Tarujyot Investment Ltd., Ahmedabad V. The ACIT.,Circle-8, Ahmedabad

ITA 2268/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1887 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Business income

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2268/AHD/2011 / ASSTT. YEAR: 2008-2009 TARUJYOT INVESTMENT LTD. 801, ASHISHWANG 72, SIR POCHKHANWALA ROAD WORLI, MUMBAI 400 030. PAN : AAACT 7452 N VS ACIT, CIR.8 AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI TEJ SHAH REVENUE BY : SHRI NARENDRA SINGH, SR.DR / DATE OF HEARING : 30/03/2016 / DATE OF PRONOUNCEMENT: 18/04/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD.CIT(A)- XIV, AHMEDABAD DATED 22.7.2011 PASSED FOR THE ASSTT .YEAR 2008-09. 2. THOUGH THE ASSESSEE HAS TAKEN SEVEN GROUNDS OF A PPEAL, BUT ITS GRIEVANCE REVOLVES AROUND TWO ISSUES VIZ. (A), THE LD.CIT(A) HAS ERRED IN TREATING THE SHORT TERM CAPITAL GAIN/LONG TERM CAPI TAL GAIN ARISING FROM SALE OF SHARES, AS BUSINESS INCOME, AND (B) THE LD. CIT(A) HAS ERRED IN ITA NO.2268/AHD/2011 2 CONFIRMING THE LEVY OF INTEREST UNDER SECTION 234C OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY, IT HAS FILED ITS RETURN OF INCOME ON 25.9.2008 DECLARING T OTAL INCOME AT RS.29,63,630/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED U PON THE ASSESSEE ON 19.8.2009. ON SCRUTINY OF THE ACCOUNTS, IT REVEALE D TO THE AO THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AS WELL A S SHORT TERM CAPITAL GAIN ON SALE OF SHARES. IN THE OPINION OF THE AO, THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE ARE VOLUMINOUS, AND THER EFORE, THE ASSESSEE IS TO BE TREATED AS TRADER IN THE SHARES. THE LD.AO H AS SPECIFICALLY HIGHLIGHTED THE FOLLOWING POINTS: 4.1 THE ASSESSEE PURCHASED AND SOLD LACS OF SHARE S AGGREGATING IN TOTAL TO ALMOST TWO LAKH SHARES DURING THE YEAR. 4.2 THE ASSESSEE PURCHASED AND SOLD 48 DIFFERENT TYPES OF SHARES IN STCG AND 18 DIFFERENT TYPES OF SHARES IN LTCG 4.3 THE NUMBER OF TIMES ON WHICH THE SCRIPS WER E TRANSACTED BY THE ASSESSEE WAS 425 IN STCG AND 133 IN LTCG DURING THE ENTIRE YEAR. 4.4 THE NUMBER OF DAYS ON WHICH THE SHARES WERE PU RCHASED WAS 165 DURING THE YEAR IN STCG AND 39 IN LTCG. 4.5 THE NUMBER OF DAYS ON WHICH THE SHARES WERE SO LD WAS 265 DURING THE IN STCG AND 73 IN LTCG. 4.6 THUS, THE ASSESSEE HAD ADEQUATE KNOWLEDGE AND E XPERIENCE TO INDULGE IN SHARE TRADING. 4.7 THE ASSESSEE INDULGED IN BUYING AND SELLING OF SHARES ON ALMOST EACH DAY THAT MARKET WAS OPEN. ITA NO.2268/AHD/2011 3 4. THE LD.AO, THEREAFTER, MADE RELIANCE ON THE DECI SION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. AMALGAMATI ONS P.LTD., 108 ITR 885, CBDT CIRCULAR NO.4/2007 AND OTHER DECISION S OF THE HONBLE MADRAS HIGH COURT. HE HELD THAT SINCE THE ASSESSEE HAS UNDERTAKEN A LARGE NUMBER OF TRANSACTIONS, THEREFORE, ITS ACTIVI TY ARE TO BE TREATED AS IN THE NATURE OF BUSINESS INSTEAD OF SIMPLICITOR INVESTMENT. 5. ON APPEAL, THE ASSESSEE HAS FILED WRITTEN SUBMIS SIONS, WHICH HAVE BEEN REPRODUCED BY THE LD.CIT(A) IN PARA-2.2 OF THE IMPUGNED ORDER. THE LD.CIT(A) HAS NOTICED CERTAIN CIRCUMSTANCES IN A SUMMARIZED MANNER. IT IS PERTINENT TO TAKE NOTE OF THESE CIRC UMSTANCES, AS UNDER: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE ID. AR OF THE APPELLANT. I HAVE ALSO PERUSED VARIOUS DOCUMENTS SUCH AS COPIES OF RETURN OF INCOM E FOR THE PRESENT YEAR AS WELL AS EARLIER YEARS, COPY OF MEMO RANDUM OF ASSOCIATION AND STATEMENT OF LONG TERM AND SHORT TE RM CAPITAL GAIN FOR THE YEAR UNDER CONSIDERATION SUBMITTED BY THE APPELLANT. THE FACTS WHICH EMERGE FROM THE ABOVE DOCUMENTS AND ARE IMPORTANT FOR THE DECISION OF THE CASE ARE AS UNDER : (I) THE APPELLANT IS A LIMITED COMPANY INCORP ORATED TO CARRY ON THE BUSINESS OF INVESTMENT COMPANY AND TO INVEST IN AND ACQUIRE AND HOLD SHARES, STOCKS, DEBENTURES ETC. (II) THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2008-09 SHOWS VARIOUS ASSETS AND LIABILITIES. THE ASSETS INCLUDE INVESTMENT (AT COST) AS PER SCHEDULE - F AMOUNTING TO RS.2,59,72,7 82/- AS ON 31/03/2008. THIS IS A VALUE OF SHARES AT COST HELD BY THE APPELLANT. ITA NO.2268/AHD/2011 4 III) THE INVESTMENT PORTFOLIO IS THE ONLY PORTF OLIO WHICH IS MAINTAINED BY THE APPELLANT FOR THE PURPOSE OF SALE AND PURCHASE OF SHARES. THERE IS NO OTHER PORTFOLIO FOR TRADING. (IV) THE APPELLANT IS ALSO DOING TRADING IN F & O SEGMENT AND TRADING OF RS.39.56,707/- HAS BEEN SHOWN BY THE APP ELLANT DURING THE YEAR. IT WAS NIL IN THE PRECEDING YEAR. (V) THE APPELLANT HAS TAKEN LOAN OF RS.8,95,48 0/- FROM ONE OF THE DIRECTOR OF THE COMPANY. (VI) THE APPELLANT HAS SHOWN THE SHARES AS INVE STMENT IN BOOKS OF ACCOUNTS SINCE LONG. (VII) THE DEPARTMENT HAS ALSO ACCEPTED THE METHO D OF ACCOUNTING SHOWN BY THE APPELLANT SINCE EARLIER YEARS. HOWEVER , THE PRESENT YEAR IS THE FIRST YEAR UNDER SCRUTINY. (VIII) A PERUSAL OF STATEMENT OF SHORT TERM CAPI TAL GAIN SHOW THAT THE APPELLANT HAS ALSO SOLD CERTAIN SHARES WITHIN A SHORT PERIOD OF HOLDING WHICH IS AS LOW AS ONE DAY, TWO DAY, FIVE D AYS. THE PERIOD IN SOME CASES ALSO GO UP TO FOURTEEN DAYS, TWENTY E IGHT DAYS, FORTY EIGHT DAYS ETC. (IX) THE VOLUME OF SHARE TRANSACTIONS TOTALS TO RS.2.34 CRORES APPROX. (X) THE PURCHASE AND SALES OF SHARES HAS BEEN DON E IN A SYSTEMATIC AND ORGANIZED MANNER. 6. ACCORDINGLY, THE LD.CIT(A) HAS REJECTED THE CONT ENTIONS OF THE ASSESSEE AND HELD THAT THE ASSESSEE IS TO BE TREATE D AS A TRADER IN SHARES. THE GAIN ARISEN TO THE ASSESSEE ON SALE OF SHARES I S TO BE TREATED AS BUSINESS INCOME. ITA NO.2268/AHD/2011 5 7. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED HIS CONTENTIONS AS WERE RAISED BEFORE THE REVENUE AUTHORITIES BELOW . HE SPECIFICALLY TOOK US THROUGH THE SUBMISSIONS REPRODUCED BY THE L D.CIT(A). ON THE OTHER HAND, LD.DR RELIED UPON THE ORDERS OF THE REV ENUE AUTHORITIES. 8. BEFORE WE EMBARK UPON AN INQUIRY ON THE FACTS OF PRESENT CASE SO AS TO FIND OUT, WHETHER ASSESSEE IS TO BE TERMED AS INVOLVING IN THE TRADING OF SHARES OR IS TO BE TREATED AS A SIMPLICITOR INVESTOR. WE WOULD LIKE TO REFER CERTAIN BROAD PRINCIPLE CULLED OUT BY ITAT LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE PVT. LTD. REP ORTED IN 120 TTJ 216. THESE TESTS READ AS UNDER:- 13. AFTER CONSIDERING ABOVE RULINGS WE CULL OUT FO LLOWING PRINCIPLES, WHICH CAN BE APPLIED ON THE FACTS OF A CASE TO FIND OUT WHETHER TRANSACTION(S) IN QUESTION ARE IN THE NATURE OF TRA DE OR ARE MERELY FOR INVESTMENT PURPOSES: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TI ME OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED STOCK-IN-TRADE OR INVESTMENT. WHETHE R SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVEST MENT OR NON- TRADING ASSET. (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY, MONEY IS BORROWED TO P URCHASE GOODS FOR THE PURPOSE OF TRADE AND NOT FOR INVESTING IN AN AS SET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASE AND DISP OSAL IN THAT PARTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT , OR THERE ARE SUBSTANTIAL TRANSACTION IN THAT ITEM, IF WOULD INDI CATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF IN TENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PURCHASES AND SALES AN D THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTI NG (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREA S LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT). ITA NO.2268/AHD/2011 6 (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROF IT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION ITS VALUE? FORMER WILL INDICATE INTENTION OF TRADES AND LATTER, AN INVESTM ENT. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIA L MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN TH E 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 VALUE (WHICHEVER IS LESS), IT WILL INDICATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEM ORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION? WHETHER FOR TR ADE OR FOR INVESTMENT? IF AUTHORIZED ONLY FOR TRADE, THEN WHE THER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO C ARRY OUT INVESTMENTS IN THAT COMMODITY? AND VICE VERSE. 7. IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHO W THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT D ISTINCTION HE HAS KEPT IN 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 APPA RENT IS NOT REAL. 8. THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHAR ES ( OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) FOR INVESTMENT. 9. ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISITE S FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE A SSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS, IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM? WHETHER IT HAD SUCH AN I NTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR W HEN PURCHASES WERE MADE? 10. IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 OF 2007 OF 15 TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIO S, ONE FOR TRADING ITA NO.2268/AHD/2011 7 AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR B OTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. 11. NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EF FECT OF SEVERAL FACTORS HAS TO BE SEEN. 9. THE HONBLE GUJARAT HIGH COURT HAD ALSO AN OCCAS ION TO CONSIDER THIS ISSUE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RIVA SHARKAR A KOTHARI REPORTED IN 283 ITR 338. HONBLE COURT HAS MADE REFERENCE TO THE TEST LAID BY IT IN ITS EARLIER DECISION RENDERED IN THE CASE OF PARI MANGALDAS GIRDHARDAS VS. CIT REPORTED IN 1977 CTR 647. THESE TESTS READ AS UNDER: AFTER ANALYZING VARIOUS DECISIONS OF THE APEX COUR T, THIS COURT HAS FORMULATED CERTAIN TESTS TO DETERMINE AS TO WHETHER AN ASSESSEE CAN BE SAID TO BE CARRYING ON BUSINESS. (A) THE FIRST TEST IS WHETHER THE INITIAL ACQUISITI ON OF THE SUBJECT-MATTER OF TRANSACTION WAS WITH THE INTENTION OF DEALING IN THE ITEM, OR WITH A VIEW TO FINDING AN INVESTMENT. IF THE TRANSACTIO N, SINCE THE INCEPTION, APPEARS TO BE IMPRESSED WITH THE CHARACT ER OF A COMMERCIAL TRANSACTION ENTERED INTO WITH A VIEW 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 SUBSEQUENTLY. (C) THE THIRD TEST, WHICH IS FREQUENTLY APPLIED, I S AS TO HOW THE ASSESSEE DEALT WITH THE SUBJECT-MATTER OF TRANSACTI ON DURING THE TIME THE ASSET WAS THE ASSESSEE. HAS IT BEEN TREAT ED AS STOCK-IN- TRADE, OR HAS IT BEEN SHOWN IN THE BOOKS OF ACCOUNT AND BALANCE SHEET AS AN INVESTMENT. THIS INQUIRY, THOUGH RELEV ANT, IS NOT CONCLUSIVE. (D) THE FOURTH TEST IS AS TO HOW THE ASSESSEE HIMS ELF HAS RETURNED THE INCOME FROM SUCH ACTIVITIES AND HOW THE DEPARTMENT HAS DEALT WITH ITA NO.2268/AHD/2011 8 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 CIRCUMSTANCE TO BE CONSIDERED IN THE ABSEN CE OF ANY SATISFACTORY EXPLANATION. (E) THE FIFTH TEST, NORMALLY APPLIED IN CASE OF PAR TNERSHIP FIRMS AND COMPANIES, IS WHETHER THE DEED OF PARTNERSHIP OR TH E MEMORANDUM OF ASSOCIATION, AS THE CASE MAY BE, AUTH ORIZES SUCH AN ACTIVITY. (F) THE LAST BUT NOT THE LEAST, RATHER THE MOST IMP ORTANT TEST, IS AS TO THE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTION OF PURCHASE AND SALE OF THE GOODS CONCERNED. IN A CAS E WHERE THERE IS REPETITION AND CONTINUITY, COUPLED WITH THE MAGN ITUDE OF THE TRANSACTION, BEARING REASONABLE PROPOSITION TO THE STRENGTH OF HOLDING THEN AN INFERENCE CAN READILY BE DRAWN THAT THE ACTIVITY IS IN THE NATURE OF BUSINESS. 10. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE RE CORD CAREFULLY, THEN, IT WOULD EMERGE OUT THAT FIRST CONTENTION OF THE AS SESSEE WAS THAT IT HAD STARTED INVESTMENT IN SHARES SINCE 1986. IN ALL TH ESE YEARS, SHARES WERE TREATED AS INVESTMENT IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE, AND THIS TREATMENT WAS NEVER DISTURBED BY THE REVENUE. THIS PLEA OF THE ASSESSEE WAS REJECTED BY THE CIT(A) SIMPLY ON ACCOU NT OF NON- APPLICABILITY OF PRINCIPLE OF RES JUDICATA ON THE INCOME TAX PROCEEDINGS. SHE ALSO OBSERVED THAT IN EARLIER YEAR SCRUTINY ASS ESSMENT WAS NOT MADE. IN LAW, BOTH THESE REASONS ARE NOT VALID REASONS. IT IS TO BE KEPT IN MIND THAT IN THE PRESENT CASE, CIRCUMSTANCES ARE BEING E VALUATED IN ORDER TO COLLECT THE INTENTION OF THE ASSESSEE WHILE PURCHAS ING THE SHARES. THESE FACTORS ARE TO BE CORROBORATED WITH THE CIRCUMSTANC ES. NO DOUBT, THE SCRUTINY ASSESSMENT WAS NOT MADE IN EARLIER YEARS. BUT THE ACCOUNTS ARE THERE, RETURNS WERE FILED FROM THOSE ACCOUNTS. IT CAN BE GATHERED WHETHER ITA NO.2268/AHD/2011 9 SINCE 1986, THE ASSESSEE IS CONSISTENT TO MAKE INVE STMENT IN SHARES. IF THAT BE SO, WHAT HAPPEN IN ASSESSMENT YEAR 2008-09 TO CHANGE THE COLOUR OF TRANSACTION. THE ARGUMENTS RAISED BY THE ASSESS EE ARE NOT OF SUCH NATURE WHICH ARE TO BE NOTED AND REJECTED WITHOUT A PPRECIATING IN RIGHT PERSPECTIVE. THE NEXT CIRCUMSTANCES POINTED OUT BY THE ASSESSEE ARE THAT IT HAS PAID SECURITY TRANSACTIONS TAX, THEREFORE, I TS TRANSACTIONS SHOULD BE TREATED OF AN INVESTOR. THIS ARGUMENT WAS RAISED B Y THE ASSESSEE ON THE STRENGTH OF THE SPEECH OF HONBLE FINANCE MINISTER IN THE PARLIAMENT WHILE INTRODUCING SECURITY TRANSACTION TAX, WITH TH E HELP OF THIS ARGUMENT, IT WAS CONTENDED THAT PAYMENT OF STT WOUL D INDICATE AS INVESTMENT. THOUGH, IT IS NOT A DIRECT CIRCUMSTANC ES, BUT IT CAN BE ONE OF THE CUMULATIVE FACTORS, AMONGST OTHER, TO GIVE A PO INTER TO THE NATURE OF THE TRANSACTION. THE ASSESSEE TOOK DELIVERY OF THE SHARES AND THEREAFTER SOLD. THE ORDER OF THE ITAT IN THE CASE OF JCIT VS . GOPAL PUROHIT, (2009) 29 SOT 117 (MUM) WAS BROUGHT TO THE NOTICE O F THE CIT(A). IN THIS CASE, THERE WERE LARGE NUMBER OF TRANSACTIONS AND THE TRIBUNAL HAS OBSERVED THAT IF THE DELIVERY OF SHARES WERE TAKEN BY THE ASSESSEE, AND THEREAFTER, THOSE WERE SOLD, THEN THIS ACTIVITY WOU LD BE CONSIDERED AS INVESTMENT IN SHARES. BUT THE LD.CIT(A) WITHOUT AP PRECIATING THE FACT WHETHER THE DELIVERY WAS TAKEN OR NOT, SIMPLY OBSER VED THAT THIS DECISION IS NOT APPLICABLE. THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT ALSO IN THE CASE OF GOPAL PUROHIT (SUPRA). THE ASSESSEE HAS NOT USED BORROWED FUNDS. IT HAS N OT CLAIMED ADMINISTRATIVE EXPENDITURE. THE ONLY CIRCUMSTANCES , WHICH IS AGAINST THE ASSESSEE IS NUMBER OF TRANSACTIONS. BUT THAT I S ONLY ONE CIRCUMSTANCE ITA NO.2268/AHD/2011 10 AMONGST OTHERS REQUIRED TO BE APPRECIATED BY THE AD JUDICATING AUTHORITY TO COLLECT THE INTENTION OF THE ASSESSEE WHILE MAKI NG INVESTMENT. IN OUR OPINION, THE LD.REVENUE AUTHORITIES HAVE NOT APPREC IATED THE TRANSACTIONS IN RIGHT PERSPECTIVE. WE HAVE ALSO BEEN APPRAISED THAT EVEN IN SUBSEQUENT YEARS, THE TRANSACTIONS OF INVESTMENT BY THE ASSESSEE HAVE NOT BEEN DISTURBED. IN VIEW OF THE ABOVE DISCUSSION, W E ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE ASSESSE E AS INVESTOR AND THE GAIN ARISEN TO THE ASSESSEE ON TRANSFER OF SHARES I S TO BE TREATED UNDER THE HEAD CAPITAL GAIN. 11. AS FAR AS CHARGING OF INTEREST IS CONCERNED, IT IS CONSEQUENTIAL IN NATURE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH APRIL, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER