVE, CAN AFFORD GOOD AND COGENT EVIDENCE TO JUDGE THE NATURE OF THE TRANSACTION AND WOULD BE A RELEVANT C IRCUMSTANCE TO BE CONSIDERED IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION. (E) THE FIFTH TEST , NORMALLY APPLIED IN CASES OF PARTNERSHIP FIRMS AND COMPANIES, IS WHETHER THE DEED OF PARTNERSHIP O R THE MEMORANDUM OF ASSOCIATION, AS THE CASE MAY BE, AUTH ORISES SUCH AN ACTIVITY. (F) THE LAST BUT NOT THE LEAST , RATHER THE MOST IMPORTANT TEST, IS AS TO THE VOLUME FREQUENCY, CONTINUITY AND REGULARI TY OF TRANSACTIONS OF PURCHASE AND SALE OF THE GOODS CONC ERNED. IN A CASE WHERE THERE IS REPETITION AND CONTINUITY, COUP LED WITH THE MAGNITUDE OF THE TRANSACTION, BEARING REASONABLE PR OPORTION TO THE STRENGTH OF HOLDING, THEN AN INFERENCE CAN READ ILY BE DRAWN THAT THE ACTIVITY IS IN THE NATURE OF BUSINESS. 5.9 IN THE PRECEDING YEAR, THE ITAT VIDE THEIR ORDE R DATED 13-05-2011 IN THE ASSESSEES OWN CASE IN ITA NO.127/AHD/2009 C ONCLUDED ON SIMILAR FACTS AND CIRCUMSTANCES AS UNDER:- 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE LATEST DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF NIRAJ AMIDHAR SURTI (SUPRA), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE. ADMITTEDLY, IN THE PAST, THE ASSESSEE WAS DECLARING SHORT-TERM/LONG-TERM CAPITAL GAINS IN SALE AND PURC HASE OF SHARES WHICH HAS BEEN ACCEPTED BY THE AO. EVEN IN T HE ASSESSMENT ORDER UNDER SECTION 143(3) FOR THE ASSES SMENT YEAR 2003-04, THE AO HAS ACCEPTED THE INCOME DECLARED UN DER THE HEAD CAPITAL GAINS ON SALE AND PURCHASE OF SHARES . THE FACTS AND CIRCUMSTANCES OF THIS YEAR ARE THE SAME AS IN T HE EARLIER YEAR. THEREFORE, THE RATIO OF JUDGMENT OF HONBLE B OMBAY HIGH COURT IN THE CASE CIT-VS- GOPAL PUROHIT (SUPRA) AS WELL AS THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRAJ AMI DHAR SURTI ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 21 - (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF ASS ESSEES CASE. WE, THEREFORE, FOLLOWING THE AFORESAID DECISIONS, D IRECT THE AO TO ACCEPT THE SHORT-TERM CAPITAL GAIN AMOUNTING TO RS.68,87,173/- DECLARED BY THE ASSESSEE IN THE RETU RN OF INCOME. THIS GROUND OF APPEAL TAKEN BY THE ASSESSEE IS ALLOWED. 5.10 IN NUTSHELL , THE CLAIM OF THE ASSESSEE REGARD ING INCOME FROM SALE OF SHARES HAS ALL ALONG BEEN ACCEPTED UNDER THE HE AD SHORT- TERM/LONG-TERM CAPITAL GAINS . THE LD. CIT(A) AS A LSO THE LD. DR APPEARING BEFORE US IN HIS WRITTEN SUBMISSIONS HAV E OBSERVED THAT THE FACTS OF THE CASE PERTAINING TO THE CLAIM OF STCG R EMAIN THE SAME THIS YEAR AS WERE OBTAINING IN THE IMMEDIATELY PRECEDING YEAR . IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS , WE ARE O F THE OPINION THAT THE MERE VOLUME OF TRANSACTIONS TRANSACTED BY THE ASSES SEE WOULD NOT ALTER THE NATURE OF TRANSACTION. THOUGH THE PRINCIP LES OF RES JUDICATA DO NOT APPLY TO THE INCOME-TAX PROCEEDINGS AS EACH YEA R IS AN INDEPENDENT YEAR OF THE ASSESSMENT BUT IN ORDER TO MAINTAIN CONSISTENCY, IT IS A JUDICIALLY ACCEPTED PRINCIPLE THAT SAME VIEW SHOULD BE ADOPTED FOR THE SUBSEQUENT YEARS, UNLESS THERE I S A MATERIAL CHANGE IN THE FACTS. IN THE FACTS OF THE INSTANT CA SE, THE ASSESSEE WAS HOLDING THE SHARES AS INVESTMENT FROM YEAR TO YEAR. IT WAS THE INTENTION OF THE ASSESSEE WHICH WAS TO BE SEEN TO DETERMINE T HE NATURE OF TRANSACTION CONDUCTED BY THE ASSESSEE. THOUGH THE INVESTMENT IN SHARES WAS ON A LARGE MAGNITUDE BUT THE SAME WOULD NOT DECIDE THE NATURE OF TRANSACTION. SIMILAR TRANSACTIONS OF SALE AND PURCHASE OF SHARES IN THE PRECEDING YEARS HAVE BEEN HELD TO BE INCOME FROM CAPITAL GAINS BOTH ON LONG-TERM AND SHORT-TERM BASI S. THE TRANSACTION IN THE YEAR UNDER CONSIDERATION ON ACCOUNT OF SALE AND PURCHASE OF SHARES WAS SAME AS IN THE PRECEDING YEARS . THERE W AS NO BASIS FOR TREATING THE ASSESSEE AS A TRADER IN SHARES, WHEN H IS INTENTION WAS TO HOLD SHARES IN THE INDIAN COMPANIES AS AN INVESTMEN T AND NOT AS STOCK-IN-TRADE. THE MERE MAGNITUDE OF THE TRANSACTI ON DOES NOT CHANGE THE NATURE OF TRANSACTIONS, WHICH ARE BEING ASSESSED AS INCOME FROM CAPITAL GAINS IN THE PAST SEVERAL YEARS . 5.11 THE PLEA OF THE LD. DR THAT THE FACTS AND CIRC UMSTANCES IN THE DECISION RELIED UPON IN THE CASE OF GOPAL PUROHIT ( SUPRA) BY THE ITAT IN THE PRECEDING YEAR, WERE DIFFERENT, IS NOT TENAB LE AS OBSERVED BY US ALREADY ABOVE FIRSTLY , THE RATIO OF THE SAID DECI SION HAS BEEN FOLLOWED IN A NUMBER OF DECISIONS REFERRED TO ABOVE AND SECO NDLY, THE LD. DR DID NOT DEMONSTRATE BEFORE US AS TO HOW THE SAID DE CISIONS IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE IN STANT CASE BEFORE US. TO A QUERY BY THE BENCH, THE LD. DR ADMITTED THAT H E WAS NOT AWARE AS TO WHETHER OR NOT THE DECISION OF THE ITAT FOR THE PRECEDING YEAR HAS BEEN CHALLENGED BEFORE THE HONBLE HIGH COURT. ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 22 - 5.12 IN VIEW OF THE FOREGOING, FOLLOWING THE VIEW T AKEN IN THE AFORESAID DECISIONS, IF WE ANALYSE THE TRANSACTIONS IN THE IN STANT CASE, WE FIND THAT THE ASSESSEE DISCLOSED INCOME FROM CAPITAL GAI NS / DIVIDENDS IN EARLIER YEARS AND THE SHARES HAVE ALL ALONG BEEN TR EATED AS INVESTMENTS IN THE BOOKS OF ACCOUNT/BALANCE SHEETS. IN THESE CIRCUMSTANCES, WE, THEREFORE, DIRECT THE AO TO ACCE PT THE SHORT-TERM CAPITAL GAIN AMOUNTING TO RS. 62,67,735/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, GROUND NO.1 IN THE APPEAL IS ALLOWED. 7. THE AFORE-REPRODUCED ORDER OF THE TRIBUNAL HAS A LMOST CONSIDERED ALL THE ASPECTS AND COVERED ENTIRELY THE VARIOUS VI EWS TAKEN IN THIS REGARD BY SEVERAL COURTS, THEREFORE, BOTH OF US BEING PART Y TO THE SAID ORDER HEREBY FOLLOW OUR JUDGEMENT TO DECIDE THE PRESENT A PPEAL, RESULTANTLY IN THE LIKE MANNER HEREBY HOLD THAT THE LD.CIT(A) WAS RIGHT IN HOLDING THE TRANSACTION AS CAPITAL GAIN INSTEAD OF BUSINESS INC OME. THE SAID VIEW IS HEREBY AFFIRMED. IN THE RESULT REVENUES BOTH THE GROUNDS ARE HEREBY DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVEN UE IS DISMISSED. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED 31/ 10 /2011 PRONOUNCED IN THE COURT SD/- SD/- (AM) (JM) AKG MKS 31.10.11 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTME NT. 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEA LS)-XI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ,3 + //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO. 1911/AHD/2009 ACIT VS. SMT.GARGI SHITALKUMAR PATEL ASST.YEAR - 2006-07 - 23 - 1. DATE OF DICTATION..14/10/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14/10/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31.10.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.10.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER