The ACIT, Circle-6, Surat V. Shri Amish Vadilal Shah, Surat

ITA 2962/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50856 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Capital asset; Business income; Depreciation; Salary income
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. K. GARODIA AM) ITA NO.2962/AHD/2009 A. Y.: 2006-07 THE A. C. I. T., CIRCLE-6, SURAT , ROOM NO.623, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI AMISH VADILAL SHAH, 6/1940, VARDAN APARTMENT, DALAGIA MOHALLO, MAHIDHARPURA, SURAT PA NO. ADRPS 1071 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. MADHUSUDAN, SR. DR RESPONDENT BY SHRI M. J. SHAH, AR DATE OF HEARING: 01-11-2011 DATE OF PRONOUNCEMENT: 4-11-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , SURAT DATED 16-07-2009, FOR ASSESSMENT YEAR 2006-07, CHALLENGIN G THE ORDER OF THE LEARNED CIT(A) IN TREATING THE BUSINESS INCOME OF RS.31,65,922/- EARNED BY THE ASSESSEE FROM TRADING OF SHARES AS SH ORT TERM CAPITAL GAINS. 2. THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THA T THE AO OBSERVED THAT THE ASSESSEE WAS A DIRECTOR IN THE CO MPANY, S. VINODKUMAR DIAMONDS PVT. LTD. AND PARTNER IN VIKAS INTERNATIONAL ENGAGED IN THE BUSINESS OF DIAMONDS FROM WHERE HE H AS EARNED SALARY INCOME OF RS.60,00,000/- AND PROFIT OF RS.18 ,68,877/- ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 2 RESPECTIVELY. THE ASSESSEE HAS ALSO EARNED INTEREST INCOME OF RS.17,66,059/- FROM S. VINODKUMAR DIAMONDS PVT. LTD . ON THE LOANS GIVEN TO IT. THE MAJOR EARNING ACTIVITY OF THE ASSE SSEE WAS PERTAINING TO THE BUSINESS OF THE COMPANY AND THE FIRM, BUT HE ALSO APPLIED HIS FUNDS IN SHARES AND SECURITIES MARKET WHEREIN HE CL AIMED TO HAVE EARNED SHORT TERM CAPITAL GAIN OF RS.31,65,922/- AN D HAD ALSO EARNED LONG TERM CAPITAL GAIN OF RS.10,87,304/- THE AO TRE ATED THE SHORT TERM CAPITAL GAIN INCOME ON SALE OF LISTED EQUITY S HARES AS BUSINESS INCOME OF THE ASSESSEE ON VARIOUS GROUNDS. THE FIRS T GROUND WAS THAT THE ASSESSEE HAS EARNED THE DIVIDEND INCOME OF RS.5 7,253/- WHEREAS THE TOTAL PURCHASE IS RS.3.20 CRORES AND SA LE IS RS.2.07 CRORES AND THEREFORE, DIVIDEND WAS NOT THE ONLY MOT IVE TO EMPLOY SUCH HUGE MONEY OF RS.3.20 CRORES AT RISK. THE AO O BSERVED THAT THE NUMBER OF OCCASIONS WHERE DIVIDEND WAS DECLARED DURING THE YEAR WAS 26 WHEREAS THE TOTAL TRANSACTIONS IN THE S HARE MARKET WERE 100. THE AO ALSO OBSERVED THAT THE ASSESSEE MADE TR ANSACTIONS IN 43 SCRIPTS DURING THE YEAR, OUT OF WHICH DIVIDEND F ETCHING SCRIPTS WERE 20 AND THUS, THE ASSESSEES MOTIVE WAS NOT TO EARN DIVIDEND ON INVESTMENT BUT WAS TO MAKE PROFIT BY DOING BUSINESS . THE AO PREPARED A LIST OF MAJORITY SCRIPTS ON WHICH DIVIDE ND WAS EARNED BY THE ASSESSEE AND WORKED OUT THAT THE DIVIDEND EARNE D WAS 3.16% WHEREAS THE PROFIT EARNED THEREON WAS 66.30% AND TH AT EXCEPT 4 SCRIPTS ALL OTHER DIVIDEND HAD BEEN RECEIVED ON LON G TERM HELD SCRIPTS. THE AO FURTHER OBSERVED THAT OUT OF 67 SALES TRANSA CTIONS OF SHARES, 15 TRANSACTIONS WERE ON LONG TERM BASIS AND REMAINI NG 52 ON SHORT TERM BASIS WHICH IMPLIES HAT 80% TRANSACTIONS WERE SHORT TERM REFLECTING A PATTERN OF TRADING ACTIVITY. THE AO TH US CONCLUDED THAT THE ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 3 SHARES POSSESSED BY THE ASSESSEE CANNOT BE TREATED AS CAPITAL ASSET BUT AS STOCK-IN-TRADE. THE ASSETS SIDE OF THE BALA NCE SHEET OF THE ASSESSEE WAS RS.12.49 CRORES OUT OF WHICH SHARES HE LD AS ASSETS WERE RS.5.67 CRORES AND THUS VERY LARGE SCALE OF FU NDS WERE DEPLOYED IN THE SHARE MARKET. THE AO PREPARED A GRA PH TO SHOW THE HOLDING PERIOD OF SHARES IN RESPECT OF SHORT TERM T RANSACTIONS AND CONCLUDED THAT 7 TRANSACTIONS CROSSED THE HOLDING P ERIOD OF 60 DAYS, AROUND 21 TRANSACTIONS WERE BETWEEN THE HOLDING PER IOD OF 30 TO 60 DAYS AND THE BALANCE TRANSACTIONS WERE LESS THAN 30 DAYS. ON THE BASIS OF THIS GRAPH THE AO CONCLUDED THAT THE PATTE RN OF INVESTMENTS CLEARLY REFLECTED ADVENTURE IN THE NATURE OF TRADE. THE AO PLACED RELIANCE ON THE CBDT CIRCULAR NO.4/2007 DATED 15-06 -2007 AND THE JUDICIAL PRONOUNCEMENTS AS CITED THEREIN TO COME TO A CONCLUSION THAT THE MOTIVE OF THE ASSESSEE IN THIS TRANSACTIONS OF SHARES WAS TO MAKE PROFIT AND NOT TO EARN DIVIDEND. THE AO WORKED OUT THE HOLDING PERIOD OF EACH SCRIPTS HELD BY THE ASSESSEE FOR SHORT TERM PERIOD WHICH RANGES FROM A MINIMUM PERIOD OF 1 DAY TO A MAXIMUM PERIOD OF 312 DAYS. THE AO OBSERVED THAT THE ASSESSEE HAS HUGE LE NDING AND BORROWING TRANSACTIONS WITH HIS COMPANY S. VINODKUM AR DIAMONDS PVT. LTD. AND DURING THE YEAR HUGE AMOUNT OF FUNDS CHANGED HANDS BETWEEN THE TWO ENTITIES. FURTHER, THE AO DEVISED 1 5 TESTS ON THE BASIS OF DRAFT INSTRUCTIONS AND CBDT CIRCULAR TO DE TERMINE WHETHER THE ASSESSEE WAS AN INVESTOR OR A TRADER IN SHARES. HE HELD THAT THOUGH THE SHARE TRADING ACTIVITY WAS NOT ALLIED TO THE US UAL DIAMOND BUSINESS CARRIED ON BY THE ASSESSEE THE SAME WAS NO T AN OCCASIONAL INDEPENDENT ACTIVITY. THE PURCHASE OF SHARES WAS WI TH THE SOLE INTENTION OF RESALE AT PROFIT AND DIVIDEND INCOME W AS ONLY INCIDENTAL ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 4 THERETO. THE SCALE OF ACTIVITY WAS SUBSTANTIAL. THE TRANSACTIONS WERE CONTINUOUS AND REGULAR DURING THE YEAR AND INVESTME NT WAS MADE FROM THE FUNDS RECEIVED FROM THE COMPANY. THE HOLDI NG PERIOD FOR 85% OF THE TRANSACTION WAS LESS THAN 60 DAYS. APART FROM DIAMOND BUSINESS ACTIVITY, THE ASSESSEE DEVOTED SUBSTANTIAL TIME OVER AND ABOVE THE DIAMOND BUSINESS AND THE CONSULTING CHARG ES WERE PAID FOR GETTING THE SERVICES. THE AO, THEREFORE, HELD T HE ASSESSEE TO BE A TRADER IN SHARES AND NOT AN INVESTOR AND ACCORDINGL Y TREATED THE SHORT TERM CAPITAL GAIN INCOME OF RS.31,65,992/- AS BUSIN ESS INCOME. 3. THE ASSESSEE CHALLENGED THE FINDING OF THE AO B EFORE THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE IS A WHOLE TIME DIRECTOR IN S. VINODKUMAR DIAMONDS PVT. LTD. AND DE RIVED REMUNERATION AND HE IS ALSO ACTIVE PARTNER IN VIKAS INTERNATIONAL AND DERIVED PROFIT FROM THE SAID FIRM. THE SURPLUS FUND S WERE INVESTED IN THE SHARES AND THE ASSESSEE HAS NO OFFICE OR INFRAS TRUCTURE BUT MADE INVESTMENT ONLY THROUGH HIS BROKER THROUGH HIS DEMA T ACCOUNT. YEAR AFTER YEAR THE ASSESSEE HAS STATED THE EQUITY SHARE S AS HIS INVESTMENT IN HIS REGULAR BALANCE SHEET AND THE ASS ESSEE HAS NOT CONDUCTED ANY BUSINESS ACTIVITY. THE ASSESSEE RELIE D UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTIONS WHICH ARE N OTED IN THE IMPUGNED ORDER. THE ASSESSEE ALSO FILED A TABLE TO SHOW THAT THE ASSESSEE HAS SHOWN MORE SHORT TERM CAPITAL GAINS FO R TAXATION AS AGAINST BUSINESS INCOME COMPUTED BY THE AO. HE HAS SUBMITTED THAT SINCE IT IS CONSISTENTLY FOLLOWED THAT THE ASSESSEE DID NOT ENTER INTO ANY BUSINESS TRANSACTION AND MADE ONLY INVESTMENT T HROUGH DEMAT ACCOUNT ON ACTUAL TAKING DELIVERY OF THE SHARE AND NO BORROWED FUNDS ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 5 USED, THEREFORE, THE ASSESSEE HAS CORRECTLY SHOWN T HE TRANSACTIONS AS SHORT TERM CAPITAL GAINS. THE VARIOUS POINTS HIG HLIGHTED BY THE ASSESSEE ARE NOTED IN THE APPELLATE ORDER. 4. THE LEARNED CIT(A) CONSIDERING THE MATERIAL ON R ECORD IN THE LIGHT OF THE FINDINGS OF THE AO AND SUBMISSIONS OF THE ASSESSEE SET ASIDE THE ORDER OF THE AO AND DECIDED THE POINT IN FAVOUR OF THE ASSESSEE BY HOLDING THE INCOME OF THE ASSESSEE FROM SHORT TERM CAPITAL GAINS. THE FINDINGS OF THE LEARNED CIT(A) I N THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CONSIDERED THE FINDINGS OF THE AO AND THE SUBMISSIONS AS MADE BY THE APPELLANT. FROM THE FACT S OF THE CASE, IT IS EVIDENT THAT THE APPELLANT IS A FUL L TIME DIRECTOR IN S. VINODKUMAR DIAMONDS PVT. LTD. AND PA RTNER IN VIKAS INTERNATIONAL WHICH HAS A TOTAL TURNOVER O F MORE THAN 672 CRORES IN THE YEAR UNDER CONSIDERATION. ON ACCOUNT OF HIS FULL TIME INVOLVEMENT IN THE BUSINES S OF THE COMPANY AND THE FIRM, THE APPELLANT IS DERIVING AN ANNUAL SALARY OF RS.60,00,000/- FROM THE SAID COMPANY AND PROFIT OF RS.18,68,877/- FROM THE FIRM. DURING THE YEAR UN DER CONSIDERATION, THE APPELLANT APPARENTLY HAD SURPLUS IN THE FORM OF NET SALARY INCOME OF RS.30.31 LACS AFTER DE DUCTING TDS AND HOUSEHOLD WITHDRAWALS FROM THE SAID COMPANY AS ALSO NET INTEREST INCOME OF RS.15.68 LACS ON THE LOANS GIVEN TO THE SAID COMPANY. THE APPELLANT HAS NOT BORROWED ANY FUNDS FOR MAKING INVESTMENTS IN THE CA PITAL MARKET. FURTHER THE ENTIRE SHORT TERM CAPITAL GAIN OF RS.31.66 LACS AND LONG TERM CAPITAL GAIN OF RS.10.8 7 LACS ON SALE OF LISTED EQUITY SHARES HAS BEEN RE-INVESTE D IN EQUITY SHARES. THE ACTIVITY OF INVESTMENT IN THE CA PITAL MARKET IS NEITHER ALLIED NOR INCIDENTAL TO THE USUA L TRADE OF THE APPELLANT OF EXPORT OF DIAMONDS. THE APPELLANT DOES NOT HAVE ANY INFRASTRUCTURE IN THE FORM OF OFFICE, EMPLOYEES, COMPUTER SYSTEMS, BOLT, ON LINE TRADING ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 6 ACTIVITY ETC. SO AS TO CARRY ON THE BUSINESS OF TRA DING IN SHARES AND HIS INVESTMENT HAS BEEN MANAGED BY THE BROKER AND ALL THE TRANSACTIONS OF PURCHASE AND SAL E ARE ONLY THROUGH DEMAT ACCOUNT. DURING THE YEAR THE APPELLANT HAS SUFFERED A LOSS OF O RS.8,446/- IN RE SPECT OF NON DELIVERY OF SHARES WHICH IS SHOWN BY HIM UNDER THE HEAD 'INCOME FROM BUSINESS' AS PER THE PROVISIONS O F SEC. 43(5) OF THE INCOME TAX ACT. THE APPELLANT HAS ALSO EARNED DIVIDEND INCOME OF RS.57,253/- DURING THE YE AR I.E. ON 20 SCRIPTS OUT OF THE TOTAL INVESTMENTS IN 43 SCRIPTS I.E. A RATIO OF 47% WHICH IS SUBSTANTIAL. THE APPEL LANT HAS ALSO RECEIVED DIVIDEND ON 26 OCCASIONS DURING THE Y EAR WHICH ALSO FAVOURS THE ACT OF THE APPELLANT AS AN I NVESTOR. FURTHER, THE AVERAGE PERIOD OF PURCHASE AND SALE OF SHARES IN THE CASE OF THE APPELLANT IS 52 DAYS WHER EAS THE AVERAGE PERIOD OF HOLDING OF SHARES AS AT THE Y EAR END IS 210 DAYS, WHICH CLEARLY LEAD TO AN INFERENCE THA T THE APPELLANT IS AN INVESTOR SINCE NO BUSINESSMAN WOULD HOLD HIS STOCK FOR AN AVERAGE PERIOD OF 210 DAYS AND THE GAP OF 52 DAYS BETWEEN A PURCHASE AND SALE TRANSACTION IS ALSO HIGHER IF A MARKET EXISTS FOR THE SAME. IT IS IMPORTANT TO NOTE THAT THE APPELLANT HAS SHOWN THE SHARE AS A T THE YEAR END IN HIS BALANCE SHEET UNDER THE HEAD 'INVESTMENTS' AND NOT AS 'STOCK-IN-TRADE' AND ACCOR DINGLY, THE SAID INVESTMENTS HAS BEEN CARRIED IN THE BOOKS AT COST WITHOUT CLAIMING BENEFIT OF DIMINUTION IN THE MARKET VALUE OF SHARES AS WOULD HAVE BEEN AVAILABLE IN THE CASE OF STOCK-IN-TRADE. AS PER THE APPELLANT, THE PURCHA SE COST OF THE SHARES HELD AT THE YEAR END IS RS.1,91,73,65 6/- AS AGAINST THE MARKET VALUE OF RS.1,74,14,942/- AND HE NCE, THERE IS A DEPRECIATION IN THE VALUE OF INVESTMENT AS ON 31-03-2006 OF RS.17,58,714/-. IT IS SEEN THAT AO IS HOLDING THAT THE SHARES HELD AT THE YEAR END ARE ST OCK-IN- TRADE OF THE APPELLANT AND NOT CAPITAL ASSET BUT AF TER THIS FINDING, THE AO IS NOT VALUING THE SAID STOCK-IN-TR ADE AT THE LOWER OF COST OR MARKET VALUE AS PER THE ACCOUNTING STANDARD PRESCRIBED UNDER THE ACT. IF HE HAD DONE S O AND COMPUTED THE INCOME OF THE APPELLANT, THE BUSINESS INCOME WOULD HAVE BEEN RS.14,47,886/- IN THE ACTIVI TY OF SALE OF SHARE INSTEAD OF THE SHORT TERM CAPITAL GAI N OF ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 7 RS.31,65,922/- DULY OFFERED BY THE APPELLANT. HOWEV ER, THE AO ONLY APPLIED THE TAX RATE OF 30% ON THE INCO ME COMPUTED AS PER THE PROVISIONS OF SEC. 45 I.E. UNDE R THE HEAD CAPITAL GAINS WHICH IS NOT CORRECT. IT IS ALSO SEEN THAT IF THIS APPROACH OF COMPUTING THE BUSINESS INCOME I S APPLIED ON A CONSISTENT BASIS IN THE SUBSEQUENT YEA RS, THE TOTAL BUSINESS INCOME FOR F.Y. 2005-06 TO F.Y. 2008 -09 WOULD WORK OUT TO RS.31,74,181/- AS AGAINST THE SHO RT TERM CAPITAL GAIN OF RS.79,02,706/- AS DULY OFFERED BY THE APPELLANT IN HIS REGULAR RETURNS. THE ISSUE IS DECI DED IN FAVOUR OF THE APPELLANT BY THE HON'BLE ITAT MUMBAI IN THE CASE OF J.M. SHARES & STOCK BROKERS LTD. VS. JCIT SP.RANGE-22, MUMBAI IN ITA NO. 2801/MUM/2000 FOR A.Y. 1995-96 VIDE ORDER DATED 30-11-2007 WHEREIN IT HAS HELD THAT THE PROFIT EARNED BY THE APPELLANT ON SAL E OF SHARES WHICH WERE HELD BY IT AS INVESTMENT WAS ASSESSABLE UNDER THE HEAD CAPITAL GAIN AND NOT UNDE R THE HEAD BUSINESS INCOME SINCE THE APPELLANT HAD NOT CLAIMED THE BENEFIT OF THE DEPRECIATION IN THE MARK ET VALUE OF SHARES AS IS AVAILABLE IN THE CASE OF STOCK-IN-T RADE. IF THE FACTS OF THE CASE ARE VIEWED IN LINE WITH THE PARAMETERS AS LAID DOWN IN THE CBDT CIRCULAR NO. 4/ 2007 DATED 15-06-2007 AND THE VARIOUS TESTS AS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER, I FIND THAT FIRST O F ALL THE PURCHASE AND SALE OF SHARES IS NOT THE USUAL TRADE OR BUSINESS OF THE APPELLANT NOR IS IT INCIDENTAL TO H IS BUSINESS OF EXPORT OF DIAMONDS. SECONDLY, I ALSO FI ND THAT THE MOTIVE BEHIND THE INVESTMENTS IS LONG TERM APPRECIATION SINCE DIVIDEND HAS ALSO BEEN RECEIVED ON 20 SCRIPTS OUT OF 43 SCRIPTS AND IN THE MEANTIME IF TH E INVESTMENT IS CHANGED FOR BETTER RE-INVESTMENT THEN , IT CANNOT BE HELD THAT IT IS BUSINESS SINCE THE SURPLU S AGAIN STANDS RE-INVESTED IN OTHER SCRIPTS. MERE MAGNITUDE OF THE TRANSACTION DOES NOT CHANGE THE NATURE OF TRANSACTI ON. IT IS ALSO SEEN THAT THE APPELLANT HAS NOT MADE ANY BORROWINGS FOR INVESTMENTS BUT IT IS OUT OF HIS OWN SURPLUS FUNDS. THE CHARACTERIZATION OF SHARES IN THE BOOKS AS INVESTMENTS AND NOT AS STOCK-IN-TRADE AND THEREBY N OT CLAIMING THE BENEFIT OF DIMINUTION IN THE MARKET VA LUE OF ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 8 SHARES SUPPORTS THE CLAIM OF THE APPELLANT THAT HE IS AN INVESTOR NOT HAVING CLAIMED ANY HOLDING LOSS. THUS, I AM OF THE CONSIDERED VIEW THAT THE APPELLAN T HAS CORRECTLY SHOWN THE INCOME ON SALE OF LISTED EQUITY SHARES AS SHORT TERM CAPITAL GAIN AND THE SAME DOES NOT AM OUNT TO BUSINESS. ACCORDINGLY, THE AO'S ACTION OF TREATING THE INCOME OF THE APPELLANT AS BUSINESS INCOME AND NOT AS SHORT TERM CAPITAL IS NOT IN ORDER. THIS GROUND IS THEREFORE, DECIDED IN FAVOUR OF THE APPELLANT. IN THE RESULT THE APPEAL OF THE APPELLANT IS ALLOWE D. 5. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT IN THE CASE OF ANOTHER DIRECTOR WITH M/S. VINODKUMAR DIAMONDS PVT. LTD., SHRI MANISH SUMATILAL SHAH, THE TRIBUNAL HAS DISMIS SED THE DEPARTMENTAL APPEAL FOR THE SAME ASSESSMENT YEAR ON IDENTICAL FACTS IN ITA NO.1934/AHD/2009 DATED 21-10-2011. COPY OF T HE ORDER IS PLACED ON RECORD AND SUPPLIED TO THE LEARNED DR. HE HAS, THEREFORE, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE. THE LEARNED DR DID NOT DISPUTE THE CONTEN TION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6. ON CONSIDERATION OF THE FACTS OF THE CASE AND T HE FINDINGS OF THE LEARNED CIT(A), WE ARE OF THE VIEW THAT IN IDEN TICAL CASE OF OTHER DIRECTOR SHRI MANISH SUMATILAL SHAH (SUPRA), THE TR IBUNAL HAS CONFIRMED SIMILAR ORDER OF THE LEARNED CIT(A) AND D ISMISSED THE DEPARTMENTAL APPEAL. THE FINDINGS IN THE ORDER OF T HE TRIBUNAL DATED 21-10-2011 IN PARA 6 ARE REPRODUCED AS UNDER: ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 9 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DIRECTOR OF THE COM PANY AND INVOLVED IN THE BUSINESS OF THE COMPANY FOR WHI CH THE ASSESSEE DERIVES ANNUAL SALARY OF RS.60 LAKHS. THE CIT(A), AFTER DETAILED DISCUSSION ON EACH AND EVERY ASPECTS, FOUND THAT THE ACTIVITY OF INVESTMENT IN C APITAL MARKET BY THE ASSESSEE IS NEITHER ALLIED NOR INCIDE NTAL TO THE USUAL TRADE OF THE ASSESSEE OF EXPORT OF DIAMON DS. THE ASSESSEE DOES NOT HAVE ANY INFRASTRUCTURE IN TH E FORM OF OFFICE, EMPLOYEES, COMPUTER SYSTEMS, BOLT, ONLINE TRADING ACTIVITIES, ETC. SO AS TO CARRY ON THE BUSI NESS OF TRADING IN SHARES AND INVESTMENT. THE CIT(A) HAS AL SO EXAMINED THE ISSUE FROM THE ANGLE OF HOLDING OF THE SHARES AND NOTED THAT AVERAGE PERIOD OF PURCHASE AN D SALE OF SHARES IN CASE OF THE ASSESSEE IS 134 DAYS WHEREAS THE AVERAGE PERIOD OF HOLDING OF SHARES AS AT THE YEAR END IS 220 DAYS, WHICH CLEARLY LEAD TO AN INFE RENCE THAT THE ASSESSEE IS AN INVESTOR. THE CIT(A) HAS AL SO NOTED THAT THE ASSESSEE, AT THE YEAR END, IN HIS BA LANCE- SHEET, SHARE INVESTMENT HAS BEEN SHOWN AS INVESTMEN T AND NOT AS STOCK-IN-TRADE. THE CIT(A) ALSO EXAMINED THE ISSUE IN THE LIGHT OF PARAMETERS LAID DOWN BY THE C BDT IN ITS CIRCULAR NO.4/2007 DATED 15.06.2007 AND FOUND T HAT THE PURCHASE AND SALE OF SHARES IS NOT USUAL TRADE OR BUSINESS OF THE ASSESSEE NOR IT IS INCIDENTAL TO BU SINESS OF EXPORT OF DIAMONDS. THE CIT(A) ALSO CONSIDERED THE DECISION DATED 30.11.2007 OF THE ITAT, MUMBAI J B ENCH IN THE CASE OF M/S. J.M. SHARE & STOCK BROKERS LTD. VS- JCIT. THE LD. CIT(A), AT PAGE 4 OF HIS ORDER, CONSI DERED THE ASSESSEES SUBMISSIONS IN RESPECT OF THE HOLDIN G OF THE SHARES BY THE ASSESSEE. THE CIT(A) HAS ALSO CONSIDERED THE ASSESSEES SUBMISSION THAT THE ASSES SEE HAS CONSEQUENTLY FOLLOWING THE SAME TREATMENT OF TR EATING PROFIT ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN S. THE CIT(A) HAS ALSO CONSIDERED THE ASSESSEES SUBMISSIO N WHICH HE HAS SUMMARIZED AT PAGE 7, OBJECT AND MOTIV E OF THE ASSESSEE IN DEALING IN SHARES, MAINTENANCE OF B OOKS OF ACCOUNTS, FUND INVESTMENT IN PURCHASE OF SHARES AND INFRASTRUCTURES, ETC. IN THE LIGHT OF THE ITAT ORDE R DATED ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 10 28.01.2011 IN CASE OF SHRI RAVINDRA M. AGRAWAL IN I TA NOS.1725 TO 2167 OF 2008, A COPY OF WHICH HAS BEEN PLACED BY THE ASSESSEE IN THE PAPER BOOK, WE FIND T HAT THE ORDER OF THE CIT(A) IS IN CONSONANCE WITH THE O RDER OF THE ITAT IN CASE OF SHRI RAVINDRA M. AGRAWAL (SUPRA ). THEREFORE, WE FIND THAT THE CIT(A) HAS RIGHTLY HELD THAT THE INCOME OF THE ASSESSEE ON SALE OF LISTED EQUITY SHA RES IS TAXABLE UNDER THE HEAD SHORT TERM CAPITAL GAIN AN D DOES NOT AMOUNT TO BUSINESS. THE REVENUE DID NOT POINT O UT ANY CONTRARY MATERIALS OR EVIDENCE AGAINST THE FIND ING OF THE CIT(A). IN THE LIGHT OF THE FACT, THE ORDER OF THE CIT(A) IS CONFIRMED. 7. IN VIEW OF THE FACTS NOTED ABOVE, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. BY F OLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI MANISH SUMATILAL S HAH (SUPRA), WE DISMISS THE DEPARTMENTAL APPEAL. 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ITA NO.2962/AHD/2009 THE A. C. I.T., CIR-6, SURAT VS SHRI AMISH VADILAL SHAH 11 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD