SHIVANG S. SEHGAL, MUMBAI V. DCIT 12(2), MUMBAI

ITA 2696/MUM/2010

• Counselvise Citation: 269619914 RSA 2010
• Duration Of Justice: 3 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 30-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG , JM ./ I.T.A. NO. 2696/MUM/2010 ( / ASSESSMENT YEAR:2006-07) SHIVANG S. SEHGAL, 203, KARTAR BHAVAN, 121, S.B.S. MARG, COLABA, MUMBAI-400005 / VS. DY. COMMO. OF INCOME- TAX-12(2), AAYKAR BHAVAN, CHURCHGATE, MUMBAI- 400020 ./ PAN : ALYPS5710Q ( / ASSESSEE ) .. ( / REVENUE ) / ASSESSEE BY SHRI M. SUBRAMANIAN / REVENUE BY : SHRI B.P.K.PANDA / DATE OF HEARING : 30/12/2013 / DATE OF PRONOUNCEMENT : 22-01-2014. / O R D E R PER P.M. JAGTAP, A.M . & .. , : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-23, MUMBAI, DATED 05.01.2010 WHEREBY HE UPHELD THE ACTION OF THE AO IN TREATING THE PROFIT OF RS.11,64 ,924/- EARNED BY THE ASSESSEE FROM THE SHARE TRANSACTIONS AS HIS BUSINES S INCOME INSTEAD OF SHORT TERM CAPITAL GAIN. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS CARRYING ON THE BUSINESS IN THE NAMES OF HIS TWO PROPRIETARY CONCERNS M/S SUPREME SHIPPING SERVICES AND M/S ACCLAIMED ENTERPR ISES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY HIM ON 31.10.2006 DECLARING TOTAL INCOME OF RS.24,03,210/- . IN THE PROFIT 2 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL AND LOSS ACCOUNT OF M/S ACCLAIMED ENTERPRISES FILED ALONGWITH THE SAID RETURN, THE ASSESSEE HAD CREDITED PROFIT ON SALE OF SHARES AMOUNTING TO RS.11,64,923/- BESIDES INCOME FROM COMMISSION, D IVIDEND ETC. IN THE COMPUTATION OF TOTAL INCOME, THE SAID PROFIT ON SALE OF SHARES HOWEVER WAS SHOWN BY THE ASSESSEE UNDER THE HEAD S HORT TERM CAPITAL GAIN. THIS MATTER WAS EXAMINED BY THE AO D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS FROM THE RELEVANT DET AILS FURNISHED BY THE ASSESSEE AND ON SUCH EXAMINATION, HE TREATED TH E PROFIT EARNED BY THE ASSESSEE ON SALE OF SHARES AS THE BUSINESS INCO ME OF THE ASSESSEE INSTEAD OF SHORT TERM CAPITAL GAIN FOR THE FOLLOWIN G REASONS:- 1) THE ASSESSEE HAS BEEN ENGAGED IN SEVERAL BUSINESS A CTIVITIES AND TRADING SHARES HAS BEEN ONE AMONG THEM. 2) THE ASSESSEE HAS MAINTAINED AN ELABORATE OFFICE SET UP AND INFRASTRUCTURE IN THE CONDUCT OF THE BUSINESS. 3) THE ASSESSEE HAS TAKEN LOANS FOR MAKING INVESTMENT IN SHARES AND HAS PAID INTEREST THEREON. 4) THERE HAVE BEEN SEVERAL TRANSACTIONS BY WAY OF TRAD ING OF THE SHARES AND HOLDING PERIOD OF THE SHARES HAS BEEN VE RY SHORT 5) MOST OF THE SHARES PURCHASES HAVE BEEN SOLD IMMEDIA TELY AND SEVERAL ARE WITHIN THE SAME SETTLEMENT PERIOD. 6) THE ASSESSEE HAS INCURRED SEVERAL EXPENSES RELATING TO BUSINESS OF SHARE TRADING AND EXPLAINED THE SAME IN HIS PROPRIETARY CONCERN M/S ACCLAIMED ENTERPRISES. FOR THE REASONS GIVEN ABOVE, THE PROFIT EARNED BY T HE ASSESSEE ON SALE OF SHARES WAS BROUGHT TO TAX IN THE HANDS OF THE AS SESSEE BY THE AO UNDER THE HEAD INCOME FROM BUSINESS INSTEAD OF SHOR T TERM CAPITAL GAINS IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE A N ORDER DATED 09.09.2008. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A PPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CLA IMING THAT THE PROFIT 3 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL ON SALE OF SHARES EARNED BY HIM WAS CHARGEABLE TO T AX AS SHORT TERM CAPITAL GAIN AND NOT BUSINESS INCOME. THE MAIN CON TENTION RAISED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) IN SUP PORT OF HIS STAND WAS THAT THE RELEVANT STOCK/SHARES/SECURITIES WERE REFL ECTED IN THE BALANCE-SHEET OF M/S ACCLAIMED ENTERPRISES AS INVES TMENT FOR THE YEAR UNDER CONSIDERATION AS WELL AS FOR THE EARLIER YEARS . IT WAS CONTENDED THAT ALTHOUGH THE PROFIT ARISING FROM SAL E OF THE SAID INVESTMENT WAS CREDITED TO THE PROFIT AND LOSS ACCO UNT OF M/S ACCLAIMED ENTERPRISES, THE SAME BEING IN THE NATURE OF THE SHORT TERM CAPITAL GAIN WAS PROPERLY EXCLUDED FROM THE BUSINES S INCOME IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN O F INCOME. IT WAS CONTENDED THAT THE ASSESSEE WAS NEVER ENGAGED IN TH E BUSINESS OF TRADING OF SHARES AND KEEPING IN VIEW THE TREATMENT GIVEN BY THE ASSESSEE TO THE RELEVANT SHARES/SECURITIES IN HIS B OOKS OF ACCOUNT AS INVESTMENT IN THE YEAR UNDER CONSIDERATION AS WELL AS IN THE EARLIER YEARS, THE PROFIT ON SALE OF SHARES WAS CHARGEABLE TO TAX AS SHORT TERMS CAPITAL GAIN AS RIGHTLY CLAIMED IN THE RETURN OF IN COME. 4. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISS ION MADE ON THE BEHALF OF THE ASSESSEE AND PROCEEDED TO UPHOLD THE ACTION OF THE AO IN TREATING PROFIT ON SALE OF SHARES EARNED BY THE AS SESSEE AS HIS BUSINESS INCOME FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO.2.3 OF HIS IMPUGNED ORDER. 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE ASSESSMENT ORDER. AS PER SCRIP WISE DETAILS FURNISHED BY THE A PPELLANT IT IS SEEN THAT THE APPELLANT HAS TRANSACTED IN 23 SCRIPS. EXCEPT IN V ERY FEW CASES, SCRIPS PURCHASES HAVE BEEN SOLD WITHIN A A SHORT PERIOD, T HE PERIOD OF HOLDING VARIES FROM ONE DAY TO A MONTH OR SO WITH SOME EXCEPTIONS. ONLY A FEW HOLDINGS HAVE BEEN CARRIED THE SAME SCRIPS ON THE SAME DAY ( BOTH PURCHASE AND SALE). IN 17 OF THESE SCRIPTS THERE HAS BEEN NO DELIVERY. AS NOTED BY THE ASSESSING OFFICER THE APPELLANT HAS MAINTAINED A ELABORATE OF FICE SET UP AND INFRASTRUCTURE FOR CONDUCT OF BUSINESS AND HAS TAKE N LOANS AND PAID INTEREST ON IT. WHILE FUND FLOW STATEMENT HAS BEEN FILED, I T SHOWS THAT SOME AMOUNTS HAVE BEEN RECOUPED FROM SALE OF SHARES AND AGAIN US ED FOR SHARE TRANSACTIONS. LOOKING INTO THE VOLUME, SALE OF SHA RES IT CAN BE INFERRED THAT THE TRANSACTIONS MUST HAVE BEEN ENTERED INTO BY THE APPELLANT WITH A PROFIT MOTIVE. IT CANNOT BE SAID THAT THESE TRANSACTION W ERE ENTERED INTO ONLY FOR THE PURPOSE OF INVESTMENT AND THERE WAS NO MOTIVE OF TH E APPELLANT TO EARN PROFIT. THERE IS NOTHING TO SHOW THAT THE OBJECT OF THE PUR CHASE WAS TO DERIVE INCOME 4 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL BY WAY OF DIVIDEND. THE RATIO OF PURCHASE AND SALE TO HOLDINGS IS VERY SMALL AS MOST OF THE SCRIPS HAVE NOT BEEN HELD FOR LONG A ND HAVE NOT BEEN RETAINED. THE FACTS AND CIRCUMSTANCES OF THE TRANSACTIONS SEE N IN TOTALITY SHOW THAT THE INCOME ARISING FROM TRANSACTION IN SHARES IN THE AP PELLANT INCOME FROM BUSINESS AND NOT SHORT TERM CAPITAL GAIN. THE ASSE SSING OFFICERS ACTION IN TREATING THE SAME UNDER THE HEAD INCOME FROM BUSINE SS IS UPHELD. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. THE MAIN CONTENTION RAISED BY THE LD. COUNSEL FO R THE ASSESSEE IN SUPPORT OF THE ASSESSEES CASE BEFORE US IS THAT A SIMILAR TREATMENT GIVEN BY THE ASSESSEE TO PROFIT ON SALE OF SHARES A S CAPITAL GAIN IN THE EARLIER YEARS WAS ACCEPTED BY THE AO AND THE RULE O F CONSISTENCY SHOULD HAVE BEEN FOLLOWED BY THE REVENUE TO TREAT T HE PROFIT ON SALE OF SHARES AS CAPITAL GAINS EVEN IN THE YEAR UNDER CONS IDERATION AS CLAIMED BY THE ASSESSEE. IN SUPPORT OF THIS CONTEN TION, HE HAS RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT (2011) 336 ITR 287 (BOM.) AND THA T OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CONSOLIDATED FINV EST AND HOLDING LTD. 337 ITR 264. 6. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES C ASE AND SUBMITTED THAT THE SPECIFIC FINDINGS GIVEN BY THE AO AS WELL AS LD. CIT(A) ARE SUFFICIENT TO SHOW THAT THE ASSESSEE WAS DEALING IN SHARES AS A TRADER AND NOT INVESTOR. HE SUBMITTED THAT THE VALUE OF T HE SHARES HELD BY THE ASSESSEE AS ON THE LAST DATE OF THE PREVIOUS YE AR WAS ONLY RS.20.02 LAKHS AS AGAINST THE TOTAL TURNOVER OF SHA RE TRANSACTION OF RS. 2.18 CRORES WHICH AGAIN GOES TO SHOW THAT THE A SSESSEE WAS A TRADER IN SHARES AND NOT AN INVESTOR. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE MAIN C ONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE RUL E OF CONSISTENCY THAT THE ASSESSEE HAVING TREATED AS INVESTOR IN SHARES I N THE EARLIER YEARS 5 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL AND THE PROFIT ON SALE OF SHARES HAVING BEEN ACCEPT ED AS CAPITAL GAINS IN THE EARLIER YEARS, THERE WAS NO REASON FOR THE A UTHORITIES BELOW TO TAKE A DIFFERENT STAND IN THE YEAR UNDER CONSIDERAT ION, WE FIND THAT NONE OF THE ASSESSMENTS FOR THE EARLIER YEARS WAS C OMPLETED ON SCRUTINY U/S 143(3) AND ALL THE RETURNS OF THE ASSE SSEE FOR THE EARLIER YEARS HAVING BEEN ACCEPTED BY THE DEPARTMENT U/S 14 3(1) AS AGREED EVEN BY THE LD. COUNSEL FOR THE ASSESSEE, IT CANNOT BE SAID THAT THE TREATMENT GIVEN BY THE ASSESSEE TO THE PROFIT ON SA LE OF SHARES AS CAPITAL GAIN WAS ACCEPTED BY THE DEPARTMENT ON MERI T. MOREOVER, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF N EW JAHANGIR WAKIL MILLS VS CIT 49 ITR 137, THE CIRCUMSTANCES THAT IN THE EARLIER ASSESSMENT YEAR ASSESSEE WAS TREATED AS AN INVESTOR COULD NOT STOP THE ASSESSING AUTHORITY FROM CONSIDERING FOR THE PU RPOSE OF COMPUTATION OF PROFITS FOR THE SUCCEEDING YEAR AS T O WHEN THE TRADING ACTIVITIES OF THE ASSESSEE BEGAN. 8. IT IS BY NOW WELL SETTLED THAT THE ISSUE AS TO W HETHER THE PROFIT ON SALE OF SHARES CONSTITUTES BUSINESS INCOME OF THE A SSESSEE OR CAPITAL GAINS DEPENDS ON WHETHER THE SAID SHARES WERE PURCH ASED BY THE ASSESSEE AS INVESTMENT OR STOCK IN TRADE. IN ORDER TO ASCERTAIN AS TO WHETHER THE SHARES WERE PURCHASED BY THE ASSESSEE A S INVESTMENT OR STOCK IN TRADE, THE MOST RELEVANT ASPECT WHICH IS T O BE SEEN IS THE INTENTION OF THE ASSESSEE BEHIND THE PURCHASE OF SH ARES AND SUCH INTENTION HAS TO BE GATHERED FROM THE FACTS OF THE CASE INCLUDING THE CONDUCT OF THE ASSESSEE. IN THIS REGARD, CERTAIN GU IDELINES HAVE BEEN LAID DOWN IN THE VARIOUS JUDICIAL PRONOUNCEMENTS AN D EVEN THE CBDT HAS ALSO ISSUED A CIRCULAR PRESCRIBING CERTAIN GUID ELINES IN THIS REGARD. IN THE CASE OF SARNATH INFRASTRUCTURE 333 ITR (AT) 13 THE LUCKHNOW BENCH OF ITAT HAS SUMMARIZED THESE GUIDELINES IS AS UNDER. (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 TRE ATED AS STOCK-IN- TRADE OR INVESTMENT? WHETHER SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS 6 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL INVESTMENT OR NON-TRADING ASSET? (2) WHETHER ASSESS EE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON. NORMALLY, MO NEY IS BORROWED TO PURCHASE GOODS FOR THE PURPOSE OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHA SES AND DISPOSAL IN THAT PARTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT, 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 PURCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETH ER THE ASSESSEE IS TRADING OR INVESTING (HIGH TRANSACTIONS AND LOW HOL DINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT): (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROFIT OR PURCHA SES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE. FORMER WILL INDICATE INTENTION OF TRADE AND LATTER, AN INVESTMENT. IN THE CASE OF SHARES WHETHER INTENT ION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIAL MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET? IF THE ITEMS IN QU ESTION ARE VALUED AT COST, IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE T HEY 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 MEMORANDUM OF ASSOCIATI ON/ARTICLE OF ASSOCIATION? WHETHER FOR TRADE OR FOR INVESTMENT? IF AUTHORIZED ONLY FOR TRADE, THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRE CTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY? AND VICE VERSA. (7) IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHOW THAT HIS HOLDING IS FOR INV ESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT IN THE RECORDS OR OTHE RWISE, 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 IN VESTMENT FOR SAY, STOCK-IN- TRADE), THEN ONUS WOULD SHIFT TO REVENUE TO PROVE T HAT APPARENT IS NOT REAL. (8) THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHARES (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 T HAT ASSESSEE WAS HOLDING THE SHARES FOR THE ITEMS IN QUESTION) FOR INVESTMENT. ( 9) ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISITES FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE ASSESSEE IS COMPLYING WITH THEM. WHETHE R IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUI REMENTS, 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 CBDT CIRCULAR N O. 4 OF 2007 OF 15TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS, ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR BOTH AND THERE IS NO INTER MINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. (11) NOT ONE OR TWO FACTORS OUT OF ABOV E ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EF FECT OF SEVERAL FACTORS HAS TO BE SEEN. 9. IF THE ABOVE GUIDELINES ARE APPLIED TO THE FACTS OF THE PRESENT CASE, WE FIND OURSELVES IN AGREEMENT WITH LD. CIT(A ) THAT THE TRANSACTIONS IN SHARES WERE CARRIED OUT BY THE ASSE SSEE AS INVESTOR AND NOT AS A TRADER AND PROFIT EARNED FROM THE SAID TRANSACTIONS THEREFORE WAS CHARGEABLE TO TAX IN HIS HANDS UNDER THE HEAD BUSINESS INCOME AND NOT CAPITAL GAINS. FOR INSTANCE, THE ASS ESSEE TRANSACTED IN AS MUCH AS 23 SCRIPS DURING THE YEAR UNDER CONSIDER ATION AND EXCEPT IN VERY FEW CASES, SCRIPS PURCHASED WERE SOLD BY TH E ASSESSEE WITHIN A 7 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL VERY SHORT SPAN OF TIME WHICH VARIES FROM ONE DAY T O A MONTH OR SO. THERE WERE SEVERAL TRANSACTIONS IN THE SAME SCRIPS ON THE SAME DATE BOTH OF PURCHASES AND SALE WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS DEALING IN SHARES AS A TRADER AND NOT AS AN INVEST OR. AS NOTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, THERE WAS NO DELI VERY TAKEN IN CASE OF 17 SCRIPS. AS FURTHER NOTED, THE ASSESSEE HAD MA INTAINED AN ELABORATE OFFICE SET-UP AND INFRASTRUCTURE TO CONDU CT HIS BUSINESS AND HAD ALSO TAKEN LOANS AND PAID INTEREST THEREON. THE DIVIDEND INCOME EARNED BY THE ASSESSEE ON SHARES WAS VERY LOW AS CO MPARED TO THE INVESTMENT MADE WHICH AGAIN GOES TO SHOW THAT THE I NTENTION OF THE ASSESSEE WAS NEVER TO HOLD THE SHARES AS LONG TERM INVESTMENT IN ORDER TO EARN DIVIDEND INCOME. EVEN THE TURNOVER OF SHARE TRANSACTIONS DURING THE YEAR UNDER CONSIDERATION WA S MORE THAN 5 TO 6 TIMES OF THE VALUE OF SHARES HELD BY THE ASSESSEE WHICH IS SUFFICIENT TO SHOW THAT THE ASSESSEE WAS TRADER IN SHARES. HAV ING REGARD TO ALL THESE FACTS OF THIS CASE, WE FIND OURSELVES IN AGRE EMENT WITH THE LD. CIT(A) THAT LOOKING INTO VOLUME, FREQUENCY, CONTINU ITY AND REGULARITY OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES BY T HE ASSESSEE, THE TRANSACTIONS IN SHARES WERE ENTERED INTO BY THE ASS ESSEE AS A TRADER AND NOT AS AN INVESTOR AND THE PROFIT FROM THESE TR ANSACTIONS THEREFORE WAS CHARGEABLE TO TAX AS BUSINESS INCOME IN THE HAN DS OF THE ASSESSEE AND NOT CAPITAL GAINS. WE THEREFORE UPHOL D THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE ACTION OF TH E AO IN TREATING THE PROFITS FROM THE SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE AND DECIDE THIS ISSUE AGAINST THE ASSESSEE. 10. AS REGARDS THE OTHER ISSUE RAISED BY THE ASSESS EE RELATING TO CHARGING OF INTEREST U/S 234A, 234B, AND 234C, IT I S OBSERVED THAT THE SAME IS CONSEQUENTIAL IN NATURE. SINCE THE MAIN ISS UE IS DECIDED BY US AGAINST THE ASSESSEE, WE DECIDE THIS CONSEQUENTI AL ISSUE ALSO AGAINST THE ASSESSEE . 8 ITA NO.2696/MUM/2010 SHIVANG S. SEHGAL 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-01-2014 . + , - 22-01-2014 SD/- SD/- ( SANJAY GARG ) (P.M. JAGTA P ) + / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; - DATED 22-01-2014 F{X~{T? P.S./ .. ! '$% &% / COPY OF THE ORDER FORWARDED TO : 1. 0 / THE APPELLANT 2. 120 / THE RESPONDENT. 3. 3 () / THE CIT (A) - , MUMBAI 4. 3 /CIT MUMBAI 5. 6 18 , 8 , / DR, ITAT, MUMBAI BENCH 6. / GUARD FILE. / BY ORDER, 26 1 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI,