DCIT, New Delhi V. M/s VIC Enterprises Pvt. Ltd., New Delhi

ITA 2863/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97570 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 15-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT CHAND RA SHARMA
• Keywords: Capital asset; Business income; Proportionate interest; Advance ruling; Question of law
• Section: 143(3); 14A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI L.P. SAHU ITA NO. 2863/DEL/2010 ASSESSMENT YEAR: 2006-07 DEPUTY CIT, VS. VIC ENTERPRISES PVT. LTD., CIRCLE-17(1), 4 TH FLOOR, PUNJABI BHAWAN, NEW DELHI. 10-ROUSE AVENUE, NEW DELHI. (PAN: AAACV0132B) (APPELLANT) (RESPONDENT) ITA NO. 3911/DEL/2011 ASSESSMENT YEAR: 2008-09 ASSTT. CIT, VS. VIC ENTERPRISES PVT. LTD., CIRCLE-17(1), 4 TH FLOOR, PUNJABI BHAWAN, NEW DELHI. 10-ROUSE AVENUE, NEW DELHI. (PAN: AAACV0132B) (APPELLANT) (RESPONDENT) ITA NO. 2240/DEL/2010 ITA NO.3635/DEL/2011 ASST.YRS: 2006-07 & 2010-11 VIC ENTERPRISES PVT. LTD., VS. ADDITIONAL CIT, 4 TH FLOOR, PUNJABI BHAWAN, CIRCLE-17(1), 10-ROUSE AVENUE, NEW DELHI. NEW DELHI. (PAN: AAACV0132B) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI MP RASTOGI, ADV. DEPARTMENT BY: SHRI SUMIT CHAND RA SHARMA, CIT- DR DATE OF HEARING : 30 .09.2015 DATE OF PRONOUNCEMENT: 22:12.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER ASSESSMENT YEAR: 2006-07 : THE PARTIES ARE IN CROSS-APPEALS AGAINST THE COMMON FIRST APPELLATE ORDER. 2 2. THE REVENUE (ITA NO. 2863/DEL/2010) HAS QUESTION ED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE IS A REGULAR INVESTOR AND UNDER NO STRETCH OF IMAGINATION, IT CA N BE TREATED AS TRADER IN SHARES IGNORING THE FACT THAT THE ASSESSEE WAS C ARRYING ON A SYSTEMATIC ACTIVITY IN ORDER TO DERIVE INCOME FROM BUSINESS OF TRADING IN SHARES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING RS.34,61,63,879 T O BE LONG TERM CAPITAL GAINS INSTEAD OF TREATING THE SAME AS BUSIN ESS INCOME AS HELD BY THE A.O. IGNORING THAT THE NATURE OF TRADING ACT IVITIES IN SHARES IS TRADING IN SHARES AND SECURITIES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT RS.9 LACS IS NOT A REAL INCOME, IGNORING THE FACT THAT INTEREST INCOME OF RS.60 LAC S HAD ALREADY ACCRUED AND ACCORDINGLY RECEIVED BY THE ASSESSEE DU RING THE YEAR. 3. THE ASSESSEE ON THE OTHER HAND HAS QUESTIONED FI RST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS AND LAW IN DECLINING THE CLAIM FOR THE INVESTMENT ACTIVITY REL ATING TO SHARES TREATING THE SAME AS BUSINESS INCOME WHICH IS NOT I N ACCORDANCE WITH THE REGULARLY FOLLOWED METHOD OF ACCOUNTING SUBSTAN TIATED BY THE AUDITED FINANCIAL STATEMENT. 3 2.(I) BECAUSE THE ACTION IS UNDER CHALLENGE ON FACT S AND LAW FOR HAVING TREATED THE GAINS ACCRUED ON DISPOSAL OF SHA RES INVESTMENT AMOUNTING TO RS.6,23,34,129 AS BUSINESS INCOME WHER EAS PER THE ASSESSEE THE SAME IS SORT TERM CAPITAL GAIN CHARGEA BLE TO TAX U/S. 111A. (II) BECAUSE THE ACTION IS UNDER CHALLENGE HAVING O VERLOOKED & IGNORED THE CBDT CIRCULAR NO. 4/2007 DT. 15.06.2007 IN TERMS OF WHICH THE GAIN ARISING ON ACCOUNT OF DISPOSAL OF SH ARES HELD AS INVESTMENT ARE LIABLE TO BE TAXED UNDER THE HEAD CA PITAL GAIN AND THE DECISIONS OF THE CIT(A) IN THE LIKELY PLACED OTHER CASES. 3. WHEREIN THE FINDINGS OF THE A.O. AND THE FINDING S OF THE CIT(A) BOTH ARE UNDER CHALLENGE ON THE IMPUGNED ISSUES. 4. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW FOR PROPORTIONATE DISALLOWANCE OF EXPENSES AMOUNTING TO RS.5,33,768 U/S. 14A AGAINST EXEMPTED INCOME. 4. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A NO N-BANKING FINANCIAL COMPANY AND IS ONE OF THE PROMOTER COMPANIES OF DAW AR INDIA LTD. AND IS HAVING CONTROLLING INTEREST IN THE GROUP COMPANIES. DURING THE YEAR, THE 4 FOLLOWING ADDITIONS/DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT FRAMED UNDER SEC. 143(3) OF THE INCO ME-TAX ACT, 1961: S.NO. NATURE OF ADDITION/ISSUE AMOUNT IN (RS.) GROUNDS OF APPEAL RAISED 1. LONG TERM CAPITAL GAIN TREATED AS BUSINESS INCOME. 34,61,63,879 GROUND NOS. 1 TO 9 2. SHORT TERM CAPITAL GAIN TREATED AS BUSINESS INCOME. 6,71,16,180 GROUND NOS. 10 TO 18 3. INTEREST INCOME 9,00,000 GROUND NO. 19 4. DISALLOWANCE U/S. 14A 5,33,768 GROUND NOS. 20 TO 22 (NOT PRESSED) 6. THE ASSESSEE QUESTIONED THE ABOVE ADDITION BEFO RE THE LEARNED CIT(APPEALS) RAISING THE ISSUE REGARDING TAXING THE PROFITS REALIZED ON SALE OF SHARES AS BUSINESS INCOME AGAINST CAPITAL GAIN O FFERED BY THE ASSESSEE EITHER UNDER LONG TERM CAPITAL GAIN OR SHORT TERM C APITAL GAIN DEPENDING UPON THE PERIOD OF HOLDING OF THE SHARES. THE VIEW OF TH E ASSESSING OFFICER WAS THAT THE ASSESSEES INTENTION WAS TO DO TRADING IN SHARES, SECURITIES AND UNITS. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAS CARRIED ON A REGULAR TRA DING IN SHARES, SECURITIES AND UNITS. THE VOLUMINOUS TRANSACTION CARRIED ON BY THE ASSESSEE DURING THE YEAR ON VARIOUS SCRIPTS IS SELF-EXPLANATORY. THE AS SESSING OFFICER NOTED THAT 5 THE ASSESSEE HAD SHOWN INCOME FROM BUSINESS TO THE TUNE OF RS.1,15,44,84,872.67 AND PURCHASE OF SHARES SHOWN A S RS.1,46,27,37,974.36. IT HAD ALSO SHOWN INCREASE OR DECREES IN STOCK TO THE TUNE OF RS.30,84,64,940.67 WHEREAS OTHER INCOME WAS SHOWN AT RS.53,69,66,060.68. NOTING THESE ASPECTS, THE ASSES SING OFFICER CAME TO THE CONCLUSION THAT ASSESSEE IS CARRYING ON BUSINESS OF TRADING IN SHARES, SECURITIES AND UNITS. IN SUPPORT, HE ALSO NOTED THE FREQUENCY OF TRADING IN DIFFERENT SCRIPTS EXCEPT DOWAR INDIA LTD.S SHARES DONE ON REGULAR BASIS. THE ASSESSING OFFICER TRIED TO DISTINGUISH THE CASE LAWS RELIED UPON BY THE ASSESSEE AND HELD THAT ALL THE ALLEGED LONG TERM CA PITAL GAIN OF RS.34,61,63,879 SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME IS BUSINESS INCOME AND TAXED THE SAME ACCORDINGLY. ON THE SUBMI SSION OF THE ASSESSEE REGARDING THE PRINCIPLES OF CONSISTENCY, THE ASSESS ING OFFICER REJECTED THE SAME WITH THIS FINDING THAT EACH ASSESSMENT YEAR IS A DIFFERENT UNIT. 7. THE ASSESSING OFFICER ALSO TREATED THE SHORT TER M CAPITAL GAIN CLAIMED BY THE ASSESSEE AT RS.6,71,16,180 AS BUSINESS INCOM E ADOPTING THE SAME OBSERVATION AS MADE BY HIM HEREINABOVE IN RELATION TO THE CLAIMED LONG TERM CAPITAL GAIN. 6 8. THE LEARNED CIT(APPEALS) DID NOT AGREE WITH THE ASSESSING OFFICER REGARDING TREATMENT GIVEN BY THE ASSESSING OFFICER TO THE CLAIMED LONG TERM CAPITAL GAIN OF RS.34,61,63,879 AS BUSINESS INCOME AND ALLOWED THE CLAIM OF THE ASSESSEE WITH THIS FINDING THAT THE ASSESSEE HA S RIGHTLY TREATED THE AMOUNT AS LONG TERM CAPITAL GAIN AND THUS IS ELIGIBLE FOR EXEMPTION UNDER SEC. 10(38) OF THE ACT. THIS ACTION OF THE LEARNED CIT(APPEALS) HAS BEEN QUESTIONED BY THE REVENUE BEFORE US. 9. THE LEARNED CIT(APPEALS) HAS, HOWEVER, UPHELD TH E ACTION OF THE ASSESSING OFFICER TREATING THE CLAIMED SHORT TERM C APITAL GAIN OF RS.6,71,16,180 AND LOSS OF RS.47,82,051 (NET GAIN R S.6,23,34,128) AS BUSINESS INCOME. THIS ACTION OF THE FIRST APPELLATE AUTHORITY HAS BEEN QUESTIONED BY THE ASSESSEE IN ITS ABOVE APPEALS. 10. IN SUPPORT OF GROUND NOS. 1 AND 2 OF THE APPEAL PREFERRED BY THE REVENUE, THE LEARNED CIT(DR) HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE REFERRED CONTENTS OF PAGE NOS. 17 TO 20 OF THE ASSESSMENT ORDER WITH THE SUBMISSION THAT FREQUENCY AND VOLUMES OF THE TRANSACTIONS SUGGEST THAT IT WAS NOT A CASE OF INVE STMENT BUT BUSINESS. THE ASSESSEE HAS CONVERTED STOCK IN TRADE TO INVESTMENT S. HE PLACED RELIANCE ON THE DECISION OF THE AUTHORITY FOR ADVANCE RULING IN THE CASE OF FIDELITY 7 GROUP REPORTED IN 288 ITR 641 (AAR). HE SUBMITTED T HAT WHERE A COMPANY PURCHASES AND SELLS SHARES, IT MUST BE SHOWN THAT T HEY WERE HELD AS STOCK IN TRADE AND THAT EXISTENCE OF THE POWER TO PURCHASE A ND SELL SHARES IN THE MEMORANDUM OF ASSOCIATION IS NOT OF DECISIVE OF THE NATURE OF TRANSACTION. HE SUBMITTED THAT THE SUBSTANTIAL NATURE OF TRANSAC TIONS, THE MANNER OF MAINTAINING BOOKS OF ACCOUNT, THE MAGNITUDE OF PURC HASES AND SELLS AND THE RATIOS BETWEEN PURCHASES AND SELLS AND THE HOLDING PERIOD WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTION. HE CONTENDED THAT ORDINARILY THE PURCHASE AND SALE OF SHARES WITH THE MOTIVE OF EARNING A PROFIT WOULD RESULT IN TRANSACTION BEING IN THE NATURE OF TRADE/ADVENTURE IN THE NATURE OF TRADE BUT WHERE THE OBJECTS OF INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY OF DIVIDEND ETC. THEN THE P ROFITS ACCRUING BY CHANGE IN SUCH INVESTMENT BY SALE OF SHARES WILL YIELD C APITAL GAIN AND NOT REVENUE RECEIPTS. THE LEARNED CIT(DR) ALSO REFERRED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. H. HOLCK LARSE N 160 ITR 67 (S.C) HOLDING THAT AS TO WHETHER TRANSACTIONS OF SALE AND PURCHASE OF SHARES WERE TRADING TRANSACTION OR WHETHER THESE WERE IN THE NA TURE OF INVESTMENT IS NOT A QUESTION OF LAW BUT IT IS A MIXED QUESTION OF LAW A ND FACTS. THE LEARNED CIT(DR) REFERRED PAGE NO. 18 OF THE ASSESSMENT ORDE R TO SUPPORT HIS SUBMISSIONS THAT THERE WERE LOT OF FREQUENCY AND VO LUMES OF TRANSACTION. THE 8 ASSESSEE HAD ALSO NOT PAID SECURITY TRANSACTION TAX ON THE SALE OF SHARES. HE SUBMITTED THAT BEFORE THE ASSESSING OFFICER, THE AS SESSEE HAD NOT POINTED OUT THAT IT IS PROMOTER OF DAWAR INDIA. THE LEARNED CIT (DR) SUBMITTED THAT FINDING OF THE LEARNED CIT(APPEALS) ON THE PAYMENT OF SECURITY TRANSACTION TAX (STT) IS MISLEADING. HE SUBMITTED THAT THE ASSE SSEE HAD NOT MAINTAINED TWO PORTFOLIOS TO SUPPORT ITS SUBMISSION THAT IT WA S TRADING IN SHARES AS WELL BESIDES MAKING INVESTMENT IN SHARES. THE ASSESSEE I S IN THE BUSINESS OF NON- BANKING FINANCE, HENCE THE SHARES TRANSACTION WAS P ART OF ITS BUSINESS. THE LEARNED CIT(APPEALS) ON GENERAL FINDINGS HAS GIVEN THE RELIEF TO THE ASSESSEE BY ACCEPTING THE CLAIMED LONG TERM CAPITAL GAIN AS SUCH. 11. THE LEARNED AR ON THE OTHER HAND PLACED RELIANC E ON THE FIRST APPELLATE ORDER ON THE ISSUE. HE SUBMITTED THAT THE ASSESSEE IS ONE OF THE HOLDING COMPANY OF DAWAR INDIA. HE SUBMITTED THAT I NVESTMENT THEREIN WAS MADE 20 YEARS BACK AND THE SAME ARE BEING SHOWN AS INVESTMENT IN THE BOOKS OF ACCOUNT. HE SUBMITTED THAT DURING THE YEAR , THE ASSESSEE HAD SOLD 23,55,000 SHARES OF DABUR INDIA LTD. AND REALIZED P ROFIT UNDER THE HEAD LONG TERM CAPITAL GAINS AND CLAIMED EXEMPTION UND ER SEC. 10(38) OF THE ACT. SIMILARLY, THE ASSESSEE SOLD SHARES OF CERTAIN OTHER COMPANIES AND THE GAIN REALIZED WAS OFFERED UNDER THE HEAD LONG TERM CAPITAL GAIN AS PERIOD OF HOLDING WAS MORE THAN ONE YEAR AND CLAIMED EXEMP TION. IN SUPPORT, HE REFERRED PAGE NO. 137 OF THE PAPER BOOK HAVING DETA ILS OF SUCH SHARES. IN 9 ADDITION TO THE ABOVE, THE ASSESSEE ALSO SOLD SHARE S OF VARIOUS OTHER COMPANIES (APPROXIMATELY 170) AND OFFERED THE GAINS UNDER THE HEAD SHORT TERM CAPITAL GAIN, SINCE THE PERIOD OF HOLDING IN THOSE TRANSACTIONS WAS LESS THAN ONE YEAR. IN SUPPORT, THE LEARNED AR REFERRED PAGE NOS. 142 TO 146 OF THE PAPER BOOK. THE ASSESSEE HAD ALSO APPLIED SPECI AL RATE OF TAXATION THEREON AS PRESCRIBED UNDER SEC. 111A OF THE ACT, M ADE AVAILABLE AT PAGE NO. 141 OF P.B. THE LEARNED AR ALSO REFERRED BOARD RESOLUTION (PAGE NO. 215 OF P.B), EXTRACT OF INVESTMENT LEDGER ACCOUNT ( PAGE NO. 216-217 OF P.B.), FINANCIAL STATEMENT WITH AUDIT REPORT (PAGE NOS. 218 TO 244 OF P.B.) AND MEMORANDUM OF ASSOCIATION (PAGE NOS. 243 TO 263 OF P.B.). 12. THE LEARNED AR SUBMITTED THAT AS SUBMITTED ABOV E, THE SHARES OF DAWAR INDIA LTD. HAVE BEEN HELD BY THE ASSESSEE AS INVESTMENT AS A PROMOTER FOR CONTROLLING INTEREST AND THIS POSITION WAS ACCE PTED BY THE DEPARTMENT UP TO THE ASSESSMENT YEAR 2005-06. THE INTENTION OF TH E ASSESSEE BEHIND THE TRANSACTION IS SIGNIFICANT AND FREQUENCY OF TRANSAC TION ALONE WOULD NOT DECIDE THE ISSUE IPSO FACTO. HE SUBMITTED THAT THE ASSESSEE CAN HOLD SHARES EITHER AS INVESTMENT OR AS STOCK IN TRADE AS CLARIF IED BY THE CBDT CIRCULAR NO. 4 OF 2007 DATED 15.6.2007. HE POINTED OUT THAT ENTRIES IN THE BOOKS OF ACCOUNT PROVE THAT SHARES IN QUESTION WERE HELD AS INVESTMENT. HE SUBMITTED THAT IN THE CASE OF GROUP COMPANIES, THE PROFIT ON SALE OF SHARES OF DAWAR INDIA LTD. WAS ALLOWED TO BE TAXED UNDER THE HEAD CAPITAL GAIN. THE LEARNED AR REFERRED COMPUTATION OF INCOME, DETAILS OF LONG TERM CAPITAL GAIN ON WHICH STT WAS PAID AND BENEFIT UNDER SEC. 1 0(38) OF THE INCOME-TAX ACT, 1961 WAS CLAIMED, AND DETAILS OF SHORT TERM CA PITAL GAIN ON WHICH STT 10 WAS PAID AND BENEFIT UNDER SEC. 111A OF THE ACT WAS CLAIMED, MADE AVAILABLE IN CONCISE FORM AT PAGE NOS. 1 TO 11 OF T HE PAPER BOOK. HE SUBMITTED THAT UP TO ASSESSMENT YEAR 2004-05, THE A SSESSEE HAD BEEN MAINTAINING TWO PORTFOLIOS. SINCE ASSESSMENT YEAR 2 005-06, THE ASSESSEE IS DEALING ONLY IN INVESTMENT AND MAJOR COMPONENT IS S HARES OF DAWAR INDIA LTD. THERE IS NO PROHIBITION IN LAW TO CONVERT STOC K IN TRADE TO INVESTMENT ACCOUNT. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. EXPRESS SECU RITY PVT. LTD. - 364 ITR 488 (DEL.). THE LEARNED AR SUBMITTED FURTHER THAT T HE CONTENTS OF MEMORANDUM CANNOT BE A SOLE BASIS BUT ENTIRETY OF F ACTS RELATING TO THE TRANSACTION IS TO BE EXAMINED TO FIND OUT THE NATUR E OF THE TRANSACTION AS TO WHETHER IT IS INVESTMENT OR TRADE. THE LEARNED AR S UBMITTED THAT STT WAS VERY MUCH PAID ON THE SAID TRANSACTION AND REFERRED PAGE NO. 236 (SCHEDULE K) OF THE PAPER BOOK. THE LEARNED AR SUBMITTED FURT HER THAT SO FAR SHARES OF DABUR INDIA LTD. ARE CONCERNED, THE ASSESSEE IS ALS O ENJOYING THE MANAGING/MAJORITY CONTROL ON THE GROUP AND IN THE B OOKS, ITS SHARES HAVE BEEN VALUED ON COST PRICE AS INVESTMENT. IN THIS RE GARD, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) FELSPAR CREDIT AND INVESTMENT PVT. LTD. VS. CIT - 346 ITR 121 (MADRAS); III) RAJA BAHADUR KAMAKHYA NARAIN SINGH VS. CIT - 77 ITR 253 (S.C) 11 13. THE LEARNED AR SUBMITTED FURTHER THAT IN ITS BO OKS OF ACCOUNT, THE ASSESSEE HAS VALUED THE SHARES AT COST PRICE AS INV ESTMENT AND REFERRED PAGE NO. 228 OF THE PAPER BOOK IN SUPPORT. HE SUBMITTED FURTHER THAT ASSESSEE HAD SUFFICIENT INTEREST INCOME AND REFERRED PAGE NO. 23 6 OF THE PAPER BOOK IN SUPPORT. HE SUBMITTED THAT DIVIDENDS WERE ALSO RECE IVED DURING THE YEAR. THE LEARNED AR ALSO PLACED RELIANCE ON THE FOLLOWING DE CISIONS: I) CIT VS. CHOWDRY ASSOCIATES ITA NO. 544/2013 ORDER DATED 30.1.2015 (DELHI HIGH COURT): II) CIT VS. ASHOK WADIA 2014-TIOL-518-H.C-DEL-IT ; III) BENGAL & ASSAM INVESTORS LTD. VS. CIT 2002 TIOL-705- S.C-IT. IV) SLOCUM INVESTMENT PVT. LTD. VS. DCIT 2006-TI OL-300- ITAT-DELHI; V ) RAM NARAIN SONS PVT. LTD. VS. CIT 41 ITR 534 (S.C); VI) KARNATAKA STATE IND. INVESTMENT & DEV. CORPN. LTD. VS. DCIT 59 ITD 643 (BANG,.); VII) CIT VS. GOPAL PUROHIT 2010-TIOL-129-S.C-MUM -IT; VIII) CIT VS. DEVASAN INVESTMENT P. LTD. - 365 ITR 452 (DEL.); 14. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT IN ITS RECENT DECISION, THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN T HE CASE OF CIT VS. ASHOK WADIA (SUPRA) HAS BEEN PLEASED TO HOLD THAT THE LEG AL STANDARDS CONCERNING 12 WHETHER INCOME IS TO BE TREATED AS BUSINESS INCOME OR SHORT TERM CAPITAL GAIN HAVE BEEN THE SUBJECT MATTER OF VARIOUS DECISIONS O F THE HON'BLE SUPREME COURT AND HON'BLE DELHI HIGH COURT. SUFFICE IT TO S AY THAT THERE IS NO SINGLE, UNIVERSAL STANDARD TO DISTINGUISH THE TWO. THE COUR T MUST INSTEAD LOOK INTO THE NATURE OF THE SHARES, THE VOLUME AND FREQUENCY OF THE TRANSACTION, THE MANNER IN WHICH THE SHARES HAVE BEEN SHOWN BY THE A SSESSEE IN ITS BOOKS OF ACCOUNT, DIVIDEND EARNED ON THE SHARES, IF ANY. RAR ELY WILL ANY ONE FACTOR BE CONCLUSIVE, THE PURPOSE OF THE EXERCISE IS TO ASCER TAIN THE TRUE INTENTION THROUGH A COMPOSITE TEST. IN SOME CASES, VOLUME BEC OMES DETERMINATIVE, IN OTHERS, THE DURATION OF TIMES, IT IS HELD, AT TIMES IT CAN BE THE MANNER IT IS SHOWN IN THE BOOKS, WHEREAS STILL, THE USE OF BORRO WED FUNDS COULD BE DECISIVE. 15. THE DECISION RELIED UPON BY THE LEARNED AR REFE RRED ABOVE SUGGEST THAT THE VERY INTENTION WITH WHICH THE SHARES HAVE BEEN PURCHASED IS THE BASIC TEST TO ARRIVE AT A CONCLUSION AS TO WHETHER THE SHARE TRANSACTION IS INVESTMENT OR TRADE AND THIS INTENTION CAN BE GATHE RED ON THE BASIS OF SURROUNDING CIRCUMSTANCES INCLUDING THE FACTORS LIK E PERIOD OF HOLDINGS, VOLUME AND FREQUENCY OF TRANSACTIONS IN SHARES. WHA T WAS THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF THESE SHARE S CAN BE FOUND OUT FROM 13 THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOK S OF ACCOUNT WHETHER THE ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID IN TEREST THEREON AS NORMALLY MONEY IS BORROWED TO PURCHASE GOODS FOR TH E PURPOSES OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. WHAT I S THE FREQUENCY OF SUCH PURCHASES AND DISPOSAL IN THAT PARTICULAR ITEM. WHE THER PURCHASE AND SALE IS FOR REALIZING PROFIT OR PURCHASES ARE MADE FOR RETE NTION AND APPRECIATION IN ITS VALUE. HOW THE VALUE OF ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET AND HOW THE ASSESSEE IS AUTHORIZED IN MEMORANDUM OF ASS OCIATION/ARTICLE OF ASSOCIATION. THESE ARE THE MAIN FACTORS TO DRAW AN INFERENCE THAT THE TRANSACTION IN QUESTION IS WITH INTENTION TO INVEST OR TO TRADE. WHEN WE EXAMINE FACTS OF THE PRESENT CASE IN VIEW OF THESE TESTS, WE FIND THAT THE ASSESSEE, A NON-BANKING FINANCE COMPANY REGISTERED WITH RESERVE BANK OF INDIA, IS ONE OF THE PROMOTER COMPANY OF DAWAR INDI A LTD. 15.1 THE LEARNED CIT(APPEALS) HAS DEALT WITH THE IS SUE AS UNDER: 7 . I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS FILED BY THE AR IN THIS REGARD. 8. AS ALREADY STATED THE ASSESSEE IS A NBFC AND THE ASSESSEE COMPANY IS ONE OF THE PROMOTER COMPANIES OF DABUR INDIA LTD. A ND THE 'CONTROLLING INTEREST OF ALL THE GROUP COMPANIES AS ON 31.03.200 5 IS AS UNDER: 14 PROMOTERS OF DABUR INDIA LTD. NO. OF SHARES HELD % AGE OF ON 31.03.2005 HOLDING 1. VIE ENTERPRISES PVT. LTD. 37430000 13.07% 2. GYA~ ENTERPRISES PVT. LTD. 37250330 13.01% 3. CHOWDRY ASSOCIATES 37438340 13.07% 4. PURAN ASSOCIATES PVT. LTD. 37352000 13.04% 5. ACEE ENTERPRISES 37191990 12.99% 6. ~ATNA COMMERCIAL ENTERPRISES PVT. LTD. 36456330 12.73% TOTAL PROMOTERS HOLDING 223118990 77.90% 7. PUBLIC, FLS. MUTUAL FUND ETC. 63300723 22.10% TOTAL NUMBER OF SHARES OF DIL (PAID UP) 286419713 100% 9.1 THE ASSESSEE COMPANY HAS BEEN HOLDING THE SHARE S OF DABUR INDIA LTD. OVER A PERIOD OF TIME AND THE SAME ARE SHOWN AS INV ESTMENTS IN THE BOOKS OF ACCOUNT. DURING THE F.Y. 2005-06 RELEVANT FOR THE I MPUGNED ASSESSMENT YEAR, THE ASSESSEE SOLD 23,55,000 SHARES OF MJ S DABUR IN DIA LTD. AND REALIZED PROFIT UNDER THE HEAD LONG TERM CAPITAL GAINS (LTCG) AND C LAIMED EXEMPTION UJS 10(38). 9.2 SIMILARLY THE ASSESSEE SOLD SHARES OF CERTAIN O THER COMPANIES AND THE GAIN REALIZED WAS OFFERED UNDER THE HEAD LTCG (SINCE THE PERIOD OF HOLDING IS MORE THAN ONE YEAR) AND CLAIMED EXEMPTION U/S.10(38) AS DETAILED VIDE ANNEXURE-A. 9.3 IN ADDITION TO THE ABOVE, THE ASSESSEE SOLD SHA RES OF VARIOUS OTHER COMPANIES (APPROXIMATELY 170) AND OFFERED THE GAINS UNDER THE HEAD SHORT TERM CAPITAL GAINS (STCG) - SINCE THE PERIOD OF HOL DING IS LESS THAN ONE YEAR - AND APPLIED SPECIAL RATE OF TAXATION AS PRES CRIBED U/S. 111A AS 15 DETAILED VIDE ANNEXURE-B. 10.1 THE MAIN CONTENTIONS OF THE AO AS SEEN FROM TH E ASSESSMENT ORDER ARE AS UNDER: ONE OF THE MAIN OBJECTS OF THE ASSESSEE COMPANY IS TO DO BUSINESS IN SHARES, STOCKS, DEBENTURE STOCKS, BONDS, OBLIGATION S, UNITS, SECURITIES ETC AS PER THE MEMORANDUM OF THE ASSOCIATION OF THE APPELLANT COMPANY. THE ASSESSEE CARRIED ON THE ACTIVITY OF PURCHASE AN D SALE OF SHARES ON REGULAR BASIS. THE VOLUME OF PURCHASE AND SALE OF SHARE (VOLUME OF BUS INESS) IS HUGE. FREQUENCY OF TRANSACTIONS IS VERY HIGH EXCEPT IN SH ARES OF DABUR INDIA LTD. CONDUCT OF THE ASSESSEE IS THAT OF A TRADER IN SHAR ES. NO PROPER RECORDS ARE MAINTAINED AS PER REPORT U/S 142(A) ISSUED BY THE SPECIAL AUDITOR. CERTAIN SHARES ARE HELD AS INVESTMENT TO GET TAX EX EMPTION U/S. 10(38). 10.2 THE AO RELIED ON THE FOLLOWING CASE LAWS: , . CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. LTD. 82 ITR 586 (SE) KARAMPURA DEVELOPMENT CO. LTD. VS. CIT 44 ITR 362 ( SE) DALMIYA CEMENTS LTD. VS. CIT 12 ITR 50 (PATNA) CIT VS. BRITISH PAINTS 188 ITR 44, 49 (SC). 11.1 THE MAIN CONTENTIONS OF THE AR AS GATHERED FRO M THE VARIOUS SUBMISSIONS MADE ARE AS UNDER: SHARES OF DABUR INDIA LTD. HAVE BEEN HELD AS INVEST MENT IS BY THE ASSESSEE AS A PROMOTER FOR CONTROLLING INTEREST FOR OVER TWO DECADES. THIS POSITION WAS ACCEPTED BY THE DEPARTMENT UP TO A.Y. 2005-06. THE INTENTION OF THE ASSESSEE IS OF PARAMOUNT SIGNI FICANCE AND FREQUENCY OF TRANSACTIONS WOULD NOT DECIDE THE ISSU E IPSO FACTO. THE ASSESSEE CAN HOLD SHARES EITHER AS INVESTMENT O R AS STOCK IN TRADE AS CLARIFIED IN BOARD CIRCULAR NO. 4 OF 2007 DATED 15 TH JUNE 2007. ENTRIES IN THE BOOKS OF ACCOUNT PROVE THAT SHARES I N QUESTION ARE HELD AS INVESTMENT. IN THE CASE OF GROUP COMPANIES, THE PROFIT ON SALE OF SHARES OF DABUR INDIA LTD. WAS ALLOWED TO BE TAXED UNDER THE HEAD C APITAL GAIN. 11.2 THE AR RELIED ON THE FOLLOWING CASE LAWS: BENGAL AND ASSAM INVESTORS LTD. VS. CIT (2002-TIOL- 705-SC-IT) 16 SLOCUM INVESTMENT PVT. LTD. VS. DCIT (2006-TIOL-300 -ITAT-DEL) RAMNARAIN SONS PRIVATE LIMITED VS. CIT 41 ITR 534 (SQ KARNATAKA STATE INDUSTRIAL INVESTMENT AND DEVELOPME NT CORPORATION LIMITED VS. DCIT 59 ITD 643 (BANGLORE) CIT VS. GOPAL PUROHIT (2010-TIOL-129-HC-MUM-IT) 12.1.1 IN THE CASE OF SARNATH INFRASTRUCTURE (P) LT D. VS. ASSTT.CIT (2008) 16 DTR (LUCKNOW)(TRIB) 97, THE TRIBUNAL HAS CONSIDERED ALM OST ALL THE IMPORTANT JUDICIAL DECISIONS LAYING DOWN LEGAL PRINCIPLES TO DETERMINE THE NATURE OF TRANSACTION I.E. TRADING TRANSACTION OR INVESTMENT IN THE LIGHT OF C BDT CIRCULAR NO. 4 OF 2007. THE TRIBUNAL HAS SUMMARIZED THE PRINCIPLES IN PARA 13 O F THE SAID ORDER. FOR THE SAKE OF READY REFERENCE, THE SAME ARE REPRODUCED AS UNDE R: 'AFTER CONSIDERING ABOVE RULINGS WE CULL OUT FOLLOW ING PRINCIPLES, WHICH CAN BE APPLIED ON THE FACTS OF A CASE TO FIND OUT WHETHER TRANSACTIONS (S) IN QUESTION ARE IN THE NATURE OF TRADE OR ARE MERELY FOR INVESTMENT PURPOS ES: 1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIM E OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM)? THIS CAN BE FOUND OUT FROM THE TREATME NT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED AS STOCK-IN -TRADE OR INVESTMENT? WHETHER SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVESTMENT OR NON-TRADING ASSET? 2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY, MONEY IS BORROWED TO PURCHASE GOODS FOR T HE PURPOSES OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. 3) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DISP OSAL IN THAT PARTICULARS ITEM? IF PURCHASE AND SALE ARE FREQUENT, OR THERE ARE SUBSTA NTIAL TRANSACTIONS IN THAT ITEM, IT WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PART ICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PURCHASES AN D SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTMENT (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HO LDINGS INDICATE INVESTMENT). 4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROFI T OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE? FORMER WILL INDICATE INT ENTION OF TRADE AND LATER, AN INVESTMENT. IN 17 THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY D IVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES? A COMMERCIAL MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. 16. THE ASSESSEE HAS BEEN HOLDING SHARES OF DAWAR I NDIA LTD. FOR ALMOST TWO DECADES AND THE SAME WERE SHOWN AS INVESTMENT I N THE BOOKS OF ACCOUNT. DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE SOLD 23,55,000 SHARES OF DAWAR INDIA LTD. OUT OF TOTAL OF ITS HOLD ING OF 3,74,30,000 SHARES. THE DETAILS OF ALL THESE SHARES SOLD DURING THE YEA R ON WHICH THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN ARE AS UNDER: PROMOTERS OF DABUR INDIA LTD. NO. OF SHARES HELD % AGE OF ON 31.03.2005 HOLDING 1. VIE ENTERPRISES PVT. LTD. 37430000 13.07% 2. GYA~ ENTERPRISES PVT. LTD. 37250330 13.01% 3. CHOWDRY ASSOCIATES 37438340 13.07% 4. PURAN ASSOCIATES PVT. LTD. 37352000 13.04% 5. ACEE ENTERPRISES 37191990 12.99% 6. ~ATNA COMMERCIAL ENTERPRISES PVT. LTD. 36456330 12.73% TOTAL PROMOTERS HOLDING 223118990 77.90% 7. PUBLIC, FLS. MUTUAL FUND ETC. 63300723 22.10% TOTAL NUMBER OF SHARES OF DIL (PAID UP) 286419713 100% 17. THE ASSESSEE HAD OFFERED THE PROFIT/GAIN ON PUR CHASE AND SALE OF UNITS OF MUTUAL FUNDS AS BUSINESS INCOME ON THE BASIS THA T THE SAID ACTIVITY 18 CONSTITUTES REGULAR BUSINESS ACTIVITY. HOWEVER, THE PROFITS/GAINS REALIZED ON PURCHASE AND SALE OF SHARES WERE OFFERED UNDER THE HEAD CAPITAL GAIN ON THE BASIS THAT THE SHARES HAVE BEEN HELD AS INVESTMENT IN THE BOOKS OF ACCOUNT. THERE IS NO DISPUTE THAT INTENTION AND THE ENTRIES IN THE BOOKS SHOWING THE SHARES AS INVESTMENT IS THE GUIDING AND DETERMINING FACTORS. THIS FACT HAS ALSO NOT BEEN DENIED THAT THE GAIN REALIZED ON SALE OF SHARES OF DAWAR INDIA LTD. IN FINANCIAL YEAR 1989-90 (RELEVANT FOR ASSESS MENT YEAR 1990-91) WAS OFFERED TO TAX UNDER THE HEAD CAPITAL GAIN BY GYA N ENTERPRISES PVT. LTD., WHICH IS ONE OF THE CO-PROMOTERS OF DAWAR INDIA LTD . THE ASSESSING OFFICER TAXED THE SAME AS BUSINESS INCOME AGAINST WHICH GYA N ENTERPRISES PVT. LTD. PREFERRED FIRST APPEAL AND THE LEARNED CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE GAIN SHOULD BE ASSESSED UN DER THE HEAD CAPITAL GAIN. THE SAID FIRST APPELLATE ORDER WAS UPHELD B Y THE ITAT VIDE ITS ORDER DATED 12.1.2004 IN ITA NO. 2160/DEL/1990 FOR ASSESS MENT YEAR 1990-91. 18. THE DETAILS OF NUMBER OF SHARES OF DABUR INDIA LTD. HELD BY THE ASSESSEE OVER A PERIOD OF TIME AND THE TRANSACTION/ CHANGES ARE FOLLOWS: DATE AS ON NO. OF SHARES (IN LAKHS) REMARKS 31.03.1996 37.15 NO CHANGE IN HOLDING 31.03.1997 37.51 NO CHANGE IN HOLDING 19 31.03.1998 37.41 SOLD 1000 SHARES 31.03.1999 37.41 NO CHANGE IN HOLDING 31.03.2000 37.41 NO CHANGE IN HOLDING 31.03.2001 37.41 NO CHANGE IN HOLDING 31.03.2002 37.41 NO CHANGE IN HOLDING 31.03.2003 37.41 NO CHANGE IN HOLDING 31.03.2004 37.41 NO CHANGE IN HOLDING 31.03.2005 374.30 PAID UP VALUE OF RS.10 PER SH. IS REDUCED TO RS.1 EACH AND PURCHASED 20000 SHARES (37.41X10)+20=374.3 31.03.2006 725.78 BONUS OF 1 SHARE FOR 1 SHARE HELD , ALLOTTED AND SOLD 1.41 LACS SHARES BEFORE BONUS AND SOLD 20 LACS SHARES AFTER BONUS (374.30- 1.41)X2=745.78 745.78-20=725.78 19. THUS, IT IS VERY CLEAR FROM THE ABOVE DETAIL TH AT SHARES OF DAWAR INDIA LTD. WERE HELD AS INVESTMENT. FROM THE DETAILS OF O THER SHARES GIVEN ABOVE, IT IS ALSO APPARENT THAT THOSE SHARES WERE HELD FOR CO NSIDERABLE LONG TIME. TRANSACTION OF THESE SHARES HAS NOT BEEN CARRIED OU T ON REGULAR BASIS AS GATHERED FROM THE DETAILS OF THE NUMBER OF SHARES A ND TRANSACTIONS. FROM THE FOLLOWING TABLE, IT IS APPARENT THAT IN THE FOLLOWI NG INCOME FROM BUSINESS, 20 INVESTMENT AT INCOME FROM OTHER SOURCES, THE ASSESS EE HAS EARNED DIVIDEND INCOME OF RS.12,00,86,699: PARTICULARS ASSET TYPE INCOME AMOUNT IN RS INCOME FROM BUSINESS (A) A)TRADING IN UNITS OF MUTU AL FUNDS GROSS INCOME OF RS 33 LAKHS INCOME FROM CAPITAL GAINS, TREATED AS OTHER INCOME IN PROFIT AND LOSS A/C (B) INCOME FROM CAPITAL ASSETS INVESTMENT IN SHARES BOTH LISTED AND UNLISTED LTCG,- 34,61,63,879 (84.75%) STCG- 6,23,34,129 (15.25%) RS 40.85 CRORES INCOME FROM OTHER SOURCES (C) DIVIDEND EARNED FROM INVESTMENT IN EQUITIES 12,00,86,699 19.1 THE ASSESSEE HAS EARNED ABOVE DIVIDEND OUT OF RS.44.72 CRORES OF INVESTMENT IN EQUITIES. DURING THE YEAR, THE ASSESS EE HAS MADE PURCHASE OF RS.45.07 CRORES AGAINST SALE OF ONLY RS.59.75 CRORE S. 19.2 THE TREATMENT OF INCOME FROM ABOVE THREE INCOM E STREAMS ARE BASED ON ACCOUNTING PRINCIPLES AND STANDARDS AS ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND THE ASSESSEE HAS CONSISTEN TLY FOLLOWED THE SAME ACCOUNTING PRINCIPLES OVER THE YEARS. THE SIGNIFI CANT ACCOUNTING POLICIES ADOPTED BY THE COMPANY ARE DISCLOSED IN SCHEDULE L REFER ANNEXURE 2. 21 THE ACCOUNTING POLICIES ARE IMPORTANT HERE AS IT LA YS DOWN HOW THE TREATMENT OF VARIOUS CLASSES OF ASSETS IS MEASURED. 19.3 SCHEDULE L (ON INVESTMENTS) TO THE BALANCE SHE ET ENCLOSED ALONG WITH RETURN THAT LONG TERM INVESTMENTS ARE STATED AT CO ST LESS PERMANENT DIMINUTION IN VALUE OF INVESTMENTS ONLY. THE INVEST MENTS(OTHER THAN TRADE) OF RS 44.71 CRORES AS ON 31 MARCH 2006 ARE DETAILED IN SCHEDULE F OF THE BALANCE SHEET. THE AFORESAID INVESTMENTS ARE MADE U PON THE DECISION MADE BY BOARD OF DIRECTORS AND WITH CLEAR INTENTION TO H OLD THE AFORESAID CAPITAL ASSETS AS INVESTMENT. THE INTENTION OF THE ASSESSEE IS THEREFORE NEVER TO MAKE PROFIT FROM SALES AS IN THE CASE OF TRADING AC TIVITIES. THE INTENTION IS TO HAVE STEADY AND SUBSTANTIAL CAPITAL APPRECIATION AN D EARN DIVIDENDS IF ANY FROM SUCH INVESTMENT. 19.4 AS REGARDS, TRADING STOCK WHERE THE ASSESSEE I NTENDS TO MAKE PROFITS, SUCH STOCK HAS BEEN DISCLOSED IN SCHEDULE I OF THE BALANCE SHEET SHOWING A CLOSING VALUE OF RS 30.85 CRORES ON 31 MARCH 2006. THE ACCOUNTING POLICY FOR TRADING OF SHARES IS DISCLOSED IN SCHEDULE L OF THE BALANCE SHEET WHICH STATES THAT CLOSING STOCK OF SECURITIES IS VALUED AT COST OF MARKET PRICE WHICH EVER IS LOWER. 22 19.5 THUS, THE INTENTION OF THE ASSESSEE IS VERY MU CH CLEAR AS TO WHAT STOCKS ARE TO BE TREATED AS BUSINESS STOCK AND WHAT TO BE TREATED AS INVESTMENT STOCK. THE POLICY AND TREATMENT OF STOCK TRANSACTION ARE CLEARLY REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE. 19.6 WE THUS FULLY CONCUR WITH THE FINDING OF THE L EARNED CIT(APPEALS) THAT THE PROFIT OF RS.34,61,63,879 IN RESPECT OF SH ARES SOLD DURING THE YEAR (INCLUDING GAIN OF RS.29,05,58,750 REALIZED ON SALE OF SHARES OF DAWAR INDIA LTD. ) HAS BEEN RIGHTLY TREATED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN AND THUS THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SEC. 10(38) OF THE ACT ON THE S AID LONG TERM CAPITAL GAIN. THE FIRST APPELLATE ORDER IN THIS REGARD IS T HUS UPHELD. THE GROUND NOS. 1 AND 2 ARE ACCORDINGLY REJECTED. 19.7 FROM PERUSAL OF THE ABOVE TABLE, IT IS ALSO CL EAR THAT 84% GAINS FROM CAPITAL GAINS WERE LONG TERM AND ONLY 15% WAS FROM SHORT TERM INVESTMENT. 19.8 TO DETERMINE THE COMPLEXITY WHETHER AN INCOME FROM SHARES IS BUSINESS OR INVESTMENT, AS HAS TO LOOK INTO THE INT ENTION AND MANNER OF BOOK 23 KEEPING AND APPARENT NATURE OF TRANSACTIONS. VOLUME OF TRANSACTIONS ALONE CAN NOT DETERMINE THE NATURE OF INCOME. IT IS ALWAY S MATERIAL THAT THE INTENTION OF THE ASSESSEE, WHICH IS TO BE SEEN WHIL E DETERMINING THE NATURE OF THE TRANSACTION CONDUCTED BY THE ASSESSEE. ON PERUS AL OF THE HOLDING PERIOD OF THE SHARES IT IS SEEN THAT THE ASSESSEE TRANSACT ED IN 85 SCRIPTS HAD HOLDING PERIOD OF MORE THAN 400 DAYS ( DABUR INDIA HOLDING WAS MORE THAN 6900 DAYS), 29 SCRIPTS HAD HOLDING PERIOD OF MORE THAN 3 65 DAYS (APPENDIX A). BESIDES, ALL THE SCRIPTS SOLD WERE STT PAID AND ALL WERE DELIVERY BASED. 20. GROUND NO.3 : IN THIS GROUND, THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER WHEREBY THE LEARNED CIT(APPEALS) HA S HELD THAT RS.9 LACS IS NOT A REAL INCOME. THE LEARNED CIT(DR) SUBMITTED THAT WHILE HOLDING SO, THE LEARNED CIT(APPEALS) HAS IGNORED THE FACT THAT INTEREST INCOME OF RS.60 LACS HAD ALREADY ACCRUED AND ACCORDINGLY RECEIVED B Y THE ASSESSEE DURING THE YEAR. 21. THE LEARNED AR ON THE OTHER HAND PLACED RELIANC E ON THE FIRST APPELLATE ORDER. 24 22. WE HAVING GONE THROUGH THE ORDERS OF THE AUTHO RITIES BELOW, FIND THAT THE ASSESSING OFFICER HAD MADE ADDITION OF RS.9 LA CS ON THE BASIS OF SPECIAL AUDITORS REPORT THAT ASSESSEE HAD NOT SHOWN INTERE ST INCOME OF RS. 9 LACS RECEIVED FROM DAWAR FOODS LTD. AS THE ASSESSEE HAD ADVANCED ICD OF RS.6 CRORES TO M/S. DAWAR FOODS LTD. AT THE INTEREST RAT E OF 10%. THE SUBMISSION OF THE ASSESSEE REMAINED THAT ASSESSEE HAD ADVANCED AN AMOUNT OF RS. 6 CRORES TO DAWAR FOODS LTD. INITIALLY AT THE INTERES T RATE OF 10%, HOWEVER, DURING THE YEAR ON MUTUAL CONSENTS THE RATE WAS RED UCED FROM 10% TO 8.5%. THE ASSESSING OFFICER HAD NOT ACCEPTED THIS EXPLANA TION OF THE ASSESSEE BUT THE LEARNED CIT(APPEALS) HAS ACCEPTED THE SAME WITH THIS FINDING THAT IT IS A SETTLED PRINCIPLE OF LAW THAT ONLY REAL INCOME IS T O BE TAXED. IN THIS REGARD, HE HAS FOLLOWED THE RATIOS LAID DOWN IN THE CASE OF CI T VS. SHOORJI BALLABDASS & CO., 46 ITR 144 (S.C). WE THUS DO NOT FIND REASO N TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS U PHELD. THE GROUND NO. 3 IS ACCORDINGLY REJECTED. 23. IN RESULT, THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED. 24. THE ASSESSEE ( ITA NO. 2240/DEL/2010) ON THE OT HER HAND HAS BASICALLY QUESTIONED THE FIRST APPELLATE ORDER MAIN LY ON TWO GROUNDS. FIRSTLY, UPHOLDING OF RS.6,23,34,129 CLAIMED BY THE ASSESSEE AS SHORT TERM 25 CAPITAL GAIN AS BUSINESS INCOME (GROUND NOS. 1 AND 2) AND SECONDLY DISALLOWANCE OF EXPENSES AMOUNTING TO RS.5,33,768 U NDER SEC. 14A OF THE ACT AGAINST EXEMPTED INCOME (GROUND NO.3). 25. GROUND NOS. 1 AND 2 : SIMILAR ARGUMENTS HAVE BEEN ADOPTED BY THE PARTIES AS ADVANCED BY THEM HEREINABOVE ON THE ISSU E OF LONG TERM CAPITAL GAIN RAISED IN THE APPEAL PREFERRED BY THE REVENUE. THE AUTHORITIES BELOW HAVE TREATED THE CLAIMED SHORT TERM CAPITAL GAIN OF RS.6,23,34,129 ACCRUED ON DISPOSAL OF SHARES INVESTED FOR A SHORT TERM PER IOD AS BUSINESS INCOME. THE ASSESSEE HAD ALSO CLAIMED BENEFIT UNDER SEC. 11 1A OF THE ACT ON THE SAID SHORT TERM CAPITAL GAIN. 26. THE ASSESSEE HAD FURNISHED LIST OF SHARES AND T HE NUMBER OF SCRIPTS INVOLVED AS 170. IT HAD CLAIMED SHORT TERM CAPITAL GAIN OF RS.6,71,16,180 AND LOSS OF RS.47,82,051 THUS THE NET GAIN WAS CLAIMED AT RS.6,23,34,129. THE ASSESSEE HAD CLASSIFIED THE GAINS INTO LONG TERM AN D SHORT TERM, AFTER TAKING INTO CONSIDERATION THE PERIOD OF HOLDING OF SHARES. THE ASSESSING OFFICER DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE ON THE BAS IS THAT THE NUMBER OF SHARES AND FREQUENCY OF TRANSACTIONS WERE IN THE NA TURE OF REGULAR BUSINESS ACTIVITIES. HE HELD THAT ASSESSEE HAD DONE THE SAME WITH A MOTIVE TO MAXIMIZE THE PROFITS IMMEDIATELY RATHER THAN HOLDIN G THEM AS INVESTMENT. 26 WE DO NOT AGREE WITH SUCH APPROACH OF THE ASSESSING OFFICER AS EARNING OF MAXIMUM PROFIT IS THE OBJECT OF THE ASSESSEE IN BOT H TYPE OF TRANSACTIONS I.E. INVESTMENT AND TRADE, HENCE, IT CANNOT BE A SOLE CR ITERIA TO TEST THE NATURE OF THE TRANSACTION. IF THE ASSESSEE HAS SOLD A SHARE W ITHIN A SHORT TERM PERIOD AFTER PURCHASE BUT THE INTENTION OF THE ASSESSEE BE HIND THE SAME REMAINED INVESTMENT STILL THE GAIN WILL BE TREATED AS SHORT TERM CAPITAL GAIN. THE CONTENTION OF THE ASSESSEE REMAINED THAT THESE SHAR ES WERE ALSO PURCHASED WITH INTENTION TO INVEST THEREIN DETAILS OF WHICH H AS BEEN MADE AVAILABLE AT PAGE NO.142 TO 146 OF THE PAPER BOOK. IN THE DETAIL S, THE PERIOD OF HOLDING HAS BEEN SHOWN LESS THAN OR EQUAL TO SIXTY DAYS WIT H ALL THE OTHER DETAILS AS WELL AS STT PAID ON THE TRANSACTION. 26.1 BOTH THE LD AO AND LEARNED CIT(A) HAVE ERRED I N TREATING THE INCOME FROM SALE OF STT PAID LISTED EQUITY SHARES FROM SHO RT TERM CAPITAL GAINS TO BUSINESS INCOME. IT CAN BE SEEN THAT THE ASSESSEE IS PRIMARILY AN INVESTOR IN SHARES. FROM THE RATIO OF SALE OF INCOME FROM SHAR ES, 84% OF THE INCOME IS DETERMINED FROM LONG TERM HOLDING OF STT PAID LISTE D EQUITY SHARES. ONLY A SMALL COMPONENT 15% OF INCOME FROM SHARES IS TREATE D AS SHORT TERM. A LOOK INTO THE HOLDING PERIOD OF SHARES APPENDIX B WOULD REVEAL THAT OUT OF 560 SCRIPTS, THE TRANSACTIONS PERTAINED ONLY TO 60- 65 SCRIPTS WHICH WERE SOLD IN 27 AT DIFFERENT TIMES. 409 SCRIPTS OUT OF 560 TOTAL S CRIPTS HAS A HOLDING PERIOD OF MORE THAN 60 DAYS HAVING A SHORT TERM CAPITAL GAIN OF RS 5.13 CRORES OUT OF RS 6.23CRORES, ONLY RS 1.09 CRORES WERE EARNED FROM 151 SCRIPTS HAVING A HOLDING PERIOD OF 15-60 DAYS BARRING FEW WHICH ARE THAN 10 DAYS. THUS, THE APPELLANT STATES THAT WHEN SHARES ARE ACQUIRED AFTE R PAYING STT AND TAKING COMPLETE DELIVERY OF SHARES KEEPING A LONG TERM IN VIEW AS 84% OF SHARES ARE HELD FOR MORE THAN ONE YEAR, TRANSACTING IN SOM E SHARES IN SHORT TERM TO ALTER ITS INVESTMENT VISION AND GOAL CANNOT BE CONS IDERED AS AN ACTION BORNE OUT TO DO TRADE. IT HAPPENS WHEN THE VISION IS LON G TERM, SOME SHARES THOUGHT PURCHASED ARE DROPPED OUT FROM PORTFOLIO EI THER BECAUSE SUFFICIENT FUNDS ARE NOT AVAILABLE TO MAKE THEM REACH TO A LEV EL TO ACCUMULATE CAPITAL OR BECAUSE OF SOME OTHER ALLIED REASONS. 26.2 IT IS NOT THE FINDING OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) THAT THESE SHARES WERE SHOWN AS STOCK IN TRADE OR THE ASSESSEE WAS NOT CORRECT IN SHOWING THESE SHARES AS INVESTME NT. WE THUS DO NOT FIND INFIRMITY IN THE CLAIM OF THE ASSESSEE THAT THE PRO FIT ACCRUED ON SALE OF THESE SHARES WAS SHORT TERM CAPITAL GAIN AND THE ASSESSEE WAS ELIGIBLE FOR CLAIMING CHARGING OF THE GAIN UNDER THE PROVISIONS LAID DOWN UNDER SEC. 111A OF THE ACT. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS 28 REGARD DIRECT THE ASSESSING OFFICER TO ACCEPT THE C LAIM OF THE ASSESSEE AND ALLOW THE BENEFIT OF CHARGING OF THE GAIN UNDER SEC . 111A OF THE ACT. THE GROUND NOS. 1 AND 2 ARE ACCORDINGLY ALLOWED. 27. THE GROUND NO. 4 HAS NOT BEEN PRESSED BY THE LE ARNED AR, THE SAME IS ACCORDINGLY REJECTED. 28. IN RESULT, THE APPEAL IS PARTLY ALLOWED. 29. ASSESSMENT YEAR 2008-09 : THE COMMON FIRST APPELLATE ORDER IS THE SUBJECT MATTER OF THE APPEALS PREFERRED BY THE PART IES ON DIFFERENT GROUNDS. THE REVENUE ( ITA NO. 3911/DEL/2011) HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDI TION OF RS.25,59,101 BY TREATING THE BUSINESS INCOME AS LON G TERM CAPITAL GAINS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) FAILED TO APPRECIATE THAT THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY STIPULATED C ARRYING ON BUSINESS OF TRADING IN INVESTMENT AND HENCE THE INC OME DERIVED BY SUCH ACTIVITY WAS BUSINESS INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE T HAT THE CASE OF THE ASSESSEE SQUARELY FALLS UNDER THE CATEGORY OF SPECU LATION BUSINESS AS 29 PER EXPLANATION TO SEC. 73 OF THE INCOME-TAX ACT, 1 961 AS THE BUSINESS OF THE ASSESSEE IS TRADING IN SALE/PURCHAS E OF MUTUAL FUNDS. THIS IS WITHOUT PREJUDICE TO THE OTHER GROUNDS OF A PPEAL AS AGITATED ABOVE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,89,53,657 ON ACCOUNT OF INTEREST WITHOUT APPRE CIATING THAT LOANS/ADVANCES WERE GRANTED FOR NON-BUSINESS PURPOS ES. 30. THE ASSESSEE ( ITA NO. 3635/DEL/2011) HAS QUEST IONED THE FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW IN DECLINING THE CLAIM FOR THE INVESTMENT ACTIVITY REL ATING TO SHARES TREATING THE SAME AS BUSINESS INCOME WHICH IS NOT I N ACCORDANCE WITH THE REGULARLY FOLLOWED METHOD OF ACCOUNTING SUBSTAN TIATED BY THE AUDITED FINANCIAL STATEMENT. 2. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW FOR HAVING TREATED THE GAINS ACCRUED ON DISPOSAL OF SHA RES AMOUNTING TO RS.5,83,72,758 AS BUSINESS INCOME WHEREAS PER THE A SSESSEE THE SAME IS SORT TERM CAPITAL GAIN CHARGEABLE TO TAX U/S. 11 1A. 3. BECAUSE THE ACTION IS UNDER CHALLENGE HAVING OVE RLOOKED & IGNORED THE CBDT CIRCULAR NO. 4/2007 DT. 15.06.2007 IN TERMS OF WHICH THE GAIN ARISING ON ACCOUNT OF DISPOSAL OF SH ARES HELD AS INVESTMENT ARE LIABLE TO BE TAXED UNDER THE HEAD CA PITAL GAIN AND THE DECISIONS OF THE CIT(A) IN THE LIKELY PLACED OTHER CASES. 30 4) BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW HAVING FOLLOWED THE HON'BLE DELHI HIGH COURT OVERLOOKING T HE FACTS OF THE SAID CASE. 5. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW IN MAKING PROPORTIONATE DISALLOWANCE OF RS.24,57,661 U /S. 14A. 6. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW IN MAKING DISALLOWANCE OF RS.1,09,525 U/S. 94(7) AND 9 4(8). 31. BESIDES, THE ASSESSEE HAS ALSO MOVED APPLICATIO N UNDER RULE 27 OF THE ITAT RULES REQUESTING THEREIN TO A NEW PLEA IN ORDE R TO SUPPORT THE FIRST APPELLATE ORDER THAT THE INVESTMENT IN PUNJAB TRACT ORS LTD. WAS MADE BY THE ASSESSEE IN ORDER TO ENJOY THE CONTROLLING STAKES I N THE SAID COMPANY AND NOT TO TRADE IN SHARES. THE LEARNED AR SUBMITTED THAT T HOUGH THE LEARNED CIT(APPEALS) HAS ALLOWED THE APPEAL OF THE ASSESSEE , THEREBY HOLDING THE SALE OF SHARES OF PUNJAB TRACTORS LTD. AS LONG TERM CAPITAL GAIN ON THE BASIS OF PERIOD OF HOLDING, BUT THE ASSESSEE WANTS TO SUP PORT THE FIRST APPELLATE ORDER IN TERMS OF RULE 27 OF THE ITAT RULES IN RELA TION TO LONG TERM CAPITAL GAIN ARISEN ON THE SALE OF SHARES OF PUNJAB TRACTOR S LTD. ON THE OTHER GROUNDS ALSO I.E. THE PLEA RAISED HEREINABOVE THAT THE INVE STMENT IN PUNJAB TRACTORS LTD. WAS MADE BY THE ASSESSEE IN ORDER TO ENJOY THE CONTROLLING STAKE IN THE SAID COMPANY AND NOT TRADE IN SHARES. THE LEARNED A R SUBMITTED THAT THE ISSUE RAISED IN THE ABOVE PLEA IS PURELY IN LEGAL I N NATURE AND ADJUDICATION OF 31 THE SAME DOES NOT REQUIRE CONSIDERATION OF FRESH MA TERIAL OUTSIDE THE RECORD. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) ACCRA INVESTMENTS PVT. LTD. VS. ITO 263 CTR 4 8 (BOM.); II) RAM NARAIN & SONS PVT. LTD. 41 ITR 534 (S.C) ; III) RAJA BAHADUR KAMAKHYA NARAIN SINGH VS. CIT 77 ITR 253 (S.C); IV) B.R. BAMSI VS. CIT 83 ITR 223 (BOM.); V ) CIT VS. MAHALAKSHMI TEXTILES MILLS LTD. 66 I TR 710 (S.C); 32. THE LEARNED CIT(DR), HOWEVER, OPPOSED THE ABOVE REQUEST MADE ON BEHALF OF THE ASSESSEE. 33. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE PLEA RAISED IS LEGAL IN NATURE AND IS IN FURTHERANCE TO THE ISSUE OF VALIDITY OF THE ACTION OF THE ASSESSING OFFICER IN TREATING THE CLAIMED LONG TERM AND SHORT TERM GAIN BY THE ASSESSEE AS BUSINESS INCOME AND ADJUDICATION OF THE SAME DOES NOT REQUIRE CONSIDERATION OF FRESH MATERIAL OUTSIDE THE RECORD. WE THUS ALLOW THE ABOVE PLEA TO BE RAISED BY THE ASSESSEE IN SUPPORT OF THE ISSUE RAISED IN THE APPEALS. WE WILL DEAL WITH THIS PLEA WHILE DISPOSIN G OF THE ISSUE RAISED IN GROUND NOS. 1 TO 3 OF THE APPEAL PREFERRED BY THE R EVENUE AND GROUND NOS. 1 TO 4 OF THE APPEAL PREFERRED BY THE ASSESSEE BOTH ON THE ISSUE OF VALIDITY OF THE CLAIMED LONG TERM AND SHORT TERM CAPITAL GAIN B Y THE ASSESSEE ON THE TRANSACTION OF SHARES. 32 34. GROUND NOS. 1 TO 3 (REVENUE) & GROUND NOS. 1 TO 4 (ASSESSEE): THE FACTS IN BRIEF ARE THAT THE ASSESSEE A NON-BANKING FINANCIAL COMPANY REGISTERED WITH RBI AS SUCH IS ONE OF THE PROMOTER COMPANY HOLDING CONTROLLING INTEREST IN DABUR INDIA LTD. WE HAVE DI SCUSSED THE FACTS IN DETAIL ABOUT THE ASSESSEE COMPANY, HEREINABOVE, IN THE APP EALS FOR THE ASSESSMENT YEAR 2006-07. THE PARTIES HAVE ALSO ADOPTED SIMILAR ARGUMENTS AS ADVANCED BY THEM ON AN IDENTICAL ISSUES HEREINABOVE IN THE A PPEALS FOR THE ASSESSMENT YEAR 2006-07. 35. DURING THE YEAR IN THE ASSESSMENTS FRAMED UNDER SEC. 143(3) OF THE INCOME-TAX ACT, 196, FOLLOWING ADDITIONS/DISALLOWAN CES WERE MADE BY THE ASSESSING OFFICER, SOME OF WHICH WERE CONTESTED BEF ORE THE LEARNED CIT(APPEALS) MENTIONED THEREIN: S.NO. NATURE OF ADDITION/ISSUE AMOUNT IN (RS.) GROUNDS OF APPEAL RAISED 1. LONG TERM CAPITAL GAIN TREATED AS BUSINESS INCOME. 25,59,09,101 GROUND NO.2 2. SHORT TERM CAPITAL GAIN TREATED AS BUSINESS INCOME 5,83,72,758 GROUND NOS. 2 AND 5 3. INTEREST EXPENSE DISALLOWED. 3,89,53,657 GROUN D NO. 7 4. DISALLOWANCE U/S. 14A 24,57,661 NOT CONTEST ED 5. DISALLOWANCE U/S. 94(7) 1,09,525 NOT CONT ESTED 33 36. THE MAIN ISSUE INVOLVED IN THE APPEALS IS REGAR DING TAXING THE PROFITS REALIZED ON SALE OF SHARES AS BUSINESS INCOME AGAIN ST CAPITAL GAIN OFFERED BY THE ASSESSEE EITHER UNDER LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN DEPENDING UPON THE PERIOD OF HOLDING OF SHARES. 37. THE ASSESSEE CLAIMED RS.25,59,09,101 AS LONG T ERM CAPITAL GAIN WHICH HAS BEEN TREATED BY THE ASSESSEE AS BUSINESS INCOME . THE LEARNED CIT(APPEALS) HAS, HOWEVER, ACCEPTED THE CLAIMED LON G TERM CAPITAL GAIN AGAINST WHICH THE REVENUE IS IN APPEAL RAISING GROU ND NOS. 1 TO 3 IN THIS REGARD. 38. IN SUPPORT OF THE GROUNDS, THE LEARNED CIT(DR) HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE ASSESSEE WAS HOLDING SHARES MAINLY OF GROUP COMPANY INCLUDING DABUR INDI A LTD. AS INVESTMENT SINCE LONG BACK. THE ASSESSEE WAS ALSO ENGAGED IN T HE PURCHASE AND SALE OF SHARES AND MUTUAL FUNDS MOSTLY OF BLUE CHIP COMPANI ES AS STOCK IN TRADE. SHARES HELD AS STOCK IN TRADE WERE TRANSFERRED FROM STOCK IN TRADE TO INVESTMENT ACCOUNT. THE INTENTION OF THE ASSESSEE I S OF SIGNIFICANCE AND VOLUME AS WELL AS FREQUENCY OF TRANSACTION WOULD DE CIDE THE ISSUE. THE LEARNED AR ON THE CONTRARY SUBMITTED THAT THE ASSES SEE CAN HOLD SHARES 34 EITHER AS INVESTMENT OR AS STOCK IN TRADE AS CLARIF IED IN CBDT CIRCULAR NO. 4 OF 2007 DATED 15.6.2007. ENTRIES IN THE BOOKS OF AC COUNT PROVE THAT SHARES IN QUESTION ARE HELD AS INVESTMENT. IN THE CASE OF GRO UP COMPANIES, THE PROFIT ON SALE OF SHARES WAS ALLOWED TO BE TAXED UNDER THE HEAD CAPITAL GAIN. THE LEARNED AR ADOPTED SIMILAR ARGUMENTS AS ADVANCED BY HIM HEREINABOVE ON AN IDENTICAL ISSUE IN THE APPEAL FOR THE ASSESSMENT YEAR 2006-07. HE REITERATED THE CASE LAWS CITED THEREIN IN SUPPORT A ND POINTED OUT THAT DURING THE YEAR THE ASSESSEE HAD RECEIVED DIVIDEND AMOUNTI NG TO RS.9.19 CRORES, WHICH IS VERY SUBSTANTIAL TO TOTAL TAXABLE INCOME O F THE ASSESSEE, AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HE SUBMITTE D FURTHER THAT THE AMOUNT OF RS.25,59,09,131 INCLUDES THE AMOUNT OF RS .24,64,46,699 ARISEN ON ACCOUNT OF SALE OF SHARES OF PUNJAB TRACTORS LTD . IN PUNJAB TRACTORS LTD., THE ASSESSEE ALONG WITH OTHER GROUP COMPANIES WAS E NJOYING MANAGEMENT CONTROL. THE SHARES OF PUNJAB TRACTORS LTD. ALONG W ITH OTHER GROUP COMPANIES WERE SOLD TO MOHENDRA & MOHINDRA LTD. VID E AGREEMENT DATED 8.3.2007. THOUGH THE LEARNED CIT(APPEALS) HAS ALLOW ED THE APPEAL OF THE ASSESSEE, THEREBY, HOLDING THE SALE OF SHARES OF PU NJAB TRACTORS LTD. AS LONG TERM CAPITAL GAIN ON THE BASIS OF PERIOD OF HOLDING , BUT THE ASSESSEE WANTS TO SUPPORT THE FIRST APPELLATE ORDER IN TERMS OF RULE 27 OF THE ITAT RULES IN RELATION TO THE LONG TERM CAPITAL GAIN ARISEN ON SA LE OF SHARES OF PUNJAB 35 TRACTORS LTD. ON ANOTHER GROUND ALSO THAT THE INVES TMENT IN PUNJAB TRACTORS LTD. WAS MADE BY THE ASSESSEE IN ORDER TO ENJOY THE CONTROLLING STATES IN THE SAID COMPANY AND NOT TO TRADE IN SHARES. HE SUBMITT ED THAT PROFIT ON SALE OF SHARES ENJOYING MANAGING CONTROL IS ALWAYS CONSIDER ED AS CAPITAL GAIN AND NOT BUSINESS INCOME. IN SUPPORT, HE REFERRED FOLLOW ING DECISIONS CITED ABOVE IN THE CASES OF ACCRA INVESTMENT PVT. LTD. VS. ITO (SUPRA), RAM NARAIN & SONS PVT. LTD. (SUPRA) AND RAJA BAHADUR KAMAKHYA NA RAIN SINGH VS. CIT (SUPRA). 39. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT BOTH THE SHARES OF MTNL AND PUNJAB TRACTORS LTD. HAVE BEEN SHOWN AS IN VESTMENT IN THE BALANCE SHEET AS ON 31.3.2007 AND ALL THE SHARES WE RE SOLD AND NOT MANY TRANSACTIONS ARE THERE IN THE SCRIPTS. AS ON 31.3.2 008, NO SHARES OF MTNL AND PUNJAB TRACTORS LTD. ARE HELD. THESE SHARES WER E HELD FOR CONSIDERABLE LONG TIME AND SHARES WERE BEING SOLD WHEN THERE WAS APPRECIATION IN THE MARKET. SHARES OF ABN AMRO SECURITIES PURCHASED IN 1998-99 WERE SOLD ON 14.7.2007 AFTER A PERIOD OF 7/8 YEARS. IN THESE SHA RES, THE ASSESSEE HAD NOT CARRIED OUT THE TRANSACTIONS ON REGULAR BASIS AS EV IDENT FROM THE NUMBERS OF SHARES AND TRANSACTIONS. BESIDES, THE INVESTMENT IN PUNJAB TRACTORS LTD. WAS MADE BY THE ASSESSEE IN ORDER TO ENJOY THE CONTROLL ING SHARES IN THE SAID COMPANY AND THE PROFIT ON SALE OF SHARES ENJOYING M ANAGING CONTROL IS ALWAYS CONSIDERED AS CAPITAL GAIN AS PER THE DECISI ON CITED HEREINABOVE IN THE CASES OF ACCRA INVESTMENT PVT. LTD. VS. ITO (SUPRA) , RAM NARAIN & SONS (P) LTD. (SUPRA) AND RAJA BAHADUR KAMAKHYA NARAIN SINGH VS. CIT (SUPRA). HE 36 ALSO REFERRED PAGE NOS. 7 TO 15 OF THE PAPER BOOK I .E. INVESTMENTS AS ON 31.3.2008, 31.3.2007, 31.3.2006 AND 31.3.2005, AND PAGE NOS. 149 TO 181 I.E. COMPUTATION OF INCOME WITH DETAILS OF CAPITAL GAIN WITH BALANCE SHEET FOR THE YEAR. 40. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE LEARNED CIT(APPEALS) HAS DEALT WITH THE ISSUE I N DETAIL MEETING OUT RESPECTIVE CASES OF THE PARTIES AND HAS COME TO THE FOLLOWING CONCLUSION: 13. THE FACTS OF THE CASE WERE EXAMINED FROM THE P ERSPECTIVE OF RATIO LAID DOWN IN THE ABOVE CASES. 14. AS ALREADY STATED THE ASSESSEE IS A NBFC. THE A SSESSEE HAS OFFERED THE PROFITS/GAINS ON PURCHASE AND SALE OF U NITS OF MUTUAL FUNDS AS BUSINESS INCOME ON THE GROUND THAT THE SAI D ACTIVITY CONSTITUTES REGULAR BUSINESS ACTIVITY. HOWEVER, THE PROFITS/GAINS REALIZED ON PURCHASE AND SALE OF SHARES WERE OFFERE D UNDER THE HEAD CAPITAL GAIN ON THE GROUND THAT THE SHARES HAVE BEE N HELD AS INVESTMENT IN THE BOOKS OF ACCOUNT. 15. IN A NUTSHELL ACCORDING TO THE AR, THE INTENTIO N AND THE ENTRIES IN THE BOOKS SHOWING THE SHARES AS INVESTMENT SHOUL D BE THE GUIDING AND DETERMINING FACTORS AND WHEREAS ACCORDING TO TH E A.O., VOLUME OF BUSINESS IN SHARES AND FREQUENCY OF TRANSACTIONS AN D THE OBJECTIVE OF THE ASSESSEE TO TRADE IN SHARES (AS PER MEMORANDUM OF ASSOCIATION OF THE COMPANY) SHOULD BE TAKEN INTO CONSIDERATION WHI LE DECIDING THE ISSUE. 37 16. LONG TERM CAPITAL GAIN OF RS.25,59,09,100 : FROM THE FACTS BROUGHT ON RECORD AS MENTIONED IN PARA 8 ABOVE, IT IS SEEN THAT BOTH SHARES OF MTNL AND M/S. PUNJAB TRACTORS LTD. HAVE B EEN SHOWN AS INVESTMENT IN THE BALANCE SHEET AS ON 31.3.2007 AND ALL THE SHARES WERE SOLD AND NOT MANY TRANSACTIONS ARE THERE IN TH ESE SCRIPTS. AS ON 31.03.2008 NO SHARES OF MTNL AND M/S. PUNJAB TRACTO RS LTD. ARE HELD. THE SAID SHARES WERE HELD FOR CONSIDERABLE LO NG TIME AND SHARES ARE BEING SOLD WHEN THERE IS APPRECIATION IN THE MA RKET. SIMILARLY SHARES OF ABN AMRO SECURITIES PURCHASED IN 1998-99 WERE SOLD ON 14.07.2007 AFTER A PERIOD OF 7/8 YEARS. IN THESE SH ARES THE ASSESSEE HAS NOT CARRIED OUT THE TRANSACTIONS ON REGULAR BASIS A S EVIDENT FROM THE NUMBER OF SHARES AND TRANSACTIONS. IN THE LIGHT OF THE ABOVE FACTS AND LEGAL POSITION, THE PROFIT OF RS.25,59,09,100 REALI ZED ON SALE OF SHARES HAS BEEN RIGHTLY TREATED BY THE ASSESSEE AS LONG TE RM CAPITAL GAINS TO BE TAXED AS SPECIAL RATES PRESCRIBED U/S. 112. THE ACTION OF THE A.O. IN TREATING THE GAIN AS BUSINESS INCOME IS NOT APPROVE D. ACCORDINGLY, GROUND NO.2 IS ALLOWED. 41. THE ABOVE MATERIAL FINDINGS OF THE LEARNED CIT( APPEALS) ON FACTS REGARDING SHOWING OF THE SHARES AS INVESTMENT IN TH E BALANCE SHEET, THEIR HOLDING PERIOD, AND VOLUME AND FREQUENCIES OF THEIR TRANSACTIONS, HAVE NOT BEEN REBUTTED BY THE REVENUE. WE THUS DO NOT FIND R EASON TO INTERFERE WITH THE FIRST APPELLATE ORDER ON THE ISSUE. THE SAME IS UPHELD. 38 42. IN RESULT, GROUND NOS.1 TO 3 OF THE APPEAL OF T HE REVENUE ARE THUS REJECTED. 43. IN GROUND NOS. 1 TO 4 OF THE APPEAL OF THE ASSE SSEE, THE ASSESSEE HAS BASICALLY QUESTIONED TREATMENT GIVEN TO THE GAIN OF RS.5,83,72,758 ON DISPOSAL OF SHARES BY THE AUTHORITIES BELOW AS BUS INESS INCOME AGAINST THE CLAIM OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN CH ARGEABLE TO TAX UNDER SEC. 111 OF THE ACT. 44. THE RELEVANT FACTS ARE THAT THE ASSESSING OFFIC ER NOTED THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AD SHOWN SHORT TERM CAPITAL GAIN OF RS.5,83,72,785. IN THE COMPUTATION OF INCOME FURNISHED DURING THE ASSESSMENT PROCEEDINGS, AN AMOUNT OF RS. 3,53,22,682 WAS SHOWN AS SHORT TERM CAPITAL LOSS UNDER SEC. 111A. DETA ILS OF CAPITAL GAINS AND LOSSES WERE FURNISHED. ON PERUSAL OF THE SAME, THE ASSESSING OFFICER NOTED THAT IN THE COMPUTATION OF TAXABLE INCOME ONLY AN A MOUNT OF RS.3,53,22,682 WAS OFFERED FOR TAX AT SPECIAL RATE UNDER SEC. 111A OF THE ACT. THE AMOUNT OF RS.2,30,50,076 BEING SHORT TERM CAPITAL GAIN HAD NO T BEEN INCLUDED WHILE COMPUTING THE TAXABLE INCOME. THE ASSESSING OFFICER ALSO NOTED THAT DURING THE ASSESSMENT YEARS 2005-06 AND 2006-07 AND 2007-0 8, INCOME FROM SHORT TERM CAPITAL CLAIMED BY THE ASSESSEE WAS TREATED AS BUSINESS INCOME IN THE ASSESSMENT ORDER FRAMED UNDER SEC. 143(3)_ OF THE A CT. HE ACCORDINGLY 39 REJECTED THE CLAIM OF SHORT TERM CAPITAL GAIN OF RS .5,83,72,758 BY THE ASSESSEE AND TREATED THE SAME AS BUSINESS INCOME. T HE LEARNED CIT(APPEALS) HAS UPHELD THE SAME AGAINST WHICH ASSE SSEE IS IN APPEAL. 45. IN SUPPORT OF THE GROUNDS, THE LEARNED AR HAS A DOPTED THE SIMILAR ARGUMENTS AS ADVANCED BY HIM IN SUPPORT OF GROUND N OS. 1 TO 3 ON AN IDENTICAL ISSUE HEREINABOVE IN THE APPEAL FOR THE A SSESSMENT YEAR 2006-07. HE SUBMITTED THAT THE INTENTION OF THE ASSESSEE IS OF PARAMOUNT SIGNIFICANCE AND FREQUENCY OF TRANSACTION ONLY WOULD NOT DECIDE THE ISSUE IPSO FACTO. THE ASSESSEE CAN HOLD SHARES EITHER AS INVESTMENT OR ST OCK IN TRADE AS CLARIFIED IN CBDT CIRCULAR NO. 4 OF 2007 DATED 15.6.2007. HE SUB MITTED THAT THE ENTRIES IN THE BOOKS OF ACCOUNT PROVE THAT THE SHARES IN QU ESTION ARE HELD AS INVESTMENT. IN THE CASE OF GROUP COMPANIES, THE PRO FIT ON SALE OF SHARES WAS ALLOWED TO BE TAXED UNDER THE HEAD CAPITAL GAIN. HE POINTED OUT THAT IN THE CASE OF GROUP COMPANY, CHAUDHARY ASSOCIATES, THE HO NBLE JURISDICTION HIGH COURT OF DELHI VIDE ORDER DATED 30.1.2015 IN C IT VS. CHAUDHARY ASSOCIATES ITA NO. 544/2013 HAS REVERTED THE ORDE R OF THE ITAT UNDER SIMILAR FACTS OF THE CASE THAT A SUM OF RS.1,19,30, 037 HELD BY THE ITAT IN THAT CASE WAS NOT BUSINESS INCOME BUT THE CLAIMED S HORT TERM CAPITAL GAIN. IN THAT CASE ALSO THE ASSESSEE IS A NON-BANKING FINANC E COMPANY AND IN THE COURSE OF ITS FINANCE ACTIVITY, IT HAS PURCHASED AN D SOLD SHARES FOR THE SUM OF 40 RS.1,19,30,037 AND HAD CLAIMED THE INCOME ON THAT C OUNT AS SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER REJECTED THE CO NTENTION HOLDING THAT THE SAID AMOUNT WAS BUSINESS INCOME AND BROUGHT IT TO T AX ON THAT COUNT. THE ASSESSEE SUCCEEDED IN THE APPELLATE PROCEEDINGS. HO N'BLE HIGH COURT OBSERVED THAT THE BULK OF SHARES HELD BY THE ASSESS EE WERE FOR A SUBSTANTIAL PERIOD AND INCOME WAS DERIVED ON ACCOUNT OF LIQUIDA TION OF INVESTMENT. IT WAS HELD THAT THERE CANNOT BE A SINGLE FACTOR OR CR ITERION TO DETERMINE WHETHER THE INCOME FALLS UNDER THE HEAD OF SHORT TE RM CAPITAL GAIN OR OF BUSINESS INCOME. HE REFERRED PAGE NOS. 13 TO 18 OF THE PAPER BOOK WHEREIN DETAILS OF SHORT TERM CAPITAL GAINS STT PAID (BENEF IT CLAIMED UNDER SEC. 111A) AND WITHOUT STT(NO BENEFIT CLAIMED UNDER SEC. 111A) HAVE BEEN FURNISHED. 46. LEARNED CIT(APPEALS) ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW AND HE HAS ALSO ADOPTED SIMIL AR ARGUMENTS AS ADVANCED BY HIM HEREINABOVE IN THE APPEAL FOR THE ASSESSMENT YEAR 2006-07 IN OPPOSITION OF GROUND NOS. 1 TO 3 OF THE APPEAL PREF ERRED BY THE ASSESSEE. 47. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THE AUTHORITIES BELOW HAVE DENIED THE CLAIMED SHORT TERM CAPITAL GAIN MAI NLY ON THE BASIS THAT THE ASSESSEE CARRIED ON THE ACTIVITIES OF PURCHASE AND SALE OF SHARES ON REGULAR BASIS, VOLUME OF PURCHASE AND SALE OF SHARES WAS HU GE, FREQUENCY OF 41 TRANSACTION WAS VERY HIGH, CONDUCT OF ASSESSEE WAS THAT OF A TRADER IN SHARES AND NO PROPER RECORDS WERE MAINTAINED AS PER REPORT UNDER SEC. 142(A) ISSUED BY THE SPECIAL AUDITOR. THE AUTHORITIES BELO W HAVE NOT DISCUSSED THE SUBMISSIONS OF THE ASSESSEE SUPPORTED WITH DETAILS OF THE TRANSACTION IN DETAIL. INSTEAD ON GENERAL OBSERVATION AND THE APPR OACH OF THE ASSESSING OFFICER IN THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08 HAVE HELD THAT THE CLAIMED SHORT TERM CAPIT AL GAIN WAS ACTUALLY BUSINESS INCOME. THEY HAVE NOT DISCUSSED AS TO HOW THEY HAVE ARRIVED TO THE CONCLUSION THAT CLAIMED SHORT TERM CAPITAL GAIN IS ACTUALLY BUSINESS INCOME. THE ASSESSEE HAD FURNISHED THE LIST OF SHARES AND T HE NUMBER OF SCRIPTS INVOLVED AROUND HUNDRED. IT HAD CLASSIFIED THE GAIN S INTO LONG TERM AND SHORT TERM AFTER TAKING INTO CONSIDERATION THE PERIOD OF HOLDING OF SHARES. THE LEARNED CIT(APPEALS) HAS SIMPLY NOTED THAT NUMBER O F SHARES AND FREQUENCY OF TRANSACTION ARE IN THE NATURE OF REGUL AR BUSINESS ACTIVITY IGNORING THE WELL ESTABLISHED PROPOSITION OF LAW TH AT THERE ARE SEVERAL CRITERIA TO ARRIVE A CONCLUSION ABOUT THE NATURE OF TRANSACT ION AS TO WHETHER IT IS INVESTMENT OR TRADE. UNDER SIMILAR FACTS IN THE ASS ESSMENT YEAR 2006-07 IN THE APPEAL FOR THE ASSESSEE HEREINABOVE, WE HAVE AD JUDICATED UPON AN IDENTICAL ISSUE IN GROUND NOS. 1 TO 3 HEREINABOVE. FOLLOWING THE SAME, WE HOLD THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TREATING THE CLAIMED 42 SHORT TERM CAPITAL GAIN AT RS.5,83,72,758. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD DIRECT THE ASSESSING OFFICER TO ACCEPT THE CLAIMED SHORT TERM CAPITAL GAIN. THE GROUND NOS . 1 TO 4 OF THE APPEAL PREFERRED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 48. GROUND NO.4 (REVENUE) : THE ASSESSING OFFICER DISALLOWED INTEREST EXPENDITURE OF RS.3,89,53,657 ON THE BASIS THAT THE RE ARE INTEREST FREE ADVANCES. HE NOTED THAT ASSESSEE IS USING INTEREST BEARING FUNDS BY GIVING ADVANCES TO VARIOUS OTHER GROUP CONCERNS AND INDIVI DUALS WITHOUT CHARGING ANY INTEREST FROM THEM. HE NOTED THAT LOANS AND ADV ANCES (CLOSING BALANCE OF WHICH HAS BEEN SHOWN AT RS.1,06,86,15,255 AS ON 31. 3.2008) HAVE BEEN GIVEN OR USED BY THE ASSESSEE FOR NON-BUSINESS PURP OSES. HE ACCORDINGLY DISALLOWED A PROPORTIONATE INTEREST EXPENSES. THE A SSESSING OFFICER NOTED THAT THE TOTAL INTEREST ON ADVANCES GIVEN FREE OF I NTEREST TO VARIOUS PARTIES WORKED OUT TO RS.7,91,18,129. HE NOTED FURTHER THAT THE CLAIM OF INTEREST EXPENSES AT RS.3,89,53,657 WAS LESS THAN THE AMOUNT OF RS.7,91,18,129 AND ACCORDINGLY THE ENTIRE AMOUNT OF RS.3,89,53,657 BEI NG INTEREST EXPENSE WAS DISALLOWED. THE LEARNED CIT(APPEALS) HAS, HOWEVER, DELETED THE DISALLOWANCE BEING SATISFIED WITH THE SUBMISSIONS O F THE ASSESSEE WHICH HAS BEEN QUESTIONED BY THE REVENUE. 43 49. IN SUPPORT OF THE GROUND, THE LEARNED CIT(DR) H AS PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT ASSESSEE HA D TAKEN INTEREST BEARING FUNDS BUT HAD GIVEN INTEREST FREE ADVANCES OR ON NO MINAL INTEREST RATES, WHICH WAS PREJUDICIAL TO BUSINESS INTEREST OF THE A SSESSEE. THE LEARNED CIT(APPEALS) HAS DELETED THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER WITHOUT ANY PLAUSIBLE REASON. THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE WAS HAVING SUFFICIENT FUND AVAILA BLE AND DISCUSSING THE SAME, THE LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE. HE PLACED RELIANCE ON THE FOLLOWING DECISION: I) CIT VS. TIN BOX CO. 260 ITR 637 (DEL.); II) CIT VS. DOCTOR & CO. 180 ITR 627 (BOM.); III) SANGHVI SWISS REFILLS PVT. LTD. VS. ITO 85 ITD 59 (MUM); 50. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE LEARNED CIT(APPEALS) HAS DELETED THE DISALLOWAN CE MAINLY ON THE BASIS THAT AS PER BALANCE SHEET AS ON 31.3.2008, THE ASSE SSEE WAS HAVING HUGE RESERVES AS DETAILED HEREUNDER: SCHEDULE B RESERVES AND SURPLUS AS ON 31.3.2008 AS ON 31.3.2007 A)STATUTORY RESERVE ADD: TRANSFER FROM PROFIT & LOSS A/C. B) CAPITAL REDEMPTION RESERVE C)SHARE PREMIUM ACCOUNT D) GENERAL RESERVE 178,875,000.00 78,500,000.00 133,875,000.00 45,000,000.00 257,375,000.00 178,875,000.00 3,290,000.00 3,290,000.00 7,750,000.00 8,345,000.00 7,750,000.00 8,345,000.00 8,345,000.00 8,345,000.00 44 E) PROFIT AND LOSS A/C. AS ANNEXED. TOTAL 1,258,942,332.41 1,535,702,332.41 948,913,872.63 1,147,173,872.63 51. FROM THE ABOVE DETAILS, WE FIND THAT INTEREST R ECEIPT IS MORE THAN THE INTEREST PAYMENT IN RESPECT OF FINANCIAL ACTIVITIES AND THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THE RESERVES AVAILABLE WITH T HE ASSESSEE. WE ARE THUS OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE. THE SAME IS UPHELD. THE GROUND NO. 4 OF THE APPEAL PREFERRED BY THE REVENUE IS THUS REJECTED. 52. THE GROUND NOS. 5 AND 6 OF THE APPEAL PREFERRED BY THE ASSESSEE HAVE NOT BEEN PRESSED AND THE SAME ARE ACCORDINGLY REJEC TED. 53. IN SUMMARY, APPEALS PREFERRED BY THE REVENUE AR E DISMISSED AND THOSE PREFERRED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.12.2015 SD/- SD/- ( L.P. SAHU ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 /12/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 45 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 22.12.2015 DRAFT PLACED BEFORE AUTHOR 22.12.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 22.12.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 22.12.2015 KEPT FOR PRONOUNCEMENT ON 22.12.2015 FILE SENT TO THE BENCH CLERK 22.12.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.