The ACIT, Circle-2, Surat V. Shri Shyambhai Balubhai Shah, Surat

ITA 2324/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0252 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Depreciation; Principle of natural justice
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER ITA NO.2324/AHD/ 2010 A.Y.2007-08 THE A.C.I.T., CIRCLE-2, SURAT APPELLANT VS. SHRI SHYAMBHAI BALUBHAI SHAH PROP. M/S AVANTI CHEM, PLOT NO.982, ROAD NO.58, GIDC, SACHIN, SURAT PAN-ADJPS0734R RESPONDENT DEPARTMENT BY : SHRI RAHUL KUMAR, SR. D.R. ASSESSEE BY : SHRI J.P. SHAH, A.R. DATE OF HEARING : 11.01.2013 DATE OF PRONOUNCEMENT : 15.02.2013 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-II, SURAT, DATED 14.05.2010. 2. THE FACTS, AS CULLED OUT FROM THE ORDER OF THE A SSESSMENT ARE AS UNDER:- ASSESSEE IS A PROPRIETOR OF AVANTI CHEM. THE ASSE SSEE IS ENGAGED IN THE TRADING BUSINESS OF WEAVING OF GREY CLOTH AND TWIST ING OF YARN ON JOB WORK BASIS. THE ASSESSEE FILED THE RETURN OF INCOME ON 29.10.20 07 AND DECLARED TOTAL INCOME OF RS.7,50,488/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 3 0.11.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.17,32,010/-. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). CIT(A) VIDE ITS ORDER DATED 14.05.2010 ALLOWED THE ASSESSEES APPEAL. IT IS AG AINST THE AFORESAID ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US. THE ONLY EFFECTIVE GROUND RAISED ITA NO.2324/AHD/ 2010 A.Y.2007-08 2 IN THE APPEAL IS DELETION OF RS.14,91,740/- MADE BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON P ERUSAL OF THE COMPUTATION OF INCOME A.O. NOTICED THAT ASSESSEE HA S SHOWN SHORT TERM CAPITAL GAIN OF RS.5,10,220/- AND EXEMPTED LONG TERM CAPITA L GAIN OF RS.9,81,520/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF IN VESTMENT MADE IN SHARE, SECURITIES ETC. ON VERIFICATION OF THE DETAILS THE A.O. NOTICED THAT ASSESSEE HAS EARNED A DIVIDEND OF RS.1,38,169/- HE ALSO OBSERVE D THAT DURING THE YEAR THE PURCHASE OF SHARES WAS TO THE EXTENT OF RS.2,65,70, 954/- AND THE SALE OF SHARES WAS OF RS.2,81.88,673/-. THE NET PROFIT EARNED BY THE ASSESSEE ON THE SALE OF SHARES WAS TO THE TUNE OF RS.14,91,740/-. HE FURTH ER NOTED THAT ASSESSEE HAD ENTERED IN THE SALE AND PURCHASE TRANSACTION IN 266 SCRIPS. (151 FOR SHORT TERM CAPITAL GAIN AND 115 FOR LONG TERM CAPITAL GAIN). HE FURTHER NOTED THAT THE ASSESSEE WAS HOLDING MAJORITY OF THE SCRIPS FOR A V ERY SHORT PERIOD. IN VIEW OF THESE FACTS THE A.O. WAS OF THE VIEW THAT THE FREQU ENCY OF TRANSACTIONS PROVED THE BUSINESS MOTIVE OF ASSESSEE. HE WAS FURTHER OF THE VIEW THAT THE INVESTMENT IN SHARES AND SECURITIES WERE MADE BY THE ASSESSEE AS BUSINESS AND NOT AS AN INVESTOR. HE WAS FURTHER OF THE VIEWS THAT SINCE T HE VALUE OF INVESTMENT OF THE ASSESSEE AS ON 31.03.2007 WAS CLAIMED TO BE AT RS.2 ,65,72,954/- WAS SUBSTANTIAL CONSIDERING THE NOMINAL TURN OVER OF RS .76,61,327/- IN TEXTILE UNIT AND OF RS.2,79,488/- IN THE GUM UNIT. HE, ACCORDIN GLY, CONSIDERED THE PROFIT EARNED ON SALE OF SHARES TO BE A BUSINESS AND NOT A S CAPITAL GAIN AND ACCORDINGLY TREATED THE SHORT TERM CAPITAL GAIN OF RS.5,10,220/ - AND LONG TERM CAPITAL GAIN OF RS.9,81,520/- AGGREGATE TO RS.14,91,740/- AS BUSINE SS PROFIT AND FOR WHICH HE RELIED ON THE VARIOUS DECISIONS OF HONBLE APEX COU RT, HIGH COURT AND CBDT CIRCULARS. ITA NO.2324/AHD/ 2010 A.Y.2007-08 3 4.. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE HELD THAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UNDER APPEAL WERE IDENTICAL TO THAT OF PRECEDING YEAR I.E. A.Y. 2006-07. HE, THEREFORE, F OLLOWING HIS ORDER FOR A.Y. 2006-07 DATED 15.07.2009 ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 5. GIVEN THAT THE FACTS AND CIRCUMSTANCES OF THE C ASE HAVE REMAINED IDENTICAL AS COMPARED TO THAT OF THE PRECEDING YEAR , AND THAT, THE GROUNDS ON WHICH THE AO TREATED THE LTCG AND STCG A S BUSINESS INCOME HAVE REMAINED THE SAME, AND THE AR HAS ALSO TAKEN THE SAME GROUNDS AS IN THE AY 2006-07, IT BECOMES IMPERATIVE FOR ME TO FOLLOW THE FINDINGS GIVEN BY ME AND THE DECISION TAKEN IN THE SAID YEAR. THE RELEVANT PORTIONS OF MY ORDER DATED 15-07-2009 IN C AS/II/380/2008- 09, FOR THE AY 2006-07 ARE REPRODUCED HEREUNDER: '5. I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCLU SION OF THE AO ON ONE HAND AND THE DETAILED SUBMISSIONS OF THE AR ON THE OTHER. I HAVE ALSO GONE THOUGH THE CASE-LAWS RELIED UPON BOT H BY THE AO AND THE AR. FIRSTLY, I FIND THAT THE REGULAR BUSINESS ACTIVITY OF THE ASSESSEE DURING THE YEAR WAS THE MANUFACTURE AND SALE OF GRE Y CLOTH WEAVING OF CLOTH AND TWISTING OF YARN ON JOB WORK BASIS. THE A SSESSEE OWNED 80 POWER LOOMS AND 10 TFO MACHINES, IS ALSO ENGAGED IN THE TRADING OF GUM WHICH IS USED IN THE TEXTILE INDUSTRY. DURING THE YEAR, HE MADE SUBSTANTIAL CAPITAL INVESTMENTS IN HIS BUSINESS, AS WAS STATED BEFORE THE AO AND REITERATED IN APPELLATE PROCEEDINGS. EVE N THOUGH IT IS NOT UNUSUAL FOR A BUSINESS PERSON TO BE ENGAGED IN MORE THAN ONE BUSINESS ACTIVITY AS IN THE CASE OF THE ASSESSEE WH O COULD ALSO ADD THE BUSINESS OF TRADING IN SHARES TO HIS ALREADY EXISTI NG BUSINESSES YET, IN ORDER TO JUDGE WHETHER THE SURPLUS EARNED FROM THE SALE OF SHARES WAS IN THE NATURE OF CAPITAL GAIN OR BUSINESS INCOME AS HELD BY THE AO, IT IS NECESSARY TO EXAMINE VERY CAREFULLY IN THE FACTS OF THE ASSESSEES CASE. 5.1 THE CBDT HAS ISSUED CIRCULAR NO.4 OF 2007 DTD. 15.6.2007 FOR THE EXPRESS PURPOSE OF ENABLING THE ASSESSING OFFICERS TO DECIDE AS TO WHETHER THE INCOME ON SALE OF SHARES IS IN THE NATU RE OF CAPITAL GAIN OR BUSINESS INCOME. FOR THIS PURPOSE, THE CIRCULAR HAS LAID DOWN CERTAIN PARAMETERS AGAINST WHICH THE FACTS OF THE ASSESSEE'S CASE HAVE TO BE NECESSARILY EXAMINED. WHILE THE AO HAS ONLY MADE VERY SWEEPING REFERENCE TO THE SAID CIRCULAR AND HAS NOT REALLY EXAMINED THE SPECIFIC FACTS OF THE ASSESSEE'S CASE AGAINST THE SPECIFIC PARAMETERS LAID DOWN IN THE SAID CIRCULAR, THE AR, IN THE CHART WHICH HAS BEEN REPRODUCED EARLIER IN THIS ORDER, HAS PROV IDED VERY SPECIFIC DETAILS AND FACTS TO ARGUE THAT ACCORDING TO THE PA RAMETERS LAID DOWN IN THE SAID CIRCULAR, THE ASSESSEE COULD ONLY BE T REATED AS AN INVESTOR ITA NO.2324/AHD/ 2010 A.Y.2007-08 4 IN SHARES AND THE INCOME THEREFROM COULD ONLY BE TR EATED AS CAPITAL GAIN AND NOT BUSINESS INCOME. WHILE THE AO HAS ONLY MADE A BRIEF MENTION OF THE HIGH VOLUME OF TRANSACTIONS, THE HIG H FREQUENCY AND MAGNITUDE, THE LOW AVERAGE PERIOD OF HOLDING ETC. ETC. WITHOUT SHOWING HOW AND WHY, THE AR HAS SUCCEEDED IN S HOWING THAT THE /ASSESSEE HAD FULL KNOWLEDGE OF THE FACT THAT THE PURCHASE OF THE SHARES AND SECURITIES REPRESENTED HIS INVESTMENTS W HICH WERE DULY SHOWN AS SUCH IN HIS BALANCE-SHEET; THAT THE ASSESSEE'S CLE AR OBJECT AND MOTIVE WAS TO MAKE INVESTMENTS AND NOT TREAT IT AS A BUSINESS. THE ENTIRE CAPITAL GAIN HAD BEEN REINVESTED IN THE SHARES, THE PURCHASES AND SALES WERE ONLY THROUGH A DEMAT ACC OUNT AND THE ASSESSEE HAD EARNED DIVIDEND ON THE INVESTMENTS. AC CORDING TO THE AR, THE AVERAGE PERIOD OF HOLDING DURING THE YEAR W AS 60 DAYS. HOWEVER, INVESTMENTS TO THE TUNE OF RS.7.26 LACS WE RE HELD FOR PERIODS EXCEEDING ONE YEAR. THE ASSESSEE HAD MAINTAINED HIS BOOKS OF ACCOUNT REGULARLY AND HAD SHOWN THE SHARES AND S ECURITIES UNDER THE HEAD OF 'INVESTMENTS' AND HAD VALUED THEM AT COST WITHOUT TAKING ANY BENEFIT OF THE FALL IN THE VALUE OF THE SHARES AT THE YEAR END . THE AR HAS ALSO SUCCESSFULLY SHOWN THAT IF THE SURPLUS EARNED FROM THE SALE OF THE SHARES WAS TO BE TREATED AS BUSINESS IN COME THEN THE CLOSING STOCK ' WOULD HAVE TO BE REVALUED AT THE LO WER OF COST OR MARKET VALUE WHICH WOULD RESULT IN THE DISCLOSED SH ORT TERM CAPITAL GAIN OF RS. 16.28 LACS BEING REDUCED TO THE BUSINES S INCOME OF RS. 13.10 LACS. THIS, THE AO HAD FAILED TO CONSIDER. TH E AR HAS ALSO SHOWN THAT THE ASSESSEE HAD NO SEPARATE INFRASTRUCTURE IN THE FORM OF AN OFFICE, EMPLOYEES, COMPUTER SYSTEM, BOLT, ONL INE TRADING FACILITY, ETC. TO CARRY OUT THE BUSINESS OF SHARE TRADING. TH E ASSESSEE HAD NOT MADE ANY BORROWING AND THE SHARES WERE PURCHASED WI TH THE HELP OF THE CAPITAL GAIN EARNED FROM THE SALE WHICH WER E REINVESTED. OTHERWISE, THE /ASSESSEE HAD ONLY INVESTED HIS OWN FUNDS WHICH CLEARLY SHOWED THAT HE WAS ONLY AN INVESTOR AND WAS NOT ENGAGED IN THE BUSINESS OF TRADING IN SHARES. ALL SUCH FACTS C LEARLY SUPPORT THE CLAIM OF THE AR THAT THE CAPITAL GAIN BOTH SHORT TE RM AND LONG TERM COULD NOT BE TREATED AS BUSINESS INCOME. 5.2 I FURTHER FIND THAT THE FACTS OF THE ASSESSEE'S CASE ARE DIRECTLY COVERED BY THE DECISION OF THE MUMBAI BENCH OF THE ITAT, IN THE CASE OF IN THE CASE OF M/S. J.M. SHARES & STOCK BROKERS LTD. VS. JCIT, SPECIAL RANGE-22, MUMBAI IN ITA NO. 2801/MUM/2000 F OR THE A.Y. 1995-96 WHEREIN IT HAS BEEN HELD AS FOLLOWS:- '...IN THE CASE OF SHRI JANAK S. RANGWALA (SUPRA), THE TRIBUNAL HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT MERE MAGNITUDE OF THE TRANSACTION DOES NOT CHANGE THE NA TURE OF TRANSACTION. IN THE PRESENT CASE, THE FACTS ARE SIMILAR WITH THE FACTS IN THESE JUDGEMENTS, WHEREIN THE TRIBUNAL HAS DECIDED SIMILA R ISSUE IN FAVOUR OF THE ASSESSEE. THE ASSESSEE WAS CONSISTENTLY FOLLOWING THIS PRACTI CE OF HOLDING SOME SHARES AS 'STOCK IN TRADE' AND OTHER SHARES AS 'INV ESTMENT' AND ITA NO.2324/AHD/ 2010 A.Y.2007-08 5 ASSESSEE IS REGULARLY OFFERING THE INCOME ON SALE O F SHARES HELD AS STOCK IN TRADE UNDER THE HEAD 'BUSINESS INCOME' AND INCOME ON SALE OF SHARES HELD AS INVESTMENT IS OFFERED TO TAX BY THE ASSESSEE UNDER THE HEAD CAPITAL GAINS ON REGULAR BASIS. BALANCE SHEET OF THE ASSESSEE SHOWS THAT THE ASSESS EE IS SHOWING INVESTMENT SEPARATELY UNDER THE HEAD INVESTMENT AND SHARES HELD AS STOCK IN TRADE ARE SHOWN UNDER THE HEAD STOCK IN TR ADE. THIS FACT IS ALSO WORTH NOTING THAT THE SHARES HELD BY THE ASSESSEE AS STOCK IN TRADE IS BEING VALUED BY THE ASSESSEE AT L OWER OF COST OR MARKET PRICE; WHEREAS, THE SHARES HELD BY THE ASSES SEE AS INVESTMENT ARE VALUED BY THE ASSESSEE ON THE BALANCE SHEET DAT E AT COST. ON PAGE NO. 27 OF THE PAPER BOOK, WE FIND THAT BOOK VALUE OF INVESTMENT BOTH QUOTED AND UNQUOTED IS RS.4029.53 L ACS. IT IS SUBMITTED BY THE ASSESSEE BEFORE /EARNED CIT(A) THA T IF TOTAL INVESTMENTS ARE AT LOWER OF COST MARKET VALUE IS CA LCULATED, VALUE OF INVESTMENT WILL BE ONLY RS.36,19,85,845/- AND HENCE , THERE IS DEPRECIATION IN THE VALUE OF INVESTMENT AS ON 31-03 -1995 OF APPROXIMATELY RS.4,09,67,417/-. NOTHING IS BROUGHT ON RECORD BY LEARNED DR OF THE R EVENUE THAT THERE IS ANY DEFECT IN THIS SUBMISSION OF THE ASSESSEE AN D IT PROVES THAT THE ASSESSEE HAS REAL INTENTION TO HOLD THESE SHARES AS INVESTMENTS; AND FOR THIS REASON, HE HAS NOT CLAIMED THIS LOSS ON AC COUNT OF DEPRECIATION IN VALUE OF SHARES AND DEBENTURES ON THE BALANCE SH EET DATE I.E. 31- 03-1995 AS COMPARED TO ITS COST. IT IS HELD BY THE TRIBUNAL IN VARIOUS JUDGMENTS THA T THERE IS NO BAR ON THE SHARE BROKERS TO HOLD SHARES AS INVESTMENTS AND MERELY BECAUSE THE ASSESSEE IS SHARE BROKER, IT CANNOT BE SAID THA T THE SHARES HELD BY HIM/IT IS STOCK IN TRADE AND NOT INVESTMENT. APART FROM THIS FACT THAT THE ASSESSEE IS SHARE BRO KER AND HAVING GOOD KNOWLEDGE OF SHARE MARKET, NOTHING IS BROUGHT ON RE CORD BY THE DEPARTMENT TO PROVE THAT THE IMPUGNED SHARES WERE H ELD BY THE ASSESSEE AS STOCK IN TRADE. UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE PROFIT EARNED BY THE ASSESSEE ON SALES OF THESE SHARES, WH ICH WERE HELD BY IT AS INVESTMENT IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND NOT UNDER THE HEAD BUSINESS INCOME. THIS GROUND OF THE ASSESSEE IS ALLOWED....'. 5.3 THE ASSESSEE 'S CONTENTION THAT THE SURPLUS RES ULTING DUE TO CHANGE IN INVESTMENTS FOR BETTER REINVESTMENTS MUST BE TREATED AS CAPITAL ACCRETION AND NOT BUSINESS INCOME, ALSO GET S SUPPORTED BY THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF IT VS. RAJA JAGDISH PRATAP SAHI (1971) 79 ITR 235 (ALL) AND THE FACT TH AT MERE MAGNITUDE OF THE TRANSACTION DOES NOT CHANGE THE NATURE OF TR ANSACTION, HAS ALSO ITA NO.2324/AHD/ 2010 A.Y.2007-08 6 BEEN UPHELD BY THE HON'BLE MUMBAI BENCH OF THE TRIB UNAL IN THE CASE OF JANAK S. RANGWALA V . ACIT (2007) 11 SOT 627 (MUMBAI). 5.4 IN VIEW OF THE FACTS OF THE CASE, THE PARAMETE RS LAID DOWN IN CIRCULAR NO.4 OF 2007 DTD.15.6.2007, AND VARIOUS JU DICIAL PRONOUNCEMENTS WHICH HAVE BEEN DISCUSSED ABOVE IN C ONSIDERABLE DETAIL. IT IS HELD THAT THERE WAS SIMPLY NO BASIS FOR THE AO TO TREAT THE SHORT TERM AND LONG TERM CAPITAL GAINS TOTALING RS. 18,17,901 AS BUSINESS INCOME OF THE ASSESSEE. THE AO IS DIRECTE D TO ACCEPT THE ASSESSEES CLAIM OF STCG OF RS.16,19,876 AND LTCG O F RS.1,98,025. 5.1 FOLLOWING THE FINDING GIVEN BY ME IN THE ASSESS EES OWN CASE FOR THE A.Y. 2006-07, I HOLD THAT THERE WAS NO JUSTIFIC ATION IN THE ACTION OF THE AO IN TREATING THE LTCG OF RS.9,81,520 AND STCG OF RS.5,10,220 AS BUSINESS INCOME OF THE ASSESSEE. THE ADDITION O F THE SUM OF RS.14,91,740 WILL THEREFORE STAND DELETED. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, AT THE OUTSET, LD. A.R. SUBMITTED THA T FOR A.Y. 2006-07 REVENUE HAD PREFERRED APPEAL BEFORE HONBLE ITAT. THE ITAT VIDE ITS ORDER DATED 20.04.2012 IN ITA NO.2891/AHD/2009 HAS REMITTED THE MATTER TO THE FILE OF CIT(A). HE THEREFORE SUBMITTED THAT FOLLOWING THE ORDER OF A.Y. 2006-07 IN THE CURRENT YEAR A SIMILAR VIEW BE TAKEN FOR A.Y. 2007- 08. 6. LD. D.R., ON THE OTHER HAND, SUBMITTED THAT CONS IDERING THE VOLUME OF TRANSACTIONS ENTERED BY THE ASSESSEE WHICH WAS IN E XCESS OF RS.2.5 CRORES AND THE NUMBER OF SCRIPS IN WHICH THE ASSESSEE HAD TRAD ED AND THE FREQUENCY OF TRANSACTIONS VERY CLEARLY PROVE THAT THE ASSESSEE W AS INDULGING INTO THE TRANSACTION OF PURCHASE AND SALE OF SHARES WITH THE INTENTION OF BUSINESS. IN VIEW OF THESE FACTS, THE NATURE OF TRANSACTIONS CAN NOT BE CONSIDERED AS INVESTMENT. HE, THEREFORE, SUPPORTED THE ORDER OF A.O. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE IN A.Y. 200 6-07 HAS ALSO ENTERED INTO TRANSACTION IN THE PURCHASE AND SALE OF SHARES WHIC H THOUGHT TREATED BY HIM AS CAPITAL GAIN WAS CONSIDERED BY THE A.O. AS BUSINESS INCOME. CIT(A) WHILE ITA NO.2324/AHD/ 2010 A.Y.2007-08 7 PASSING THE ORDER HAS HELD THAT THE FACTS OF THE CA SE IN THE YEAR UNDER APPEAL ARE IDENTICAL AS COMPARED TO THAT OF PRECEDING YEAR. T HIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY LD. D.R. BY BRINGING ANY CONTR ARY MATERIAL ON RECORD. WE FIND THAT THE COORDINATE BENCH WHILE DECIDING THE A PPEAL IN ITA NO.2891/AHD/2009 FOR A.Y. 2006-07HAS HELD AS UNDER: - 8. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AT BAR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND ORDERS PASSED BY THE AUTHORITIES BELOW. THE ONLY ISSUE IN VOLVED IN THIS MATTER IS WITH REGARD TO THE TREATMENT OF THE SHARE TRANSACTIONS AS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDER ATION AND THE INCOME DERIVED THERE FROM WHETHER SAME IS BUSINESS INCOME OR LONG TERM/ SHORT TERM CAPITAL GAIN AS CLAIMED BY THE ASS ESSEE. WE FIND THAT THE IMPUGNED ORDER AS PASSED BY THE LD. CIT(APPEAL) IS CRYPTIC AS HE HAS NOT CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER AND THE CASE LAWS AS RELIED BY HIM. THE OPERATING PART OF THE ORDER OF LEARNED CIT(APPEALS) IS REPRODUCED HEREINBELOW:- IN VIEW OF THE FACTS OF THE CASE, THE PARAMETERS LAID DOWN IN CIRCULAR NO.4 OF 2007 DTD. 15.06.2007 AND VARIOUS J UDICIAL PRONOUNCEMENTS WHICH HAVE BEEN DISCUSSED ABOVE IN C ONSIDERABLE DETAIL. IT IS HELD THAT THERE WAS SIMPLY NO BASIS FOR THE ASSESSING OFFICER TO TREAT THE SHORT TERM AND LONG TERM CAPIT AL GAINS TOTALING RS.18,17,907/- AS BUSINESS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE ASSESSEES CLAIM OF STCG OF RS.16,19,876/- AND LTCG OF RS.1,98,925/- LD. CIT(APPEALS) HAS NOT ADVERTED ANY THING ON THE CASE LAWS AS RELIED UPON BY THE ASSESSING OFFICER AS TO WHY THEY ARE NO T APPLICABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. W E ALSO FIND FORCE IN THE CONTENTION OF LD. A.R. THAT IN THE EVENT OF TRE ATING CAPITAL GAIN AS BUSINESS INCOME THEN COMPUTATION HAS TO BE MADE IN ACCORDANCE WITH SECTION 28 OF ACT. WE FEEL THAT UNDER THE AFOREMEN TIONED FACTS AND CIRCUMSTANCES IT WOULD BE APPROPRIATE IN THE INTERE ST OF NATURAL JUSTICE THAT MATTER IS REMITTED BACK TO THE FILE OF THE LD. CIT(APPEAL) AND WE HEREBY SET ASIDE THE IMPUGNED ORDER. LD. CIT(APPEA L) IS DIRECTED TO PASS A SPEAKING ORDER AFTER GIVING OPPORTUNITY OF H EARING TO THE CONCERNED PARTIES. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 8. SINCE IN THE PRESENT CASE CIT(A) WHILE DELETING THE ADDITION HAS FOLLOWED HIS ORDER FOR A.Y. 2006-07 AND SINCE FOR A.Y. 2006- 07 THE CO-ORDINATE BENCH HAS REMITTED THE MATTER BACK TO THE FILE OF CIT(A), WE ARE OF THE VIEW THAT IN THE ITA NO.2324/AHD/ 2010 A.Y.2007-08 8 PRESENT CASE ALSO FOR SIMILAR REASONS THE MATTER BE REMITTED TO THE FILE OF CIT(A). THE REASONING GIVEN IN THE AFORESAID ORDER OF COORD INATE BENCH OF TRIBUNAL FOR A.Y.2006-07 SQUARELY APPLY TO THE FACTS OF THE PRES ENT CASE. WE THUS DIRECT CIT(A) TO PASS A SPEAKING ORDER AFTER GIVING REASON ABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 15.02.2013 SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 18.01.2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.01.2013 OTHER MEMBER 21.01.2013 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 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 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. .