JCIT 16(3), MUMBAI V. SUPRIA POONGALIA, MUMBAI

ITA 2472/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9162 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANDEEP GOSAIN,J.M . . .. . / ITA NO. 2472/MUM/2012 / ASSESSMENT YEAR: 2008-09 ASSTT. CIT-16(3) MATRU MANDIR, 2 ND FLOOR, ROOM NO.206, TARDEO ROAD, MUMBAI-400 007. VS. SMT. SUPRIYA POONGALIA C/O., KARNAVAT & CO. 2A, KITAB MAHAL, 1 ST FLOOR 192, DR. D.N. ROAD,MUMBAI-400 001. PAN: AAIPP 2899 Q ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI V. JUSTIN-DR ASSESSEE BY: SHRI VIJAY MEHTA / // / DATE OF HEARING: 26/09/2017 !' / DATE OF PRONOUNCEMENT: 16.10.2017 , ,, , 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , ,, , -PER RAJENDRA,AM: CHALLENGING THE ORDER,DT.31/01/2012 OF CIT(A) -27,M UMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL,FIL ED HER RETURN OF INCOME ON 27/09/2008, DECLARING TOTAL INCOME OF RS.1.44 CRORES.THE AO CO MPLETED THE ASSESSMENT ON 3/12/2010, U/S. 143(3) OF THE ACT,DETERMINING HER INCOME AT RS . 1.46 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT TREATING THE TR ANSACTION OF PURCHASE AND SALE OF SHARES AS SHORT TERM CAPITAL GAINS(STCG).DURING THE ASSESS MENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD SHOWN INCOME UNDER THE HEAD STCG,A MOUNTING TO RS.95.02 LAKHS,THAT OUT OF THE SAID INCOME RS.94.27 LAKHS WERE SHOWN TO HAVE B EEN EARNED FROM SALE OF SHARES.THE AO DIRECTED HER TO EXPLAIN AS TO WHY THE STCG SHOULD N OT BE TREATED AS BUSINESS INCOME AS THE BORROWED FUNDS WERE UTILIZED FOR MAKING INVESTMENTS . THE AO OBSERVED THAT THE ASSESSEE HAD A HUGE TURNOVER(RS.16 CRORES APPROX.) OF SHARES (RS.7.83 CRORES PURCHASES + RS.8.77 CRORES SALES),THAT IN SOME CASES THE HOLDING PERIOD WAS ONLY FIVE DAYS , THAT THE ASSESSEE HAD CARRIED OUT TRANSACTION IN DERIVATIVES,THAT SHE WAS DEVOTING HER TIME AND ENERGY IN SHARE BUSINESS ONLY,THAT SHE HAD BORROWED RS.2.82 CRORES FOR MAKING INVESTMENTS, THAT SHE WAS INDULGING IN BUSINESS AND SHOWING PART OF BUSINESS AS INVESTMENT TO CLAIM THE LOWER RATE OF TAXATION, THAT THE TOTAL INVESTMENT OF THE ASSESSEE WAS TO THE TUNE OF RS.5.06 CRORES, THAT OUT OF THE SAID AMOUNT OF RS.2.82 CRORES HAD BEEN FUND ED FROM BORROWINGS. FINALLY, HE HELD THAT 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 2 INCOME RETUNED BY THE ASSESSEE UNDER THE HEAD STCG , TO THE TUNE OF RS.94.27 LAKHS WAS TO BE TAXED AS HER BUSINESS INCOME 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE DETAILED SUBMISS IONS. AFTER CONSIDERING THE AVAILABLE MATERIAL,HE HELD THAT THE ASSESSEE WAS A PARTNER IN FOUR PARTNERSHIP FIRMS,THAT THE SHARE TRADING WAS NOT THE SOLE ACTIVITY OF THE ASSESSEE, THAT AS PER THE PROVISIONS OF THE ACT ASSESSEE COULD BE AN INVESTOR AS WELL AS A TRADER,THAT THE MERE FA CT THAT SHE WAS DEALING IN DERIVATIVES COULD NOT BE HELD AGAINST HER.HE REFERRED TO THE CASE OF JM SHARES AND STOCK BROKERS AND INSTRUC - TION NO.1827 DTD. 31/8/1989 AS WELL AS CIR.NO.4/200 7 DTD. 15/6/2007 AND OBSERVED THAT THE ASSESSEE HAD BEEN AN INVESTOR IN SHARES ALL ALONG,T HAT OVER THE YEARS SHE HAD CONSISTENTLY TREATED THE ENTIRE INVESTMENT IN SHARES AS AN INVES TMENT AND NOT AS STOCK IN TRADE, THAT THE INCOME FROM TRANSFER OF SHARES WAS ALWAYS OFFERED T O TAX AS CAPITAL GAINS, SHARES HELD AS INVESTMENTS WERE VALUED AT COSTS AND NO MARKET LOSS WAS PROVIDED FOR.CONSIDERING THE PORTFOLIOS HELD BY THE ASSESSEE, THE NO. OF SCRIPS HELD/PURCHASED/SOLD, CORRESPONDING NUMBER OF TRANSACTION AND RECEIPT OF DIVIDEND INCOME BY AS SESSEE,HE HELD THAT ASSESSEE WAS AN INVESTOR AND NOT A TRADER,THAT IN THE SUBSEQUENT AY .S,DESPITE REGISTERING LOSSES FROM SALE OF SHARES,SHE HAD CONSISTENTLY FOLLOWED THE PRACTICE T REATING THE SHARES AS INVESTMENT.HE FURTHER HELD ,THAT DURING THE YEAR SHE HAD PURCHASED 91 SCR IPS AND SOLD 103 SCRIPS INVOLVING 297 TRANSACTIONS,THAT BY NO STRETCH OF IMAGINATION,DEAL ING IN 194 SCRIPS COULD BE CONSIDERED AS HIGH VOLUME,THAT TRANSACTIONS WERE NOT ENTERED INTO CONTINUOUSLY AND REGULARLY THROUGHOUT THE YEAR,THAT SHE HAD REPORTED 297 TRANSACTIONS ON 210 WORKING DAYS WHICH PROVED THAT AVERAGE NUMBER OF TRANSACTIONS WERE LESS THAN TWO PER DAY,T HAT THE TRANSACTIONS WERE NOT ENTERED INTO FREQUENTLY,CONTINUOUSLY AND REGULARLY BY HER,THAT S HE HAD EARNED 64.47% OF THE TOTAL STCG WITH A HOLDING PERIOD OF THREE TO SIX MONTHS AND 19 .72% OF CAPITAL GAINS WITH A HOLDING PERIOD BETWEEN SIX TO NINE MONTHS,THAT SHORT DURATI ON TRANSACTIONS WERE TRIGGERED BY AN UNPRECEDENTED VOLATILITY IN THE MARKET DURING NOV ' 07 TO JAN'08, THAT SHE HAD NOT RESORTED TO CHURNING OF SHARES OR REPETITIVE TRANSACTIONS OF TH E SAME COMPANY THAT COULD HAVE OTHERWISE RESULTED IN INCREASED TRANSACTIONS, EXCEPT TO THE E XTENT OF RESHUFFLING OF THE PORTFOLIO TO MINIMIZE THE LOSS/MAXIMIZE THE GAIN,THAT THE AO'S C ONCLUSION THAT APPELLANT'S HOLDING PERIOD WAS SHORT WAS DRIVEN BY THE ISOLATED FACT OF APPELL ANT'S HOLDING OF CERTAIN SCRIPTS AND WAS OUT OF CONTEXT AND COULD NOT BE GENERALISED,THAT SHE HA D USED HER OWN SURPLUS FUNDS FOR INVESTING IN SHARES,THAT SHE HAS NEITHER BORROWED ANY MONEY F ROM EXTERNAL SOURCES NOR PAID INTEREST THEREON EXCEPT A SMALL AMOUNT OF LOAN REPAID DURING THE YEAR ON WHICH INTEREST OF RS.48200 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 3 WAS PAID,THAT THE CURRENT LIABILITIES APPEARING IN THE BALANCE SHEET OF THE APPELLANT WERE IN THE NATURE OF TEMPORARY PERSONAL FAMILY TRANSFERS A ND DID NOT CARRY ANY INTEREST,THAT THE ANALYSIS OF BALANCE SHEET SHOWED THAT SHE HAD ENOUG H CAPITAL TO COVER HER INVESTMENTS IN SHARES AND THE SAME COULD NOT BE ATTRIBUTED TO THE AFORESAID CURRENT LIABILITIES,THAT INVESTMENT IN SHARES AS PERCENTAGE OF CAPITAL ALWAYS SHOWED TH E SUFFICIENCY OF CAPITAL OVER THE YEARS,THAT INVESTMENT IN SHARES WAS NOT OUT OF BORROWED FUNDS, THAT THE STAND OF THE APPELLANT AS AN INVESTOR HAD BEEN ACCEPTED BY THE AO IN THE EARLIER YEARS AY.S (2005-06 TO 2007-08)IN THE SCRUTINY ASSESSMENTS,THAT THE CAPITAL GAINS ON SALE OF SHARES AND SECURITIES WERE ACCEPTED AND TAXED AS STCG AND LTCG,THAT SHARES WERE ACCEPTED AS INVESTMENTS IN THE BALANCE SHEET,THAT THE FACTS OF THE CASE ARE SIMILAR IN A.YS. 2005-06 TO 2007-2008 & 2008-2009,THAT NO FRESH MATERIAL HAD BEEN BROUGHT ON RECORD BY THE AO,THAT HER CLAIM REGARDING LTCG HAD NOT BEEN DISTURBED BY THE AO FOR THE YEAR UNDER CONSIDERATIO N,THAT THUS THE AO HIMSELF HAD ACCEPTED THAT SHE WAS AN INVESTOR IN SHARES ALSO,THAT STCG O F RS.28,81,288/0 WAS ATTRIBUTABLE TO THE SALE OF BONUS SHARES OF INDIA BULL REAL ESTATE (RS. 591100) AND UNITECH (RS.2290188),THAT THE AO HIMSELF HAD ACCEPTED THE LTCG FROM SALE OF S HARES OF UNITECH,THAT THERE COULD NOT BE ANY REASON TO HOLD THE STCG FROM THE SAME SCRIP AS BUSINESS INCOME,THAT SHARES OF THE SAME COMPANY COULD NOT BE TREATED AS INVESTMENTS AT ONE PLACE AND STOCK-IN-TRADE AT OTHER PLACE, THAT THERE WAS NO REASON FOR THE AO TO TREAT THE IN VESTMENT IN SHARES BY THE ASSESSEE AS STOCK- IN-TRADE FOR A.Y.2008-09.HE RELIED UPON THE CASES O F JANAK S.RANGWALLA(11 SOT 627), GOPAL PUROHIT (228 CTR 582), ROHIT ANAND (327 ITR 445),SM K SHARES & STOCK BROKING PVT.LTD.( ITA/799/ MUM/ 2009), VINOD K.NEVATIA (ITA/6556/MUM/ 2009 & 181/MUM/2010).FINALLY, HE ALLOWED THE APPEAL OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING BEFORE US THE DEPARTME NTAL REPRESENTATIVE(DR) STATED THAT PERIOD OF HOLDING OF THE SECURITY WAS VERY SHORT, T HAT THE ASSESSEE HAD BORROWED THE FUNDS FOR MAKING INVESTMENTS, THAT SHE HAD HUGE TURNOVER OF S HARES, THAT INTENTION OF THE ASSESSEE WAS TO DO BUSINESS,THAT SHE WAS ACTIVE IN DEALING IN DE RIVATIVES.THE AUTHORISED REPRESENTATIVE (AR)SUPPORTED THE ORDER OF THE FAA AND STATED THAT IN SIMILAR CIRCUMSTANCES IN THE CASE OF THE MOTHER (NIRMALADEVI POONGALIA) OF THE ASSESSEE, THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE.HE REFERRED TO THE CASE OF N IRMALADEVI POONGALIA IN ITA NO.2474/ MUM/2012 DATED 15/02/2017 FOR ASSESSMENT YEAR 2008- 09. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF THE MOTHER OF THE ASSESSEE,SIMILAR ISSUE HA D TRAVELLED UP TO THE TRIBUNAL.IN THAT MATTER ALSO THE AO HAD TREATED THE INCOME FROM SHARE BUSIN ESS AS BUSINESS INCOME ADVANCING THE 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 4 SAME ARGUMENTS. WE WOULD LIKE TO REFER TO THE RELEV ANT PORTION OF THE ORDER OF THE TRIBUNAL AND SAME READS AS UNDER :- 4. BOTH THE ISSUES LEAD ONLY ONE GROUND IN WHICH THE REVENUE HAS ALLEGED THAT THE ORDER OF THE CIT(A) IS WRONG BY TREATING THE INCOME FROM SHA RES AS SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME. THE LEARNED REPRESENTATIVE OF T HE DEPARTMENT HAS ARGUED THAT THE ASSESSEE HAS HUGE TURNOVER OF SHARES DURING THE YEA R WITH LARGE NUMBER OF TRANSACTIONS AND IN SOME CASES THE HOLDING PERIOD OF SHARES WAS OF T HE TWO DAYS AND THE ASSESSEES TURNOVER WAS TO THE TUNE OF RS.4.26 CRORES AND THE ASSESSEE ONLY CARRIED OUT THE TRANSACTION IN SHARE PURCHASE AND SALE AND CLAIMED AS SHORT TERM CAPITAL GAIN WHICH IS WRONG. IT IS ALSO ARGUED THAT THE ASSESSEE ALSO USED THE BORROWED FUNDS TO T HE TUNE OF RS.1.01 CRORES FOR THE INVESTMENT IN THE SHARES, THEREFORE THE NATURE OF I NCOME OF ASSESSEE IS ONLY BUSINESS INCOME AND THE ASSESSEE CLAIMED THE SHORT TERM CAPITAL GAI N WRONGLY AND ILLEGALLY WHICH HAS WRONGLY BEEN HELD BY THE CIT(A) AS INCOME FROM SHOR T TERM CAPITAL GAIN, THEREFORE, THE ORDER OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE AS SESSEE HAS PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE PROCEEDING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD WHICH IS HEREBY REP RODUCED AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE CONTENTS OF THE ASSESSMENT ORDER AND THE APPELLANTS SUBMISSIONS. FROM THE PAPER BOOK AND OTHER SUBMISSI ONS FILED BEFORE ME BY THE APPELLANT FROM TIME TO TIME AND FROM THE ANALYSIS OF THE DATA PRES ENTED ABOVE, IN MY CONSIDERED OPINION, THE FOLLOWING FACTS EMERGE IN AN UNDISPUTED MANNER. 7.1 APPELLANT IS A PARTNER IN FOUR DIFFERENT PARTNE RSHIP FIRMS AND SHARE TRADING IS NOT THE SOLE ACTIVITY OF THE APPELLANT. APPARENTLY THE AO WAS IN FLUENCED BY THE FACT THAT THE APPELLANT IS ALSO TRADING IN DERIVATIVES TO CONCLUDE THAT SHE IS KNOW LEDGEABLE IN STOCK MARKET OPERATIONS IN DEPTH AND ALL THE ACTIVITIES CARRIED ON BY HER ARE IN THE NATURE OF BUSINESS. IT IS NOT OUT OF PLACE TO MENT ION THAT LAW ALLOWS APPELLANT TO CARRY OUT THE DUAL ROL ES IS THE MANNER IN WHICH THE INVESTMENT ACTIVITIES ARE CARRIED OUT, AND THE MERE FACT THAT SHE DEALS IN DERIVATIVES, CANNOT BE HELD AGAINST HE R. HONBLE ITAT IN THE CASES OF J.M.SHARES & STOCK BRO KERS V. DCIT (2007) AND DCIT VS. SMK SHARES & STOCK BROKING (2010). WHERE THE ASSESSEE W AS A STOCK BROKER BUT IT WAS CONSISTENTLY FOLLOWING THE PRACTICE OF HOLDING SOME SHARES AS S TOCK IN TRADE AND OTHER SHARES AS INVESTMENTS AND THE QUESTION AROSE WHETHER THE PROFITS ON THE S ALE OF SHARES HELD AS INVESTMENTS CONSTITUTED A CAPITAL GAIN OR BUSINESS PROFITS, HELD THAT: (I) THE ASSESSEE HAD BEEN CONSISTENT IN ITS PRACTIC E OF TREATING SOME SHARES AS STOCK AND OTHERS AS A CAPITAL ASSET. WHILE THE SHARES HELD AS CAPITAL ASS ET WERE VALUED AT COST IN THE ACCOUNTS, THE SHARES HELD AS STOCK-IN-TRADE WERE VALUED AT THE LOWER OF COST OR MARKET VALUE; (II) THERE IS NO BAR ON A STOCK BROKER HOLDING SHA RES AS AN INVESTMENT. THE MERE FACT THAT THE ASSESSEE IS AN EXPERT IN SHARE TRADING DOES NOT MEA N THAT HE CANNOT HOLD SHARES AS A CAPITAL ASSET. THE MAGNITUDE OF THE TRANSACTION DOES NOT CHANGE TH E NATURE OF THE TRANSACTION. (III) IT IS NO MORE RES INTEGRA THAT A PERSON CAN BE BOTH INVESTOR AS WELL AS TRADER IN SHARES. (DRAFT INSTRUCTION NO.2005, INSTRUCTION NO.1827 DAT ED 31.8.1989 & CIRCULAR NO.4/2007 DATED 15.6.2007 REFERRED). THE ASSESSEE HAS TO MAINTAIN T HE DISTINCTION BETWEEN SHARES HELD AS STOCK AND THOSE HELD AS INVESTMENTS IN ITS RECORDS; 7.2 THE APPELLANT HAS BEEN AN INVESTOR IN SHARES A LL ALONG. OVER THE YEARS SHE HAS CONSISTENTLY TREATED THE ENTIRE INVESTMENT IN SHARES AS AN INVE STMENT AND NOT AS STOCKIN-TRADE. THE INCOME FROM TRANSFER OF SHARES WAS ALWAYS OFFERED TO TAX A S CAPITAL GAIN. SHARES HELD AS INVESTMENTS WERE VALUED AT COST AND NO MARK TO MARKET LOSS WAS PROVI DED FOR. THE PORTFOLIO HELD BY THE APPELLANT OVER THE YEARS WHEN CONSIDERED IN THE LIGHT OF NO. OF SCRIPS HELD / PURCHASED/ SOLD AND THE CORRESPONDING NO. OF TRANSACTIONS AND THE FACT OF R ECEIVING DIVIDEND OVER THE YEARS AS CAN BE SEEN FROM TABLE 1 ABOVE WOULD UNDOUBTEDLY ESTABLISH THE APPELLANT AS AN INVESTOR AND NOT A TRADER. IT IS WORTHWHILE TO NOTE THAT EVEN IN THE SUBSEQUENT YEAR S DESPITE REGISTERING LOSSES FROM SALE OF SHARES, THE APPELLANT HAS CONSISTENTLY FOLLOWED THE PRACTIC E OF TREATING THEM AS CAPITAL GAINS. 7.3 COMING TO THE YEAR UNDER CONSIDERATION, AT THE OUTSET, APPARENTLY THE A.O. HAS ARRIVED AT A CONCLUSION OF HIGH VOLUME AND FREQUENCY OF TRANSACT IONS WITHOUT GOING INTO THE DETAILS. AS NOTED 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 5 FROM THE DATA PRESENTED IN THE ABOVE TABLES, DURING THE YEAR APPELLANT HAS PURCHASED 50 SCRIPS AND SOLD 45 SCRIPS INVOLVING 232 TRANSACTIONS. BY NO ST RETCH OF IMAGINATION, DEALING IN 95 SCRIPS, INVOLVING 232 TRANSACTIONS FOR THE ENTIRE YEAR CAN BE CONSIDERED AS HIGH VOLUME WHEN VIEWED IN THE BACKGROUND OF THE DAILY TRANSACTIONS CARRIED OU T IN BSE/NSE. 7.4 AS CAN BE SEEN FROM THE DATA AT ABOVE TABLES, T RANSACTIONS WERE NOT ENTERED INTO CONTINUOUSLY AND REGULARLY THROUGHOUT THE YEAR. THE APPELLANT HA S NOT TRANSACTED AT ALL DURING 120 DAYS OUT OF 250 WORKING DAYS DURING THE YEAR. THIS SUGGESTS THA T THE APPELLANT HAS NOT TRANSACTED DURING APPROX.. 50% OF THE TOTAL WORKING DAYS DURING THE Y EAR. THIS CLEARLY HIGHLIGHTS THAT THE TRANSACTIONS WERE NOT ENTERED INTO FREQUENTLY, CONTINUOUSLY AND REGULARLY BY THE APPELLANT. 7.5 THE APPELLANT HAS EARNED 46% OF THE TOTAL SHORT TERM CAPITAL GAINS WITH A HOLDING PERIOD MORE THAN 9 MONTHS AND 57% OF CAPITAL GAINS WITH A HOLDING PERIOD BETWEEN ONE TO SIX MONTHS. IT WAS HARDLY 1.38% OF THE OVERALL CAPITAL GAIN FOR TH E APPELLANT HAS ACCRUED FROM STOCKS WHERE THE WEIGHTED AVERAGE HOLDING DURATION FOR SCRIPTS WAS U P TO 1 MONTH. IN RESPECT OF SALE OF SHARES WITHIN A MONTH OF HOLDING IT WAS EXPLAINED TO BE TR IGGERED BY AN UNPRECEDENTED VOLATILITY IN THE MARKET DURING NOV 07 TO JAN 08 THAT THE APPELLANT SOLD OFF SHARES WITHIN A SHORT PERIOD OF HOLDING AT LOSS, IN FEAR OF FURTHER LARGE FALL IN MARKET. F URTHER, AS SUBMITTED DURING THE PRESENT PROCEEDINGS , APPELLANT HAS NOT RESORTED TO CHURNING OF SHARES OR REPETITIVE TRANSACTIONS OF THE SAME COMPANY THAT COULD HAVE OTHERWISE RESULTED IN INCREASED TRANSACT IONS, EXCEPT TO THE EXTENT OF RESHUFFLING OF THE PORTFOLIO TO MINIMIZE TO LOSS / MAXIMIZE THE GAIN. THEREFORE, A.O.S CONCLUSION THAT APPELLANTS HOLDING PERIOD IS SHORT, DRIVEN BY THE ISOLATED FAC T OF APPELLANTS HOLDING OF THE SCRIP BAG FILMS IS OUT OF CONTEXT AND CANNOT BE GENERALIZED. 7.6 THE APPELLANT USED HER OWN SURPLUS FUNDS FOR IN VESTING IN SHARES. SHE HAS NEITHER BORROWED ANY MONEY FROM EXTERNAL SOURCES NOR PAID INTEREST THERE ON EXCEPT AN AMOUNT OF RS.3 LAKHS BORROWED IN EARLIER YEAR, WHICH STANDS AT RS.6 LAKHS AS ON 31.3 .2008, INCLUDING THE ACCRUED INTEREST. CURRENT LIABILITIES APPEARING IN THE BALANCE SHEET OF THE A PPELLANT ARE EXPLAINED TO BE IN THE NATURE OF TEMPORARY PERSONAL FAMILY TRANSFERS AND DO NOT CARR Y ANY INTEREST. FURTHER, THE ANALYSIS OF BALANCE SHEET SHOWS APPELLANT HAS ENOUGH CAPITAL TO COVER H ER INVESTMENTS IN SHARES AND THE SAME CANNOT ATTRIBUTED TO THE AFORESAID LOAN OF RS.6 LAKHS. INV ESTMENT IN SHARES AS PERCENTAGE OF CAPITAL ALWAYS SHOWED THE SUFFICIENCY OF CAPITAL OVER THE YEARS AS CAN BE NOTED FROM TABLE 1 ABOVE. THEREFORE, THERE IS NO TRUTH IN AOS OBSERVATION THAT INVESTME NT IN SHARES WAS OUT OF BORROWED FUNDS. 7.7 THE STAND OF THE APPELLANT AS AN INVESTOR HAS B EEN ACCEPTED BY THE A.O. IN THE EARLIER UNDER SECTION 143(3). THE ASSESSMENT FOR A.Y.2007-07 WAS COMPLETED U/S.143(3) BY DCIT CIRCLE 2, JAIPUR AND THE CAPITAL GAINS ON SALE OF SHARES AND SECURITIES WERE ACCEPTED AND TAXED AS SHORT TERM AT RS.26,22,295/- AND LONG TERM CAPITAL GAIN ASSESS ED AT RS.1,86,846/-. BESIDES, SHARES WERE ACCEPTED AS INVESTMENTS IN THE BALANCE SHEET. APPAR ENTLY, THE FACTS OF THE CASE ARE SIMILAR IN A.YS. 2007-08 AND 2008-09 AND NO FRESH MATERIAL HAS BEEN BROUGHT ON RECORD BY THE A.O. AT PRESENT. FURTHER, APPELLANTS CLAIM REGARDING LONG TERM CAPI TAL GAINS HAS NOT BEEN DISTURBED BY THE A.O. FOR THE YEAR UNDER CONSIDERATION AND THUS, THE A.O. HIM SELF HAS ACCEPTED THAT THE APPELLANT WAS INVESTOR IN SHARES ALSO. FURTHER, STCG OF RS.30,45, 361/- IS ATTRIBUTABLE TO THE SALE OF BONUS SHARES OF INDIA BULL REAL ESTATE (RS.22,91,233/), NETWROK 18 (RS.3,59,267/-) AND TV18 (RS.3,94,860/-). IN FACT AO HIMSELF ACCEPTED THE LTCG FROM SALE OF S HARES OF INDIA BULLS REAL ESTATE AND TV18 AND THERE CANNOT BE ANY REASON TO HOLD THE STCG FRO M THE SAME SCRIPS AS BUSINESS INCOME. SHARES OF THE SAME COMPANY CANNOT BE TREATED AS INVESTMENT S AT ONE PLACE AND STOCK-IN-TRADE AT OTHER PLACE. THEREFORE, I AM OF THE CONSIDERED OPINION TH AT IN THE GIVEN FACTS AND CIRCUMSTANCES, THERE IS NO REASON FOR THE A.O. TO TREAT THE INVESTMENT IN S HARES BY THE APPELLANT AS STOCK-IN-TRADE FOR A.Y.2008-09. THE UNIFORMITY IN TREATMENT AND CONSIS TENCY UNDER THE SAME FACTS AND CIRCUMSTANCES IS ONE OF THE FUNDAMENTAL JUDICIAL PRINCIPLES WHICH CANNOT BE BRUSHED ASIDE WITHOUT PROPER REASON. 8. THAT APART THERE ARE A PLETHORA OF DECISIONS BY THE VARIOUS BENCHES OF HON. HIGH COURTS AND ITAT HOLDING THE ISSUE IN FAVOUR OF APPELLANT INVOL VING SIMILAR FACTS, AND FOR THE SAKE OF BREVITY, EVEN IF THEY ARE TAKEN INTO CONSIDERATION FOR ARRIV ING AT THE CONCLUSION THAT THE APPELLANT IS AN INVESTOR THE SAME ARE NOT REPRODUCED. HOWEVER TO NA ME A FEW JANAK S. RANGWALLA VS ACIT (11 SOT 627), CIT VS. GOPAL PUROHIT 228 CTR 582 (BOM.)( 2010), CIT VS. ROHIT ANAND (2010) 327 ITR 445 (DEL), DCIT VS. SMK SHARES & STOCK BROKING PVT. LTD. ITA NO. 799/MUM/2009, VINOD K. NEVATIA ITA NO.6556/MUM/2009 AND 181/MUM/2010 AN D NAISHADH V. VACHHARAJANI ITA NO.6429/MUM/2009. 9. IN VIEW OF THE DETAILED DISCUSSION OF THE FACTS AND THE LEGAL POSITION AND THE BACK GROUND OF THE AMENDED PROVISIONS ON TAXATION OF CAPITAL GAINS ON SALE OF SHARES W.E.F.1/10/2004, I HAVE NO 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 6 HESITATION TO HOLD THAT THE INCOME FROM SHORT TERM CAPITAL GAINS OFFERED TO TAX REQUIRE NO DISTURBANCE AND CANNOT BE TREATED AS BUSINESS INCOM E. ACCORDINGLY, THE APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT ON THIS ISSUE. 5. ON APPRAISAL OF THE ABOVE MENTIONED ORDER THE CI T(A) HAS DESCRIBED EACH AND EVERY ASPECT OF THE INVESTMENT OF THE ASSESSEE IN SHARES. THE CIT(A) WAS OF THE VIEW THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE QUITE SIMILAR TO THE EARLIER YEARS AND THE PRINCIPLE OF CONSISTENCY AND UNIFORMITY IS NOT REQUIRED TO BE DI SCREDITED IN THE CIRCUMSTANCES WHEN THERE IS NO MAJOR CHANGE IN THE TRANSACTION OF THE ASSESS EE. THE CIT(A) HAS ALSO PLACED RELIANCE UPON THE LAW SETTLED BY THE ORDER OF HONBLE ITAT I N THE CASES OF J.M.SHARES & STOCK BROKERS V. DCIT (2007), JANAK S. RANGWALLA VS ACIT (11 SOT 627), CIT VS. GOPAL PUROHIT 228 CTR 582 (BOM.)(2010), CIT VS. ROHIT ANAND (2010) 327 IT R 445 (DEL), DCIT VS. SMK SHARES & STOCK BROKING PVT. LTD. ITA NO. 799/MUM/2009, VINOD K. NEVATIA ITA NO.6556/MUM/2009 AND 181/MUM/2010 AND NAISHADH V. VACHHARAJANI ITA N O.6429/MUM/2009. MOREOVER, IT ALSO CAME INTO THE NOTICE THAT THE ASSESSING OFFICE R HAS TREATED THE INCOME FROM SHARES AS SHORT TERM CAPITAL GAIN FOR THE A.Y.2006-07, 2007-0 8, 2008-09, 2009-10 AND 2010-11. APPARENTLY, THE TRANSACTION IN THE SHARES WAS TREAT ED BY THE ASSESSING OFFICER AS INCOME FROM SHORT TERM CAPITAL GAIN IN THE EARLIER AS WELL AS I N THE SUBSEQUENT YEARS. NO MAJOR CHANGE OF ANY KIND WAS BROUGHT INTO THE NOTICE BY THE REVE NUE. THE RULE OF CONSISTENCY HAS PROPERLY BEEN FOLLOWED. IN VIEW OF THE SAID CIRCUMSTANCES, W E ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS HER EBY DISMISSED. 5.1. WE FIND THAT IN THE EARLIER YEARS,THE AO HAD TREATE D THE INCOME FROM SALE OF SHARES UNDER THE HEAD INCOME FROM OTHER SOURCES.WHILE FINALISING THE ORDER FOR THE YEAR UNDER CONSIDERA TION,HE HAS NOT BROUGHT ON RECORD ANY FACT TO PROVE THAT FACTS FOR THE EARLIER YEARS WERE DISTINGUISHABLE. BEFORE US ALSO, NOTHING WAS PRODUC ED THAT COULD LEAD TO THE CONCLUSION THAT FACTS FOR THE YEAR UNDER APPEAL WERE DIFFERENT FROM FACTS OF EARLIER YEARS. WE ARE AWARE THAT THE PRINCIPLES OF RES-JUDICATA DO NOT APPLY TO INCO ME TAX PROCEEDINGS.HOWEVER, PRINCIPLE OF CONSISTENCY IS APPLICABLE TO DETERMINE THE TAX LIAB ILITY OF AN ASSESSEE . THE AOS CAN DEVIATE FROM ORDERS OF EARLIER YEARS, PROVIDED THAT NEW FAC TS ARE BROUGHT ON RECORD.UNIFORMITY IN TREATMENT AND CONSISTENCY UNDER THE SAME FACTS AND CIRCUMSTANCES IS ONE OF THE FUNDAMENTAL JUDICIAL PRINCIPLES WHICH CANNOT BE BRUSHED ASIDE W ITHOUT PROPER REASON. BESIDES,THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT THE ASSESSEE WAS SHOWING SHARES AS PART OF HER INVESTMENT AND THAT SAME WERE VALUED AT COST. NO AUTHORITY IS REQUIRED TO HOLD THAT AN ASSESSEE CAN BE A TRADER AND AN INVESTOR A T THE SAME TIME. THE AO HAS ACCEPTED THE CLAIM OF THE ASSESSEE IN CASE OF LTCG IN CASE OF S OME OF THE SCRIPS BUT BE HELD THAT STCG FOR THE SAME SCRIPS WAS TO BE ASSESSED UNDER THE BU SINESS INCOME.AFTER CONSIDERING THE VOLUME OF TRANSACTIONS, PERIOD OF HOLDING AND OTHE R RELEVANT FACTORS THE FAA HAD HELD THAT SHE WAS AN INVESTOR.IN OUR OPINION HIS ORDER DOES N OT SUFFER FROM ANY FACTUAL OR LEGAL INFIRMITY.SO, CONFIRMING THE SAME WE DECIDE THE EFF ECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT , APPEAL FILED BY THE AO STANDS DISMISS ED. 2472/M/12(08-09)-SMT. SUPRIYA POONGALIA. 7 . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2017. 16 2017 SD/- SD/- ( /SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 16.10.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.