SADHANA NABERA, MUMBAI V. ACIT RG 25(3), MUMBAI

ITA 2586/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7353 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AURN C BHARAT
• Assessee Lawyers: VIJAY MEHTASHRI A K GHOSH
• Keywords: Business income; Depreciation; Question of law; Cost of acquisition; Speculation loss; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 2586/MUM/2009 (ASSESSMENT YEAR: 2005-06) SMT. SADHANA NABERA ACIT, RANGE 25(3) FIRST FLOOR, JASU, PLOT NO. 60 MUMBAI VITHAL NAGAR SOCIETY, JVPD SCHEME VS. VILE PARLE (W), MUMBAI PAN - AAFPN 5685 N APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA/SHRI A.K. GHOSH RESPONDENT BY: SHRI AURN C. BHARAT O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XXVI, MUMBAI DATED 23.01.2009. 2. ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE AOS ACTION OF A SSESSING SHORT TERM CAPITAL GAIN UNDER THE HEAD INCOME FROM BUSIN ESS OR PROFESSION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) ERRED TO HOLD THAT THE PROVISIONS OF SEC. 2( 22)(E) ARE APPLICABLE TO THE TRANSACTIONS BETWEEN THE APPELLAN T AND M/S. ADHUNIK FINANCE PVT. LTD. 3. IN THE COURSE OF ARGUMENT THE ASSESSEE HAS NOT PRES SED GROUND NO. 2 AND ACCORDINGLY THE SAME IS TREATED AS WITHDRAWN. T HE ONLY GROUND TO BE CONSIDERED IS WHETHER THE INCOME EARNED BY THE ASSE SSEE ON SALE OF SHARES IS TO BE TREATED AS SHORT TERM CAPITAL GAIN OR INCO ME FROM BUSINESS. THE ASSESSEE IS AN INDIVIDUAL AND DIRECTOR/SHAREHOLDER OF M/S. HEMKANAK MERCHANTILE PVT. LTD. AND ADHUNIK FINANCE PVT. LTD. HER HUSBAND IS ALSO DIRECTOR AND SHAREHOLDER IN EMERGING CAPITAL ADVSOR S LTD., SIMCORP FUND LTD. AND ADHUNIK FINANCE LTD. AND ALL THESE COMPANI ES ARE ENGAGED IN THE ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 2 BUSINESS OF SHARE TRADING. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD DISCLOSED BUSINESS AND PROFESSIONAL IN COME NIL, SHORT TERM CAPITAL GAIN BEFORE 01.10.2004 AT RS.45,659/- AND S HORT TERM CAPITAL GAIN AFTER 01.10.2004 AT RS.79,74,441/- AND INCOME FORM OTHER SOURCES AT RS.60,691/-. SHE ALSO CLAIMED DIVIDEND INCOME OF RS .2,24,307/- AS EXEMPT. ON SCRUTINY OF THE DETAILS OF SHORT TERM CAPITA GAI N DISCLOSED THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS ENTERED INTO VOLU MINOUS TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND OUT OF THESE TRANSA CTIONS SOME TRANSACTION IN WHICH DELIVERY HAD NOT BEEN TAKEN, THE ASSESSEE HAS TREATED AS SPECULATION LOSS AND SOME OF THE TRANSACTIONS ARE T REATED AS INVESTMENTS AND LOSSES WERE ALSO CLAIMED AS SET OFF AGAINST SHO RT TERM CAPITAL GAIN. THE A.O. ASKED THE ASSESSEE TO EXPLAIN WHY THE INCOME E ARNED ON TRANSACTION OF SHARES SHOULD NOT BE CONSIDERED AS BUSINESS INCOME. THE A.O. HAS TAKEN THE NATURE OF CAPITAL GAINS RECEIVED FOR ANALYSIS A ND OBSERVED THAT THE ASSESSEE HAS TRANSACTED TOTAL NUMBER OF 2,12,281 SH ARES INVOLVING RS.1.87 CRORES AS PURCHASE COST AND SOLD THEM FOR A CONSIDE RATION OF RS.2.69 CRORES THEREBY EARNING GAINS. IT IS ALSO NOTICED THAT: (A) THE ASSESSEE AND HER HUSBAND ARE DIRECTORS/SUBSTANTIAL SHAREHOLDERS IN C OMPANIES WHICH ARE ENGAGED IN SHARE BUSINESS AND TRANSACTING IN THE ST OCK EXCHANGE ON REGULAR BASIS; (B) THERE WAS TRANSFER OF FUNDS BETW EEN ASSESSEES ACCOUNT AND ACCOUNTS IN SOME OF THE CONCERNS. INCIDENTALLY HE ALSO INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF DEEMED DIVIDEND, WHICH WERE CONTESTED BUT WERE WITHDRAWN IN GROUND NO. 2; (C) THERE WERE TRAN SACTIONS OF INTRADAY TRADING AND THE ASSESSEE HAS PURCHASED 21 SCRIPS WH ICH ARE BOUGHT AND SOLD ON THE SAME DAY INCURRING A NET LOSS OF RS.479 9/- AND THE ASSESSEE ALSO HAD TAKEN LOANS FROM BANKS BY PLEDGING SHARES PURCHASED AND (D) EARNING OF DIVIDEND INCOME IS VERY SMALL WHEN COMPA RED TO THE GAIN EARNED ON THE SHARE TRANSACTIONS. HE WAS OF THE VIEW THAT MERELY BY CLASSIFYING THE SHARES AS INVESTMENT DOES NOT CHANGE THE NATURE OF ASSET. THE ASSESSEE EXPLAINED THAT SHE IS A PURE INVESTOR IN STORK MARK ET. THERE WAS NOT MUCH FREQUENCY OF TRANSACTIONS TO TREAT THEM AS BUSINESS AND RELIED ON VARIOUS CASE LAWS AND LEGAL PRINCIPLES TO SUBMIT THAT THE A SSESSEE IS AN INVESTOR. THE A.O. ANALYSED THE LEGAL PRINCIPLES AND CONSIDERED T HAT THE NUMBER, VOLUME ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 3 AND FREQUENCY OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN WHICH THERE WAS ACTUAL DELIVERY WAS TAKEN AND, THEREFORE, SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE SHOULD BE TREATED AS BUSIN ESS INCOME. WHILE DOING SO HE ALSO CONSIDERED THE BOARD CIRCULARS AND THE Q UESTIONS TO BE EXAMINED TO DETERMINE WHETHER THE ASSESSEE IS AN INVESTOR OR A TRADER. HE ALSO RELIED ON THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF DCIT VS. DEEPA SHAH 99 ITD 219 TO HOLD THAT THE ASSESSEE IS DOING TRANSACTIONS IN THE NATURE OF BUSINESS AND ACCORDINGLY HE HAS ARRIVED A T THE BUSINESS PROFIT AT RS.78,89,499/- AND SPECULATION LOSS WAS ALLOWED TO BE CARRIED FORWARD. HE DETERMINED THE INCOME OF THE ASSESSEE ACCORDINGLY. 4. BEFORE THE LEARNED CIT(A) THE ASSESSEE SUBMITTED TH AT THE A.O. WAS WRONG IN CONSIDERING THE ACTIVITY OF INVESTMENT IN SHARES AS THERE IS NO INTENTION OF HOLDING THE SHARES AS STOCK-IN-TRADE A ND IT WAS A REGULAR PRACTICE OF SHOWING SHARE PURCHASES AS INVESTMENT A ND WHATEVER SHARES ARE SOLD THE GAINS WERE ACCOUNTED FOR AS CAPITAL GAINS. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAS BORROWED MONEY AND UTILISED I N INVESTMENT IN SHARES AND THIS IS NOT PROHIBITED AND WAS DULY APPROVED BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. RAJENDRA PRASAD MOODY 115 IT R 519 AND IT WAS ALSO CONTENDED THAT INTRADAY TRANSACTIONS RESULTING IN L OSS OF RS.7,499/- HAS NO RELEVANCE AND TOTALLY OUT OF CONTEXT FOR DETERMININ G THE CAPITAL GAIN ON OTHER SHARES. IT WAS SUBMITTED THAT THE INTENTION OF THE ASSESSEE WAS ALWAYS TO HOLD THE SHARES AS INVESTMENT BUT IN FEW CASES THE SHARES PURCHASED WERE SOLD OF SAME DAY BECAUSE OF SOME WRONG DECISION WHI LE MAKING THE INVESTMENT. IT WILL BE A CASE OF CAPITAL GAIN/LOSS AND THE A.O. WAS TREATING IT AS A SPECULATION LOSS. THE ASSESSEE ALSO CLARIFIED THAT THE ASSESSING OFFICERS FINDING THAT DELIVERY OF ONLY 58637 SHARES WERE TAK EN IS NOT CORRECT AS ASSESSEE PURCHASED 1 LAKHS SHARES OF TASC PHARMA LT D. OUT OF WHICH 61713 SHARES WERE RECEIVED IN THE D-MAT ACCOUNT OF THE AS SESSEE AND THE BALANCE 38807 WAS RECEIVED IN THE D-MAT ACCOUNT OF THE CONC ERNED BROKER THEREBY TAKING DELIVERY OF ALL THE SHARES. WITH REFERENCE TO THE DIVIDEND INCOME BEING COMPARED LOWER THAN THE CAPITAL GAIN, IT WAS SUBMITTED THAT THERE IS NO CORRELATION BETWEEN THESE TWO ITEMS AND THE DIVI DEND WAS RECEIVED ONLY WHEN THE CONCERNED COMPANY DECLARED THE SAME AND BE CAUSE OF NON-RECEIPT ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 4 OF DIVIDEND THE ACTIVITY OF INVESTMENT CANNOT BE BE COME A BUSINESS ACTIVITY. THE ASSESSEE, FURTHER ANALYSED THE VARIOUS CASE LAW S AND COUNTERED THE ARGUMENTS OF THE A.O. AND SUBMITTED THAT THE ASSESS EE IS AN INVESTOR AND CANNOT BE CONSIDERED AS A TRADER. 5. AFTER ANALYSING THE ISSUES THE CIT(A) HAS GIVEN THE FOLLOWING FINDINGS IN PARA 3.5 OF HIS ORDER: - 3.5 I HAVE GONE THOUGH THE SUBMISSIONS IN THE LIGH T OF THE FACTS AND FIND THAT THERE IS NO DISPUTE THAT THE APPELLANT IS DEALING IN SHARES IN LARGE MAGNITUDE AS UNDER: - FROM 01.04.2004 TO 30.09.2004 APPELLANT PURCHASED 44987 NUMBER OF SHARES FOR RS.30,58,864/- AND SOLD THE SA ME OF RS.31,04,523/- THEREBY DISCLOSING A PROFIT OF RS.45 ,659/-. THESE SCRIPS PERTAIN TO 26 COMPANIES. FURTHER, FROM 01.10 .2004 TO 31.03.2005, APPELLANT PURCHASED 167384 NUMBER OF SH ARES FOR RS.1,57,24,576/- AND SOLD THE SAME FOR RS.2,38,66,8 45/- THEREBY DISCLOSING A PROFIT OF RS.79,74,441/-. THESE SCRIPT S PERTAIN TO 6 COMPANIES. IN NUTSHELL DURING THE YEAR APPELLANT CA RRIED OUT TRANSACTIONS IN 32 SCRIPTS INVOLVING 212281 NUMBER OF SHARES AMOUNTING TO RS.2,69,71,368/- AND SHORT TERM CAPITA L GAIN IS DISCLOSED AT RS.80,20,100/-. 6. IN PARA 3.6 THE CIT(A) HAS ANALYSED VARIOUS CASE LA WS AND IN PARA 3.7 HE HAS GIVEN FURTHER FINDINGS OF FACTS WHICH ARE AS UNDER: - 3.7. APPELLANT IS UNDOUBTEDLY DEALING IN LARGE VOL UME OF SHARES. MOST OF THE SHARES ARE BROUGHT AND SOLD IN FEW DAYS. NON E OF THE SHARES SHOWN N THE BALANCE-SHEET OF THE YEAR ENDING 31.03. 2004 WERE SOLD IN F.Y. 2004-05 EXCEPT 3000 SHARES OF GSFC WHICH AGAIN PURCHASED ON 29.03.2004 AND SOLD ON 01.04.2005 WITHOUT TAKING TH E DELIVERY. IN THE STATEMENT OF SHARES TRADED FROM 01.04.2004 TO 30.09 .2004 IT IS FURTHER NOTED THAT EXCEPT SHARES OF INDIA ASIA FUSE AND KAKATIA CEMENT WHICH WERE HELD FOR LES THAN FOUR MONTHS, ALL OTHER SHARES WERE SQUARED UP (PURCHASED AND SOLD) ON SAME DAY. FURTHER GAIN/L OSS ON SUCH SQUARED SHARES IS CLAIMED AS SHORT TERM CAPITAL GAI N INSTEAD OF SPECULATION LOSS/PROFIT AS NO DELIVERY WAS TAKEN. S IMILAR IS THE POSITION ABOUT SHARES TRANSACTED AFTER 01.10.2004 TO 31.03.2 005. ONLY FEW SHARES ARE NOT SOLD IN FEW DAYS. ONLY BECAUSE SOME SHARES ARE KEPT IN MORE THAN ONE YEAR DUE TO MARKET CONDITION WILL NOT CHANGE THE NATURE OF TRANSACTION. APPELLANT HAS TAKEN LOANS FROM BANKS, FINANCIAL INSTITUTIONS AND PRIVATE PARTIES AND RELATED CONCERN TO THE EXTE NT OF RS.2.84 CRORS (EARLIER YEAR RS.44.77 LACS AS PER BALANCE-SHEET) T O DO SHARE BUSINESS AND PAID INTEREST OF RS.1,82,805/- IN THE CURRENT Y EAR. THE OTHER FACTS WHICH INDICATE THAT ASSESSEE WAS DEALING IN SHARES AS TRADER IS THAT SHE HAS PLEDGED THE SHARES TO ICICI & HSBC FOR AVAILMEN T OF LOAN AND ALSO ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 5 BORROWED 96000 SHARES FROM ITS ASSOCIATE COMPANIES FOR THE PURPOSE OF MORTGAGE FOR LOAN. SHE HAS BORROWED MONEY FROM INDI VIDUALS, FINANCIAL INSTITUTIONS, BANK AND ASSOCIATES CONCERN AND PAID INTEREST TO THE EXTENT OF RS.1,82,806/- ON LOAN TAKEN. NO PRUDENT PERSON W ILL INCURRED INTEREST ON LOAN FOR THE PURPOSE OF INVESTMENT BUT CERTAINLY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE WAS WELL ACQUAINTED WITH THE ACTIVITY OF SHARE MARKET THOUGH HER COMPANIES AND FAMILY MEMBERS AND WAS USING THE FULL FLASHED INFRASTRUCTURE FACILITIES OF OWN RELAT ED CONCERNS. THE SHARES SHOWN IN THE BALANCE-SHEET OF F.Y. 2003-04 ARE NOT SOLD IN THE F.Y. 2004-05 BUT INCREASED IN THE CURRENT YEAR WHICH SHO WS THAT STOCK OF INVESTMENT IS SEPARATELY DISCLOSED IN THE BALANCE-S HEET AND TRANSACTION OF SHARES CARRIED OUT IN THE YEAR ARE PURELY BUSINE SS TRANSACTIONS AND NOT RELATED TO THE INVESTMENT SHOWN IN EARLIER BALA NCE-SHEET. MOREOVER, THE HOLDING PERIOD OF THE SHARES TRANSACTED INTRADA Y AND OTHER SHARES ARE A FEW DAYS WHICH SHOWS THAT INTENTION WAS ONLY TO BOOK PROFIT AND NOT TO INVESTMENT. ALL THESE FACTS PROVE BEYOND DOU BT THAT SHE WAS VERY WELL ENGAGED IN THE ADVENTURE IN THE NATURE OF TRAD E. THE ASSESSING OFFICER HAS DISCUSSED IN DETAIL IN THE ASSESSMENT O RDER RELYING UPON VARIOUS JUDGEMENTS THAT MANNER, VOLUME AND PERIOD OF HOLDING OF MAXIMUM SHARES CLEARLY SHOW THAT THE APPELLANT IS ENGAGED IN TRAD ING AND NOT IN INVESTMENT. IF SOMETHING IS ACCEPTED IN EARLIER YEARS U/S. 143(1) THAT WILL NOT AMOUNT TO ACCEPTANCE BY THE DE PARTMENT REGARDING HOLDING OF STOCK-IN-TRADE OR INVESTMENT. THE ASSESS ING OFFICER HAD NO OCCASION TO APPLY HIS MIND IN EARLIER YEARS AS NO S CRUTINY WAS DONE IN THE CASE. APPELLANT IS ENGAGED IN LARGE VOLUME OF T RANSACTIONS IN SHARES AND WHEN A.O. SCRUTINIZED THE CASE IN THE YEAR UNDE R CONSIDERATION AND FOUND THAT SHE IS SYSTEMATICALLY ENGAGED IN TRADING OF SHARES. THE ASSESSING OFFICER REJECTED THE BOOK VERSION OF THE APPELLANT AND HELD THAT THE APPELLANT IS ENGAGED IN TRADING OF SHARES ON FU LL SCALE. RECENTLY VISHAKAPATTANAM ITAT IN SRIDEVI STEEL AND CEMENT ST ORES V/S ITO 106 ITD 326 IN A CASE WHERE IN EARLIER YEAR DEPRECIATION WAS ALLOWED U/S. 143(1) EVEN THOUGH SAME WAS CLAIMED WR ONGLY IN THE RETURN AND WHEN ASSESSMENT FOR SUBSEQUENT ASSESSMEN T YEAR WAS REOPENED AND CORRECT DEPRECIATION WAS ALLOWED, THE HON'BLE ITAT HELD THAT MERELY BECAUSE IN PRECEDING YEAR THE CLAIM WAS WRONGLY ALLOWED MORE PARTICULARLY WHEN THERE WAS NO DISCUSSION IN T HE BODY OF ORDER TO PROVE APPLICATION OF MIND, IT COULD NOT BE SAID THA T IT WOULD BIND THE REVENUE IN SUBSEQUENT YEAR AND WOULD AMOUNT TO CHAN GE OF OPINION. MOREOVER, YEAR AFTER YEAR DEALING IN SHARES IN LARG E VOLUME ITSELF PROVE THAT THE APPELLANT IS ENGAGED IN SHARE BUSINESS IN FULL SCALE BASIS. SHE CANNOT TREAT PROFIT AS SHORT TERM CAPITAL GAIN WHEN SHARES ARE SOLD WITHIN ONE YEAR AND HOLDING PERIOD IN MOST OF TRANS ACTIONS IS ONLY ONE DAY AND IN SOME CASES A FEW MONTHS. RECENTLY HON'BLE CBDT HAD ISSUED CIRCULAR NO. 4/2007 DATED 15.06.2007 AFTER CONSIDERING VARIOUS JUDGEMENTS ON THE IDENTICAL ISSUE AND CONCL UDED THREE ASPECTS TO DETERMINE WHETHER ANY TRANSACTION IS TRADING OR INV ESTMENT. A) MAGNITUDE OF PURCHASE AND SALE B) PERIOD OF HOLDING C) MOTIVE BEHIND IT ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 6 7. ON THE BASIS OF THIS FACTUAL FINDING AND ALSO ANALY SING THE CASE LAWS REGARDING ADVENTURE IN THE NATURE OF TRADE IN PARA 3.8 AND 3.9 THE CIT(A) HELD THAT THE ASSESSEE IS ENGAGED IN ADVENTURE IN N ATURE OF TRADE ON FULL SCALE AND IT HAS SHOWN PURCHASE OF SHARES AS INVEST MENT AND GAINS AS SHORT TERM CAPITAL WITH A VIEW TO AVOID TAX. INVESTMENT S HOWN IN THE BOOKS OF ACCOUNT IS NOTHING BUT STOCK-IN-TRADE. ACCORDINGLY HE UPHELD THE ACTION OF THE A.O., HENCE THE ASSESSEE IS AGGRIEVED. 8. THE LEARNED COUNSEL DRAWING OUR ATTENTION TO THE PA PER BOOK FILED IN WHICH THE DETAILS OF ASSESSEES INVESTMENTS AND SHA RE TRANSACTIONS ARE FURNISHED, SUBMITTED THAT THE ASSESSEE HAS INVESTME NT OF RS.1.70 LAKHS AT THE END OF F.Y. 2002-03 WHICH HAS INCREASED TO RS.1 7.68 LAKHS BY THE END OF THE YEAR UNDER APPEAL AND THE ASSESSEE IS A HIGH NE T WORTH INVESTOR HAVING CAPITAL OF RS.21.94 LAKHS. IT WAS FURTHER SUBMITTED THAT MANY OF THE SHARES WERE TAKEN DELIVERY AND THE PRINCIPLES ESTABLISHED BY THE HON'BLE ITAT IN THE CASE OF GOPAL PUROHIT VS. JCIT 122 TTJ (MUM) 87 WIL L APPLY TO THE FACTS OF THE CASE AND FURTHER SUBMITTED THAT THE ORDER IN TH E ABOVE CASE WAS UPHELD BY THE HON'BLE BOMBAY HIGH COURT IN ITA NO. 1211 OF 2009. AT OUR INSTANCE THE LEARNED COUNSEL ALSO PLACED COPIES OF COMPUTATI ON OF TOTAL INCOME, CAPITAL GAIN AND STATEMENT OF STOCK AND CAPITAL GAI NS FROM A.Y. 2001-02 ONWARDS TILL A.Y. 2006-07. IT WAS ASSESSEES CONTEN TION THAT THE ASSESSEE IS AN INVESTOR AND NOT A TRADER. 9. THE LEARNED D.R., HOWEVER, RELIED ON THE ORDERS OF THE A.O. AND THE CIT(A), WHICH WERE VERY ELABORATE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE DETAILS FURNISHED BEFORE US. THE ISSUE TO BE DECIDED IS WHE THER THE ASSESSEES EARNING OF RS.78,89,499/- IN PURCHASE AND SALE OF S HARES IS TO BE TREATED AS BUSINESS INCOME OR SHORT TERM CAPITAL GAIN. IT IS T O BE NOTED THAT THE ASSESSEE HAS NO LONG TERM CAPITAL GAIN IN ANY OF TH E YEARS EXCEPT IN A.Y. 2002-03 AS LONG TERM CAPITAL LOSS OF AN AMOUNT OF R S.59,937/- AND A LONG TERM CAPITAL GAIN OF RS.8,41,749/- IN A.Y. 2006-07. IN ALL THE YEARS THE ASSESSEE HAS SHORT TERM CAPITAL GAIN AS UNDER: - ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 7 A.Y. 2001-20 RS.17,468/- A.Y. 2002-03 RS.1,64,264/- A.Y. 2003-04 RS.1,07,969/- A.Y. 2004-05 RS.1,03,309/- A.Y. 2005-06 RS.79,78,440/- A.Y. 2006-07 RS.4,889/- 11. AS CAN BE SEEN FROM THE ABOVE THE ASSESSEE HAS AN A BNORMAL SHORT TERM CAPITAL GAIN IN THIS YEAR AS POINTED OUT BY TH E CIT(A). THE ASSESSEE HAS TRANSACTED IN NUMBER OF SCRIPS IN THE YEAR AND HAS EARNED SUBSTANTIAL GAINS IN THE SAID TRANSACTIONS. THE ASSESSEE HAS GIVEN AN ANALYSIS OF HOLDING PERIOD AS UNDER: - STATEMENT OF SHORT TERM CAPITAL GAIN/(LOSS) FOR THE PERIOD FROM 1/10/2004 TO 31/3/2005 NAME OF SCRIP QUANTITY DATE OF PURCHASES COST OF ACQUISITION DATE OF SALE SALE VALUE SHORT TERM GAIN/(LOSS) GAIN ON SHARES HELD FOR THE PERIOD FROM 1 DAY TO 15 DAYS CREW BOS PRODUCTS 576 38295 20,160 38301 30,660 10,500 IPO HIRAN ORGO CHEM. 19834 VA RIOUS DATES 700,436 VARIOUS DATES 695,185 (5,251) 5,249 GAIN ON SHARES HELD FOR THE PERIOD FROM 16 DAY TO 3 0 DAYS TRICOM 7000 38358 700,910 38383 579,530 (121,380) HIRAN ORGO CHEM. 2500 38371 90,500 38399 120,650 30,150 HIRAN ORGO CHEM. 1834 38380 70,792 38399 88,509 17,716 (73,514) GAIN ON SHARES HELD FOR THE PERIOD FROM 31 DAY TO 9 0 DAYS TASC PHARMA LTD. 34807 38266 3,976,700 38309 4,803,371 1,826,671 TASC PHARMA LTD. 4000 38266 457,000 38338 704,880 247,880 TASC PHARMA LTD. 15000 38266 1,713,750 38352 2,636,550 922,800 HIRAN ORGO CHEM 50 38322 1,857 38359 1,742 (114) HIRAN ORGO CHEM 154 38322 5,718 38379 5,630 (89) HIRAN ORGO CHEM 96 38322 3,564 38393 4,394 829 HIRAN ORGO CHEM 354 38342 12,294 38393 16,203 3,908 HIRAN ORGO CHEM 781 38342 27,124 38399 37,691 10,567 HIRAN ORGO CHEM 875 38345 28,884 38399 42,228 13,344 HIRAN ORGO CHEM 1500 38348 52,035 38399 72,390 20,355 HIRAN ORGO CHEM 510 38352 18,513 38399 24,613 6,100 HIRAN ORGO CHEM 1866 38380 72,028 38422 101,193 29,166 3,081,417 GAIN ON SHARES HELD FOR THE PERIOD FROM 91 DAY TO 1 80 DAYS MICRO TECHNOLOGY LTD. 19450 38309 1,187,034 38391 2,089,586 902,553 STERLING TOOLS LTD. 10000 38274 1,306,527 38415 1,718,400 411,874 ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 8 TASC PHARMA LTD. 4700 38266 536,975 38396 929,613 392,638 TASC PHARMA LTD. 41493 38266 4,740,575 38370 8,162,627 3,422,053 5,129,053 8,142,269 LESS: EXPENSES INCURRED IN CONNECTION WITH ABOVE BANK CHARGES 884 D-MAT CHARGES 27,313 BROKERAGE, SERVICE TAX ON BROKERAGE ETC. 17,097 INTEREST EXPENSES 92,806 SECURITIES TRANSACTION TAX PAID 29,729 1,67,829 NET SHORT TERM CAPITAL GAIN AFTER 1/10/2004 7,974,441 == ========= 12. BEFORE ANALYSING THE FACTS OF THE CASE IT IS NECESS ARY TO NARRATE THE PRINCIPLES APPLICABLE IN DECIDING THE ISSUE AS LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEMENTS RELIED UPON BY BOTH THE A.O. AND THE CIT(A) AND ASSESSEE. THE A.O. HAS RELIED UPON THE PRINCIPLES THAT ENTRIE S IN THE BOOKS OF ACCOUNT ARE NOT DETERMINING FACTOR TO DECIDE THE REAL NATUR E OF TRANSACTIONS TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS. CIT (SC) 227 ITR 172. IF A RECEIPT IS TRADING RECEIPT THE FACT THAT IT IS NOT SHOWN IN THE ACCOUNT OF THE ASSESSEE DOES NOT PREVENT THE A.O. IN TREATING IT A S TRADING RECEIPT CHOWRINGHEE SALES BUREAU P. LTD. 87 ITR 548 (SC) & PUNJAB DISTILLING INDUSTRIES LTD. 35 ITR 523 (SC). NAME OF LABEL GIVE N BY A PARTY TO A PARTICULAR AMOUNT IS NOT CONCLUSIVE - CIT VS. J.D. ITALIA 141 ITR 953 (AP). & CIT VS. BAZPUR CO-OP SUGAR FACTORY LTD. 172 ITR 330 ( SC). THE QUESTION WHETHER IT AMOUNT TO BUSINESS ACTIVITY WILL DEPEND ON THE PECULIAR FACTS OF THE CASE G. VENKATASWAMI NAIDU & CO. VS. CIT 35 I TR 594. WITH REFERENCE TO THE BUSINESS ACTIVITY THE A.O. HELD THAT THE VOL UME, FREQUENCY AND REGULARITY OF SHARE TRANSACTIONS DONE IN ORGANIZED MANNER INDICATE BUSINESS ACTIVITY CIT VS. MOTILAL HIRABHAI SPG. & SVG. CO. LTD. 13 ITR 173 (GJU), RAJA BAHADUR VISHESHWARA SINGH VS. CIT 41 ITR 685 ( SC), PUNJAB CO- OPERATIVE BANK LTD. VS. CIT 8 ITR 635, ETC. ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 9 13. IT IS HELD THAT WHETHER A TRANSACTION OF SALE AND P URCHASE OF SHARES WERE TRADING TRANSACTIONS OR THEY WERE IN THE NATUR E OF INVESTMENT IS A MIXED QUESTION OF LAW AND FACTS AS HELD BY THE HON' BLE SUPREME COURT IN THE CASE OF CIT VS. H. HOLCK LARSEN 160 ITR 67. IT IS FURTHER HELD IN THE CASE OF CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. P. LTD. 82 ITR 586 THAT IT IS POSSIBLE THAT THE ASSESSEE TO BE BOTH AN INVESTOR A S WELL AS DEALER IN SHARES. WHETHER A PARTICULAR HOLDING IS BY WAY OF INVESTMEN T OR FORM PART OF STOCK- IN-TRADE IS A MATTER WITHIN THE KNOWLEDGE OF THE AS SESSEE AND IT IS FOR THE ASSESSEE TO PRODUCE EVIDENCE FROM THE RECORDS AS TO WHETHER HE MAINTAINED ANY DISTINCTION BETWEEN SHARES WHICH ARE HELD AS IN VESTMENT AND THOSE HELD AS STOCK-IN-TRADE. IT IS ALSO HELD IN THE CASE OF M OTILAL HIRABHAI SPG. & SVG. CO. LTD. 113 ITR 173 (GUJ) AND RAJA BAHADUR VISHESH WARA SING 41 ITR 685 (SC) THAT TREATMENT IN THE BOOKS BY AN ASSESSEE WIL L NOT BE CONCLUSIVE AND IF THE VOLUME, FREQUENCY AND REGULARITY AT WHICH TRANS ACTIONS ARE CARRIED OUT INDICATE SYSTEMATIC AND ORGANISED ACTIVITY WITH PRO FIT MOTIVE THEN IT BECOMES BUSINESS PROFIT NOT CAPITAL GAIN. IN THE CASE OF CI T VS. PKN CO LTD.60 ITR 65 IT WAS HELD THAT PURCHASE WITH AN INTENTION TO RESA LE WILL ALSO, UNDER THE CHANGED CIRCUMSTANCE, WOULD BE CAPITAL GAINS. IT IS ALSO HELD IN THE CASE OF SAROJ KUMAR MAZUMDAR VS. CIT 37 ITR 242 BY THE HON' BLE SUPREME COURT THAT PURCHASE WITH AN INTENTION TO RESALE IN ORDER TO GAIN PROFIT WILL BE BUSINESS PROFIT DEPENDING ON THE CIRCUMSTANCES OF T HE CASE LIKE NATURE QUANTITY OF PURCHASE AND NATURE OPERATION INVOLVED. IT WAS ALSO HELD IN THE CASE OF JANKI RAM BAHADUR RAM VS. CIT 57 ITR 21(SC) THAT NO SINGLE FACT HAS ANY DECISIVE SIGNIFICANCE AND THE QUESTION MUST BE ANSWERED DEPENDING ON THE COLLECTIVE EFFECT OF ALL RELEVANT MATERIAL B ROUGHT ON RECORD. 14. KEEPING IN VIEW THE ABOVE PRINCIPLES, THE FACTS IN THE PRESENT CASE OF THE ASSESSEE ARE EXAMINED. THE ASSESSEE DURING THE ENTIRE PREVIOUS YEAR HAD ENTERED INTO TRANSACTION OF PURCHASES AND SALE OF S HARES OF ABOUT 32 COMPANIES TOTALLING TO RS.1,87,83,440/- AND THESE S HARES WERE SOLD FOR A VALUE OF RS.2,69,71,368/-. THE ABOVE TRANSACTIONS W ERE EFFECTED BY ACTUAL DELIVERY OF SHARES AT THE TIME OF PURCHASE AND SALE OF SHARES EXCEPT IN THE CASE OF HIRAN ORGO CHEM, WHERE THERE ARE 19 TRANSAC TIONS OF PURCHASE AND SALE ON THE SAME DAY OF VARIOUS NUMBER OF SHARES IN VOLVING A TOTAL PURCHASE ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 10 OF RS.7,00,457 AND SALE OF RS.6,95,224 WITH A LOSS OF RS.5,232/-. THERE WERE EXPENSES INCURRED WITH REFERENCE TO BROKERAGE, INTE REST, SECURITY TRANSACTIONS, BANK CHARGES , ETC. TOTALLY TO RS.1,6 7,829/-. IN ALL THE TRANSACTIONS WHERE CAPITAL GAIN SHOWN DURING THE YE AR THE HOLDING PERIOD WAS LESS THAN EVEN 6 MONTHS. MOST OF THE GAIN EARNE D BY THE ASSESSEE IS IN THE SHARES HELD FOR A PERIOD 31 DAYS TO 90 DAYS TO AN EXTENT OF RS.30.81 LAKHS AND 90 DAY TO 180 DAYS, I.E. RS.51.29 LAKHS. IN FACT THERE WERE NO SHARES WHICH WERE HELD FOR MORE THAN 6 MONTHS PERIO D ON WHICH GAINS WERE EARNED. THUS THE MAXIMUM HOLDING PERIOD WAS FROM 1 DAY TO A MAXIMUM OF 180 DAYS. 15. IT IS ONE OF THE ARGUMENTS THAT THE ASSESSEE IS AN INVESTOR AND THE INVESTMENT HAS INCREASED FROM RS.1.70 LAKHS IN F.Y. 2002-03 TO RS.17.68 LAKHS IN THE YEAR UNDER APPEAL AND ACCORDINGLY THE ASSESSEE IS AN INVESTOR. AN ANALYSIS OF THE INVESTMENT SCHEDULE IN VARIOUS Y EARS INDICATE THE INVESTMENT IN 201-02 WAS TO THE TUNE OF RS.2,55,315 /- . ASSESSEE FURNISHED THE FOLLOWING DETAILS: - LIT OF INVESTMENT AS ON 31.03.2001 ALLOTTED ADHUNIK FINANCE 2,300 23,000.00 GA47 ELECTRO KELV 14-FEB-01 1,000 19,128.24 GA48 ELECTRO KELV 21-FEB-01 500 8,250.00 GA52 ELECTRO KELV 20-MAR-01 500 3,950.00 GE61 NAT. ALUMINIU 23-FEB-01 1,000 60,528.55 GA055 PENTA GLON 28-APR-00 100 1,810.00 SARVODAYA LABS 1995-96 1,300 5,200.00 GN17 SONI CAPITAL 06-DEC-00 500 11,071.07 GA021 BEST MULYANKAN 04-APR-00 2,000 83,922.26 GA38 TATIA FINANCE 09-DEC-99 3,000 33,239.32 THIRUMALAI CHEM 1995-96 2,000.00 XPRO INTERNATIONAL 1995-96 3,215.00 ------------- 255,314.44 ========= 16. OUT OF THESE, THE INVESTMENT IN ADHUNIK FINANCE, S ARVODAYA LABS, SONI CAPITAL, TATIA FINANCE, THIRUMALAI CEHM, XPRO INTERNATIONAL HAVE CONTINUED IN THE NEXT YEAR ALSO WHEREAS INVESTMENTS IN DENIM ORGANIC AND VJILCDM TO AN EXTENT OF RS.90 ,000 WERE SHOWN AFRES H AND ADDED TO THE INVESTMENT LIST IN THE NEXT YEAR (2002-03). SOME OF THE SHARES WERE DISPOSED OFF AND WERE SHOWN UNDER SHORT TERM CAPITAL GAIN. T HE ASSESSEE HAS ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 11 CONTINUED WITH THE INVESTMENT (IN FY2003-04) IN ADH UNIK FINANCE, DENIM ORGANIC, SARVODAYA LABS, SONI CAPITAL, TATIA FINANC E AND THIRUMALAI CHEM AND XPRO INTERNATIONAL. SOME OF THE SHARES WERE AL SO SOLD DURING THE YEAR AS CAN BE SEEN FROM THE SHORT TERM CAPITAL GAIN STA TEMENT IN THE YEAR UNDER CONSIDERATION. IN THE YEAR 2004-05 RELEVANT FOR THI S ASSESSMENT YEAR THE ASSESSEES PORTFOLIO OF OTHER SHARES IS SAME EXCEPT INVESTMENT IN ADANI EXPORTS LTD. OF 40240 SHARES VALUED AT RS.16,86 LAK HS WHICH IN TURN WAS SOLD IN THE NEXT FINANCIAL YEAR TO CLAIM SHORT TERM CAPITAL GAIN OF RS.8,41,747/-. IF WE EXCLUDE THE INVESTMENT IN ADAN I EXPORTS LTD. IN THIS YEAR, IN ALL THE YEARS ASSESSEES INVESTMENT ARE CO NSISTENTLY IN 5-6 SCRIPS WHICH ARE CONTINUED FROM A.Y. 2001-02 ONWARDS WHERE AS THE PURCHASES AT THE END OF YEAR WERE SHOWN UNDER THE HEAD INVESTME NT BUT WERE IMMEDIATELY SOLD IN THE NEXT YEAR MOSTLY OFFERING S HORT TERM CAPITAL GAINS, EXCEPT ADANI EXPORTS LTD. WHICH YIELDED LONG TERM C APITAL GAIN IN A.Y. 2006- 07. THEREFORE, WHAT THE ASSESSEE IS SHOWING AS INVE STMENT IS ONLY SCRIPS IN 5 6 COMPANIES OF LESS THAN RS.2 TO 2.5 LAKHS VALUE IN ALL THE YEARS WHICH IN FACT ARE CONTINUED YEAR AFTER YEAR. THE PURCHASES A ND SALES OF OTHER SHARES IN VARIOUS YEARS WERE FOR A PERIOD OF LESS THAN 6 M ONTHS IN EACH YEAR EARNING GAINS IN SHORT PERIOD. THESE FACTS WERE ANALYSED CO RRECTLY BY THE CIT(A). IN EARLIER YEARS ALSO THE ASSESSEE HAS NIL OR SMALL LO NG TERM CAPITAL GAIN WHICH INDICATES THAT HOLDING INVESTMENTS FOR A LONGER PER IOD IS NOT THE MAIN INTENTION EXCEPT FEW SCRIPS WHICH ARE CARRIED OVER WITHOUT ANY TRANSACTIONS YEAR AFTER YEAR. ACCORDINGLY TO THE EXTENT OF INVES TMENT ACTIVITY IN SHARES ONE CAN SEE THAT THE ASSESSEE HASS INVESTED IN SOME 5 TO 6 COMPANIES SCRIPS WHICH HAVE BEEN CARRIED OVER FROM YEAR TO YEAR IN W HICH THERE ARE NO FREQUENT OR LARGE NUMBER OF TRANSACTIONS AND THESE INVESTMENTS IN SHARES CAN BE CONSIDERED AS ASSESSEES PROPER INVESTMENTS . 17. PURCHASE OF SHARES DURING THE YEAR AND SELLING THEM FREQUENTLY IN SHORT PERIOD DO INDICATE THAT THE ASSESSEE HAS PUR CHASED THE SHARES WITH A MOTIVE TO EARN PROFIT IN SHORT PERIOD. AN INTERESTI NG ASPECT NOTICED FROM THE DETAILS OF SHORT TERM CAPITAL GAINS STATEMENT FILED IN THIS REGARD ( PAGE 73) IS THAT THE ASSESSEE HAS TRANSACTED IN ONE SHARE OF HI RAN ORGO CHEM FREQUENTLY. ONE ARGUMENT WHICH WAS RAISED BEFORE TH E CIT(A) EXPLAINING ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 12 DAILY TRANSACTIONS WITHOUT DELIVERY WAS THAT THE AS SESSEE BY MISTAKE HAS MADE SOME INVESTMENT AND REALISING THAT THE TRANSAC TIONS WERE NOT GAINFUL IMMEDIATELY SOLD FOR A LOSS ON THE SAME DAY. THIS A RGUMENT IS TO BE CONSIDERED IN THE LIGHT OF THE TRANSACTIONS ENTERED BY THE ASSESSEE IN HIRAN ORGO CHEMS CASE. THERE ARE PURCHASES AND SALES OF SHARES ON 06.12.2004 TO 21.12.2004 ON A DAILY BASIS AND THE MAXIMUM PURC HASE IN A DAY WAS OF ABOUT 1910 SHARES AND INVESTMENT IN A PARTICULAR DA Y WAS ABOUT RS.67,472/-. IF ASSESSEE HAS BY MISTAKE INVESTED IN THAT SCRIP ON A PARTICULAR DAY, IT IS NOT EXPLAINED HOW ONLY THIS S CRIP WAS TRANSACTED FROM 16.12.2004 TO 21.12.2004 FREQUENTLY 19 TIMES. NOT O NLY THAT IN THE SAME PERIOD, THE ASSESSEE ALSO INVESTED IN THE SAME SCRI P ON VARIOUS DATES TO EARN PROFIT OF RS.1,21,913/- ON 10500 SHARES THE COST OF WHICH WAS ABOUT RS.3,63,000/- AND SOLD FOR A GAIN. IT SHOWS THAT TH E EXPLANATION GIVEN FOR THE DAY-TO-DAY TRANSACTIONS IS NOT CORRECT AND THE ASSESSEE HAS INVESTED FREQUENTLY IN THE PARTICULAR SCRIP FROM 01.12.2004 TO 28.01.2005 AND SOLD THE SHARES FROM 16.12.2004 TO 11.03.2005 REGULARLY EARNING BOTH LOSS AS WELL AS GAINS IN THE SAME SCRIP. ANOTHER SCRIP WHIC H WAS TRANSACTED IN HIGH VOLUME WAS THE TASC PHARMA LTD. IN THIS CASE THE A SSESSEE HAS PURCHASED 1 LAKH SHARES TO AN EXTENT OF RS.1,14,25,000/- ON 0 6.10.2004 AND THESE SHARES WERE SOLD ON 18.11.2004, 17.12.2004, 31.12.2 004, 17.01.2005 AND 18.01.2005 I.E. WITHIN A PERIOD OF 3 MONTHS GAINING AN AMOUNT OF RS.68,62,041/- IN THIS TRANSACTIONS. AS CAN BE SEEN THESE 2 SCRIPS HAVE GIVEN LARGE AMOUNT OF GAIN. IN ADDITION, THERE WAS GAIN OF RS.9,02,552/- ON THE SCRIPS OF MICRO TECHNOLOGY PURCHASED ON 18.11.2 004 AND SOLD ENTIRELY ON 08.02.2005. THERE IS ALSO GAIN OF RS.4,11,873/- ON PURCHASE OF STERLING TOOLS LTD. OF 10000 SHARES AND SELLING THEM ENTIREL Y ON 04.03.2005. THUS THE ASSESSEE HAS EARNED MOST OF THE PROFITS AFTER 0 1.10.2004 TO 31.03.2005 IN ONLY 5 SCRIPS WHEREAS THERE IS LOSS OF RS.1,21,3 80/- IN PURCHASE OF TRICOM SHARES ON 06.01.2005 AND SELLING THEM ON 31.01.2005 . THESE INDICATE THAT THE ASSESSEE HAS PURCHASED THE SHARES WITH AN INTEN TION TO MAKE PROFIT IN THE SHARE MARKET. THIS FACT CAN ALSO BE COMPARED WI TH THE GAIN SHOWN FROM 01.04.2004 TO 30.01.2005. IN THE FIRST 6 MONTHS OF THE YEAR THE ASSESSEE HAS TRANSACTED IN 25 SCRIPS AND GAINED RS.45,659/- AND THE INVESTMENT IN THOSE ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 13 SHARES IS NOT MUCH WHEN COMPARED TO THE LARGE TRANS ACTIONS AS DISCUSSED ABOVE AFTER 01.10.2004. MOST OF THESE SHARES WERE A LSO PURCHASED AND SOLD IMMEDIATELY AND THERE ARE NO SHARES WHICH ARE ACQUI RED PRIOR TO 01.04.2004 HELD AFTER 31.01.2005. ALL THESE FACTS INDICATE THA T THE INTENTION OF THE ASSESSEE IS TO GAIN PROFITS BY DEALING IN SHORT TER M PERIOD ONLY. NOT ONLY THE ABOVE, THE AO ALSO DISCUSSED ABOUT BORROWING OF FU NDS, SMALL AMOUNT OF DIVIDEND WHEN COMPARED TO THE GAIN IN SALES AND ALS O THE FACT THAT ASSESSEE GROUP COMPANIES ARE INVOLVED IN SHARE TRADING. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES CONSIDERED ABOVE, WE ARE OF THE VIEW THAT THE CONCLUSION OF THE REVENUE AUTHORITIES THAT THE INCOME FROM SALE O F SHARES DECLARED BY THE ASSESSEE DURING THE YEAR AS SHORT TERM GAIN IS INCO ME FROM BUSINESS ACTIVITY IS CORRECT AND CALLS FOR NO INTERFERENCE. 18. NOW WE WILL DEAL WITH THE SPECIFIC DECISION RELIED UPON BY THE LEARNED COUNSEL. I.E. DECISION OF THE MUMBAI BENCH OF THE I TAT IN THE CASE OF GOPAL PUROHIT 122 TTJ 97 WHERE IN RESPECT OF SHARE TRANSA CTIONS THE ITAT ACCEPTED AS INVESTMENT AND ALSO ON THE PRINCIPLE OF CONSISTE NCY IN THE MATTER OF ASSESSMENT. THE TRIBUNAL FOUND THAT THE SAID ASSESS EE HAS CONSISTENTLY BEEN INVESTING IN SHARES AND RATIO OF SALES TO INVE STMENT WAS VERY LESS. IN THE ABOVE REFERRED CASE THERE WAS LONG TERM CAPITAL GAIN OF RS.1.12 CRORES WHICH WAS CLAIMED EXEMPT AND LONG TERM CAPITAL GAIN TAXABLE AT 10% TO THE TUNE OF RS.60 LAKHS IN ADDITION TO PROFIT FROM TRAD ING IN SHARES TAXABLE AT 10% AND SHORT TERM CAPITAL GAIN AT 10% OF RS.57.31 LAKHS. IN THAT CASE THE ASSESSEE WAS INVESTING FOR A LONG PERIOD AND OFFERI NG THE LONG TERM CAPITAL GAIN WHICH IS MORE THAN SHORT TERM CAPITAL GAIN AND SHARE HOLDINGS VARIED FROM ONE YEAR TO 5 YEARS. NO SUCH FACTS EXIST IN TH E PRESENT CASE. IN FACT THERE ARE NO LONG TERM GAINS IN ASSESSEES CASE EXC EPT IN SMALL AMOUNTS IN A.Y. 2001-02 AND IN THE LATER YEAR ONLY ON ONE GROU P WHICH WAS DISCUSSED ABOVE WHICH ARE FROM INVESTMENTS DISCUSSED ABOVE OF FEW COMPANY SHARES. IN VIEW OF THE FACTS OF THE CASE, WE ARE OF THE OPI NION THAT THE DECISION IN THE CASE OF GOPAL PUROHIT, UPHELD BY THE HON'BLE BOMBAY HIGH COURT DO NOT APPLY AT ALL. SIMILARLY THE DECISION OF THE ITAT IN THE CASE OF JANAK S. RANGWALLA VS. ACIT 11 SOT 627 (MUM) GIVEN IN THAT S ET OF FACTS IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. FOR TH E REASONS GIVEN ABOVE, WE ITA NO. 2586/MUM/2009 SMT. SADHANA NABERA 14 CONCUR WITH THE FINDINGS OF AO AND CIT(A) AND UPHO LD THE ORDER OF THE CIT(A). 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26 TH MARCH 2010 COPY TO: THE APPELLANT 1. THE RESPONDENT 2. THE CIT(A) XXVI, MUMBAI 3. THE CIT XXV, MUMBAI CITY 4. THE DR, I BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.