Sanjay Babel S/o Jasraj Singh BAbel, BHILWARA V. Addl. CIT, BHILWARA

ITA 288/JODH/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78226 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Capital asset; Business income; Advance ruling

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 288 /JODH/2011 (A.Y. 200 7 - 08 ) SHRI SANJAY BABEL, VS. THE ACIT , S/O SHRI JASWANT SINGH BABEL, BHILWARA RANGE, C - 172, KASHIPURI , BHILWARA. BHILWARA. PAN NO. ALEPB 6359 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 09 / 0 5 /201 4 . DATE OF PRONOUNCEMENT : 21 /0 7 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24 /05 /201 1 OF L D . CIT(A), AJMER . THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER : 1. THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN HOLDING THAT THE TRANSACTION IN SALE OF THE SHARES REPRESENTS BUSINESS INCOME OF THE ASSESSEE AND THEREBY ASSESSING THE CAPITAL GAIN DECLARED BY THE ASSESSEE ON SALE OF THE SHARE S AT RS. 30,22,109/ - AS BUSINESS INCOME INSTEAD OF INCOME FROM SHORT TERM CAPITAL GAIN. 2 2. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 3. THE ASSESSEE CRAVES RIGHT TO ADD, ALTER, OR AMEND ANY OF THE GROUNDS OF APPEAL. 2 FACTS RELATING TO THIS CASE , IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 07/01/2008 DECLARING AN INCOME OF RS. 30,22,109/ - . LATER ON CASE WAS SELE C TED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO HOW PROFIT FROM PURCHASE AND SALE OF SHARES WAS NOT A BUSINESS INCOME , BUT A CAPITAL GAIN AS CLAIMED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT HE HAD MADE INVESTMENT IN SHARES OUT OF SURPLUS F UNDS F R OM HIS BUSINESS AT JAPAN AND WHENEVER HE GOT ANY CHANC E OF GAIN OF HIS INVESTMENT IN SHARE, HE SOLD THEM AND EARNED SHORT TERM CAPITAL GAIN AND PAID DUE TAXES. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND TREATED THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS BUSINESS INCOME . 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMIT TED AS UNDER: - THE ASSESSEE SHOWED SHARES AS INVESTMENT IN ITS BALANCE SHEET AS ON 31/03/2006 AND 31/03/2007 WHICH WAS CAPITAL ASSETS. FURTHER THE ASSESSEE CONSISTENTLY FOLLOW UP THE SAME AND WHEN THE AO HAS ACCEPTED THE BALANCE SHEET OF THE LAST YEAR IN WHICH THESE SHARES WERE SHOWN AS INVESTMENTS, THE AO CANNOT CHANGE THE OPENING INVESTMENTS AS STOCK - IN - TRADE DURING THE 3 YEAR; OTHERWISE IT WOULD BE CONTRARY TO THE STAND TAKEN BY THE AO IN THE EARLIER YEARS . FURTHER THE ASSESSEE EARNED DIVIDEND INCOME OF RS. 99344/ - WHICH SHOWED THAT HE MADE INVESTMENT IN SHARES TO EARN DIVIDEND ALSO. THE ASSESSEE VALUED ITS SHARES ON COST PRICE. THE LD. AO IGNORE THE FACT THAT WHEN THERE IS SHORT TERM CAPITAL GAIN TREATED AS BUSINESS INCOME THEN STOCK OF SHARES VALUED AT COST OR MARKET PRICE WHICHEVER IS LOWER AND ALSO THE ASSESSEE WAS ENTITLED TO REBATE UNDER SECTION 88 E OF THE I.T. ACT. HOWEVE R, THE LD. AO NOT CONSIDERS VALUATION OF STOCK AS WELL AS REBATE UNDER SECTION 88E . THAT LD. AO ALSO MAKING ERRED THAT NEITHER SEPARATE SHOW CAUSE NOTICE ISSUED FOR PENALTY UNDER SECTION 271 B UNDER ACT FOR FAILURE TO GET ACCOUNTS AUDITED NOR DISCUSSED SA ME IN BODY OF ORDER. 1. THE ASSESSEE HAS, ALL ALONG AND IN A CONSISTENT MANNER, DEPICTED ITS ACQUISITION OF SHARES AS INVESTMENT AND HAS NEVER TREATED THE HOLDING OF SHARES AS ITS STOCK - IN - TRADE. THIS MAY NOT BE A CONCLUSIVE TEST BUT AT THE SAME TIME, A FAIRLY GOOD INDICATOR ABOUT THE ACTIVITIES AND ALSO THE INTENTION OF THE ASSESSEE . 2. THE LEARNED AO HAS CONSIDERED THE FREQUENCY OF TRANSACTION AND AMOUNT OF GAIN WHILE TREATING THE SAID INCOME AS BUSINESS INCOME. RECENTLY THE MUMBAI BENCH OF THE INCOME - TA X APPELLATE TRIBUNAL (THE TRIBUNAL) IN THE CASE OF ACIT VS. NAISHADH V. VACHHARAJANI (I.T.A.NO. 6429/MUM/2009) HELD THAT INCOME ON SALE OF SHARES IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND NOT BUSINESS INCOME SINCE THE INTENTION OF THE TAXPAYER WAS TO HOLD THE SHARES AS AN INVESTMENT AND NOT AS STOCK - IN - TRADE. FURTHER, THE TRIBUNAL HELD THAT THE MERE MAGNITUDE OF TRANSACTIONS DOES NOT CHANGE THE NATURE OF TRANSACTIONS. THE TRIBUNAL IN THIS CASE HELD THAT IT IS THE INTENTION OF THE TAXPAYER WHI CH IS TO BE SEEN TO DETERMINE THE NATURE OF TRANSACTION CONDUCTED BY THE TAXPAYER. THOUGH THE INVESTMENT IN SHARES IS IN LARGE MAGNITUDE, BUT THE SAME SHALL NOT DECIDE THE NATURE OF TRANSACTION . THEREFORE, MERE MAGNITUDE OF TRANSACTIONS DOES NOT CHANGE THE NATURE TRANSACTIONS, WHICH ARE BEING ASSESSED AS INCOME FROM CAPITAL GAINS IN THE PRECEDING YEAR. 4 4 IT WAS FURTHER STATED THAT THE ASSESSEE EARNED SHORT TERM CAPITAL GAIN ON THE SHARES HELD FOR MORE THAN THREE MONTHS. DETAIL OF THOSE W AS FURNISHED BEFORE THE LD. CIT(A), WHO REPRODUCED THE SAME AT PAGES 2 TO 5 OF THE IMPUGNED ORDER, FOR THE COST OF REP E TI TION , THE SAME IS NOT REPRODUCED HEREIN. IT WAS CONTENDED STATED THAT THE SIMILAR TRANSACTION S OF SALES AND PURCHASES OF SHARES IN THE PRECEDING Y EARS HAD BEEN HELD TO BE INCOME FROM CAPITAL GAINS BOTH ON LONG TERM AND SHORT TERM BASIS AND THE PURCHASE OF SHARES WAS SAME AS IN THE PRECEDING YEARS IT SHOULD HAVE BEEN ACCEPTED FOR THIS YEAR ALSO. IT WAS FURTHER CONTENDED THAT THE ASSESSING OFFICER TREATED THE ASSESSEE AS A TRADER INSTEAD OF INVESTOR IN SHARES AND CONSEQUENTLY TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME , A LTHOUGH SHARES WERE HELD AS INVESTMENT AND DULY SHOWN AS SUCH IN THE BALANCE SHEET . THEREF ORE, ANY GAIN WHICH HAD ARISEN ON TRANSFER OF SHARES WAS TAXABLE UNDER THE HEAD OF CAPITAL GAIN. IT WAS STATED THAT THE ASSESSEE HAD NRI STATUES AND WAS HAVING NO INTENTION TO CARRY BUSINESS IN INDIA . HE SIMPLY INVESTED HIS SURPLUS IN SHARES AND THE ASSESSING OFFICER ERRED IN MAKING ASSUMPTION AS TRADERS TO ASSESSEE WHEREAS HE WAS HAVING NRI STATUS . RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. GOPAL PUROHIT VS. JCIT (2009) 29 SOT 117 (MUM) 2. CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY (P) LTD. ( 197 1) 82 ITR 586 (S.C.) 5 3. RAJA BAHADUR KAMAKHYA NARAIN SINGH VS. CIT (1970) 77 ITR 253 (SC) 4. SNAM PROGETTI S.P.A. VS. ACIT (1981) [ 132 ITR 70 (DEL)] 5. CIT VS. TIRUPATI WOOLLEN MILLS LTD. (1992) 193 ITR 252 (CAL) 6. CIT VS. TAMIL NADU DAIRY DEVELOPMENT CORPORATION LTD. (1995) 216 ITR 535 (MAD.) 7. CIT VS. MADRAS REFINERI ES LTD. (1997) 228 ITR 354 (MAD.) 5 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE PURCHASED THE SHARES NOT WITH AN INTENTION TO EARN DIVIDEND ON THE SAME, BUT TO S ELL THEM ON PROFIT WITHIN A SHORT PERIOD. LD. CIT(A) FURTHER OBSERVED THAT THERE WERE TOTAL 300 TRANSACTIONS DURING THE YEAR AND IN 180 CASES, SHARES PURCHASED B Y THE ASSESSEE WERE SOLD WITHI N A PERIOD OF LESS THAN 90 DAYS. IN REMAINING CASES, SHARES WERE H E LD FOR A PERIOD VARYING FROM 91 TO 271 DAYS . THEREFORE, FROM THE CONDUCT OF ASSESSEE I T WAS CLEAR THAT HIS INT ENTION WAS TO EARN PROFIT AND NOT TO EARN DIVIDEND . HE ALSO OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT SHARES WERE PURCHASED OUT OF SURPLUS FUNDS FROM HIS BUSINESS IN JAPAN WAS NOT RELEVANT FOR THE PURPOSE OF DECIDING THE NATURE OF INCOME AND S IMILARLY, THE FACT THAT THOSE SHARES WERE SHOW N BY THE ASSESSEE IN HIS BALANCE SHEET AS INVESTMENT WAS ALSO NOT RELEVANT . LD. CIT(A), ACCORDINGLY HELD THAT THE ASSESSING OFFICER WAS 6 JUSTIFIED IN TREATING THE PROFIT OF RS. 30,22,100/ - AS INCOME FROM BUSINESS. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE FURNISHED EVIDENCES IN THE SHAP E OF STATEMENT OF HIS HOLDING , INDICATING THE PERIOD OF HOLDING SUPPORTED WITH THE TRANSACT ION STATEMENT OF HIS HOLDING WITH MOTILAL OSWAL SECURITIES LTD. , HOWEVER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER . IT WAS ALSO SUBMITTED THAT CBDT CIRCULAR NO. 04/2007 DATED 15/06/2007 IN PARA 8 & 9 HAS CLARIFIED THAT ONLY ONE OR TWO FACTOR CANNOT BE A BASIS FOR TAKING A VIEW IN THE MATTER, BUT THE OVERALL VIEW IS REQUIRED TO BE CONSIDERED BY TAKING ALL THE FACTS INTO CONSIDERATION FOR DECIDING TH E ISSUE. THE SAID CIRCULAR READS AS UNDER: - 8. THE AUTHORITY FOR ADVANCE RULINGS (AAR) [2007] 288 ITR 641 , REFERRING TO THE DECISIONS OF THE SUPREME COURT IN SEVERAL CASES, HAS CULLED OUT THE FOLLOWING PRINCIPLES (PAGE 651) (I) WHERE A COMPANY PURCHASES AND S ALES SHARES, IT MUST BE SHOWN THAT THEY WERE HELD AS STOCK - IN - TRADE A ND THAT EXISTENCE OF THE POWER TO PURCHASE AND SELL SHARES IN THE MEMORANDUM OF ASSOCIATION IS NOT DECISIVE OF THE NATURE OF TRANSACTION. (II) THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE MANNER OF MAINTAINING BALANCE SHEET, THE MAGNITU D E OF PURCHASES AND SALES AND THE RATIO BETWEEN PURCHASES AND SALES AND THE HO L DING WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTIONS 7 (III) ORDINARILY THE PURCHASE AND SALE OF SHARES WITH THE MOTIVE OF EARNING A PROFIT, WOULD RESULT IN THE TRANSACTION BEING IN THE NATURE OF TRADE/ADVENTURE IN THE NATURE OF TRADE; ;BUT WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY OF DIVIDEND ETC. THEN THE PROFITS ACCRUING BY CHANGE IN SUCH INVESTME N T (BY SALE OF SHARES) WILL YIELD CAPITAL GAIN AND NOT REVENUE RECEIPT. 9. DECLA RING WITH THE ABOVE THREE PRINCI PLES, AAR HAS OBSERVED IN THE CASE OF FIDELITY GROUP AS UNDER (PAGE 661): - WE SHALL REVERT TO THE AFOREMENTIONED PRINCIPLES. THE FIRST PRINCIPLE REQUIRES US TO ASCERTAIN WHETHER THE PUR CHASE OF SHARES BY A FII IN EXERCISE OF THE POWER IN THE MEMORANDUM OF ASSOCIATION/TRUST DEED WAS AS STOCK - IN - TRADE AS THE MERE EXISTEN CE OF THE POWER TO PURCHASE AND SELL SHARES WILL NOT BY ITSELF BE DECISIVE OF THE NATURE OF TRANSACTION. WE HAVE TO VERI FY AS TO HOW THE SHARES WERE VALUED/HELD IN THE BOOKS OF ACCOUNTS I.E., WHETHER THEY WERE VALUED AS STOCK - IN - TRADE AT THE END OF THE FINANCIAL YEAR FOR THE PURPOSE OF ARRIVING AT BUSINESS INCOME OR HELD AS INVESTMENT IN CAPITAL ASSETS. THE SECOND PRINCIPLE FURNISHES A GUIDE FOR DETERMINING THE NATURE OF TRANSACTION BY VERIFYING WHETHER THERE ARE SUBSTANTIAL TRANSACTIONS, THEIR MAGNITUDE, ETC., MAINTENANCE OF BALANCE SHEET AND FINDING THE RATIO BETWEEN PURCH ASES AND SALES. IT WILL NOT BE OUT OF PLACE TO MENTION THAT REGULATION 18 OF THE SEBI REGULATIONS ENJOINS UPON EVERY FII TO KEEP AND MAINTAIN BALANCE SHEET CONTAINING TRUE AND FAIR ACCOUNTS RELATING TO REMITTANCE OF INITIAL CORPUS OF BUYING AND SELLING AN D REALIZING CAPITAL GAINS ON INVESTMENTS AND ACCOUNTS OF REMITTANCE TO INDIA FOR INVESTMENT IN INDIA AND REALIZING CAPITAL GAINS ON INVESTMENT FROM SUCH REMITTANCES. THE THIRD PRINCIPLE SUGGESTS THAT ORDINARILY PURCHASES AND SALES OF SHARES WITH THE MOTIV E OF REALIZING PROFIT WOULD LEAD TO INTERFERENCE OF TRADE/ ADVENTURE IN THE NATURE OF TRADE; WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF COMPANIES IS TO DERIVE INCOME BY WAY OF DIVIDENDS ETC., THE TRANSACTIONS OF PURCHASES AND SALES OF SHARES WOULD YIEL D CAPITAL GAINS AND NOT BUSINESS PROFITS. 10. THE CENTRAL BOARD OF DIRECT TAXES ALSO WISHES TO EMPHASIZE THAT IT IS POSSIBLE FOR A TAX PAYER TO HAVE TWO PORTFOLIOS I.E. AN INVESTMENT PORTFOLIO COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSETS AND A TRADING PORTFOLIO COMPRISING OF STOCK - IN - TRADE WHICH ARE TO BE TREATED AS 8 TRADING ASSETS. WHERE AN ASSESSEE HAS TWO PORTFOLIOS, THE ASSESSEE MAY HAVE INCOME UNDER BOTH HEADS I.E. CAP ITAL GAINS AS WELL AS BUSINESS INCOME . 11. THE ASSESSING OFFICER ARE ADVISED THAT THE ABOVE PRINCIPLES SHOULD GUIDE THEM IN DETERMINING WHETHER, IN A GIVEN CASE, THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENT (AND THEREFORE, GIVING RISE TO CAPITAL GAINS) OR AS STOCK - IN - TRADE (AND THEREFORE GIVING RISE TO BUSINESS PROFITS). THE ASSESSING OFFICERS ARE FURTHER ADVISED THAT NO SINGLE PRINCIPLE WOULD BE DECISIVE AND THE TOTAL EFFECT OF ALL THE PRINCIPLES SHOULD BE CONSIDERED TO DETERMINE WHETHER, IN A GIVEN CA SE, THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENT OR STOCK - IN - TRADE. 7. IT WAS SUBMITTED THAT THE ASSESSEE H E LD THE SHARES AS INVESTMENT WHICH WAS EVIDEN T FROM HIS BALANCE SHEET PLACED AT PAGE NO. 15 AND IN THE LAST YEAR ALSO , SUCH SHARES WERE HELD AS INVESTMENT AND HOLDING PERIOD OF MOST OF THE SHARES SOLD DURING THE YEAR WAS RANGING FROM 90 TO 365 DAYS . REFERENCE WAS MADE TO PAGES 5 & 6 OF THE ASSESSEES PAPER BOOK. IT WAS ALSO STATED THAT THE ASSESSEE DECLARED DIVIDEND INCOME OF RS. 99 ,344/ - AND THE ASSESSEE HAD TRANSACTED ONLY IN 122 SCRIPS WHICH COULD NOT BE SAID TO BE VOLUMINOUS TRANSACTION IN THE SHARE MARKET. THEREFORE, THE INCOME OF THE SHARES WAS ASSESSABLE UNDER THE HEAD CAPITAL GAIN AND NOT AS BUSINESS INCOME . RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. CIT VS. ROHIT ANAND 327 ITR 445 (DEL) (HC) 2. CIT VS. N.S.S. INVESTMENT P. LTD. 277 ITR 149 (MAD.) 3. CIT VS. GIRISH MOHAN GANERIWALA 260 ITR 417 (P&H) (HC) 9 4. NAGINDAS P . SHETH (HUF) VS. ACIT 2011 - TIOL - 228 (MUM.) (TRIB.) 5. DCIT VS. SH. R A VINDRA M. AGARWAL 2011 - TIOL - 185 (AHM.)(TRIB.) 6. KORADIA CONSTRUCTION (P) LTD. VS. DCIT (2014) 146 ITD 251 (MUM.) (TRIB.) 7. SALIL SHAH FAMILY (P) TRUST VS. ACIT (2013) 144 ITD 390 (MUM.) 8. APPORVA PATNI VS. ACIT (2012) 54 SOT 9 (PUNE) 9. DCIT VS. SUBASH ROHILLA (2012) 34 CCH 450 (DEL.) 6 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER . 7 . WE HAVE CONSIDERED THE SUBMISSIO NS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE IS NRI (NON - RESIDENT INDIAN) SINCE 1989 AND WAS DOING BUSINESS OF TRADING IN DIAMONDS AT JAPAN. THE ASSESSEE DID NOT DO ANY BUSINESS IN INDIA AND OUT OF SURPLUS FUNDS, THE INVESTMENT WAS MADE IN SHARES & IN MUTUAL FUNDS INDIA. THE ASSESSEE EARNED DIVIDEND INCOME AMOUNTING TO RS. 9 9,344/ - WHICH WAS OFFERED FOR TAXATION AS IS EVIDE NT FROM PAGE NO. 14 OF THE ASSESSEES COMPILATION WHICH IS A COPY OF COMPUTATION OF INCOME. THEREFORE, THIS OBSERVATION OF THE LD. CIT(A) WAS WRONG THAT THE ASSESSEE HAD NOT EARNED ANY DIVIDEND . IT IS ALSO NOTICED THAT THE ASSESSEE HAD SHOWN THE INVESTMENT IN SHARES IN 10 HIS BALANCE SHEET FOR THE YEAR ENDING ON 31/03/2007 AND 31/03/2006 , COPY OF WHICH A RE PLACED AT PAGES 15 & 12 RESPECTIVELY OF THE ASSESSEES PAPER BOOK WHICH CLEARLY SHOWS THAT THE INTENTION OF THE ASSESSEE WAS TO HAVE THE SHARES AS INVESTMENT AND NOT AS STOCK - IN - TRADE . IT IS ALSO NOTICED THAT THE CONTENTS OF THE BALANCE SHEET AS ON 31/03/2006 I.E. PRECEDING YEAR HAD NOT BEEN DOUBTED AND WHEN THE SHARES HOLDING BY THE ASSESSEE WAS ACCEPTED AS AN INVESTMENT IN THE PRECEDING YEAR THEN THE INCOME EARNED FROM THE SALE OF THOSE SHARES CANNOT BE TERMED AS A BUSINESS INCOME. THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME . WE THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE , SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT THE INCOME DECLARED BY THE ASSESSE E AS SHORT TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 21 ST JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST JULY , 201 4 . 11 VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .