The ACIT, B.K.Circle, Palanpur V. Smt. Alkaben Vasantlal Vora, Deesa

ITA 3026/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9022 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Salary income; Opportunity of being heard; Transactions in derivatives; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO.3026/AHD/2013 ASST. YEAR: 2008-09 ACIT, B.K. CIRCLE, PALANPUR. VS. SMT. ALKABEN VASANTLAL VORA, 9, JAY PARK SOCIETY, HIGHWAY ROAD, AT DEESA, TAL. DEESA, DIST.BANASKANTHA (N.G.) APPELLANT RESPONDENT PAN ABGPV 5376F APPELLANT BY SHRI PRASOON KABRA, SR.DR RESPONDENT BY SHRI A. C. SHAH, AR DATE OF HEARING: 9/3/2017 DATE OF PRONOUNCEMENT: 14/03/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2008-09 IS D IRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) XX, AHMEDABAD, DATED 17.10.2013 VIDE APPEAL NO. COMMISS IONER OF INCOME TAX(A)-XX/17/12-13, ARISING OUT OF ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FRAMED ON 14/12/2010 BY ACIT, B.K. CIRCLE, PALANPUR. FOLLOWING GROUNDS HAVE BEEN RAISED BY REVENUE :- ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 2 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)- XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 36,00,950/- MADE ON ACCOUNT OF CAPITAL GAIN TREATED AS BUSINESS INCOME EVEN THOUGH ALL THE INDICATORS SHOW THAT THE TRANSACTIONS WERE IN THE NATURE OF BUSINESS / T RADE. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. 3). IT IS THEREFORE, PRAYED THAT THE ORDER OF TH E LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD MAY BE SET-ASIDE AND THAT O F THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN T HE BUSINESS OF TRADING OF DIAMONDS. RETURN OF INCOME SHOWING TOTAL INCOME OF RS.42,32,100/- WAS FILED ON 26.09.2008. CASE WAS PI CKED UP FOR SCRUTINY ASSESSMENT AND ON 14.12.2010 ORDER U/S 143 (3) OF THE ACT WAS FRAMED AFTER DENYING CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAIN OF RS.36,00,950/- TREATING IT AS BUSINESS INCOME FR OM TRADING OF SHARES AND ACCORDINGLY ASSESSED THE INCOME AT RS.78 ,33,050/-. ASSESSEE WENT IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX(A) BUT COULD NOT SUCCEED AS LD. COMMISSIONER OF INCOME TAX(A) CONFIRMED THE ORDER OF ASSESSING OFFICER BY TREATIN G THE LONG TERM AND SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. 2.1 AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE THE T RIBUNAL AND VIDE ORDER IN ITA NO.1539/AHD/2011 THE CO-ORDINATE BENCH RESTORED THE MATTER TO THE FILE OF LD. COMMISSIONER OF INCOM E TAX(A) FOR FRESH ADJUDICATION BY OBSERVING AS UNDER :- ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 3 '5. WE HAVE HEARD THE ID.D.R. AND PERUSED THE RECORDS. WE FIND THAT THE FINDING OF CIT(A) IS CONTRADICTORY. ON THE ONE HAND , THE CIT(A) HELD THAT THE ASSESSEE IS NOT AN INVESTOR IN SHARES AND ON TH E OTHER HAND, THE CIT(A) HELD THAT THE ASSESSEE IS TRADING IN SHARES. THE CIT(A) HAS TAKEN THE HOLDING PERIOD OF 30 DAYS FOR THE PURPOSE OF BI FURCATION IN BETWEEN INCOME FROM BUSINESS AND INCOME FROM CAPITAL GAIN, IN THIS REGARD, WE ARE OF THE VIEW THAT THE FINDING SHOULD BE CLEAR AN D BASED ON FACTS WHETHER THE ASSESSEE IS AN INVESTOR AND ACCORDINGLY INCOME IS ASSESSABLE UNDER THE HEAD 'CAPITAL GAIN' AND IN CASE, THE ASSE SSEE IS A TRADER, THE INCOME IS LIABLE AS BUSINESS INCOME. IN THE LIGHT O F THE CONTRADICTORY FINDING OF THE ID. CIT(A), WE FIND IT APPROPRIATE T O SEND BACK THIS MATTER TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO GIV E THE CLEAR FINDING AND DECIDE THE ISSUE, IN ACCORDANCE WITH LAW, AFTER GIV ING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. ' IN SECOND ROUND LD. COMMISSIONER OF INCOME TAX(A) P ASSED THE FRESH APPELLATE ORDER AS PER DIRECTIONS OF THE TRIBUNAL A ND ALLOWED ASSESSEES APPEAL BY ACCEPTING ASSESSEES CLAIM OF SHORT TERM AND LONG TERM CAPITAL GAIN FROM SALE OF SHARES. 3. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 4. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD. ASSESSING OFFICER. 5. ON THE OTHER HAND, LD. AUTHORISED REPRESENTATIVE SUPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. REVENUES SOLE GRIEVANCE IN THIS APPEAL IS AGAINST LD. COMMISSIONER OF INCOME TAX(A) S ORDER DELETIN G THE ADDITION OF ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 4 RS.36,00,950/- BY TREATING THE GAIN ON SHARES AS LO NG TERM CAPITAL GAIN AND AGAINST LD. ASSESSING OFFICER S TREATMENT OF THE SAME AS BUSINESS INCOME. WE OBSERVE THAT LD. COMMISSIONER O F INCOME TAX(A) IN HIS APPELLATE ORDER HAS DISCUSSED THE FAC TS OF THE CASE IN DETAIL AND HAS RELIED ON VARIOUS DECISIONS AND ALLO WED ASSESSEES APPEAL BY OBSERVING AS FOLLOWS :- 5,2. I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSION MADE BY THE APPELLANT. THE APPELLANT WAS ENGAGED IN THE BUSINESS OF TRADIN G OF DIAMONDS BESIDES HAVING RENTAL INCOME AND INTEREST INCOME. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE A.O. NOTICED THAT ASSESSEE HAS TRANSACTED IN SALE AND PU RCHASE OF SHARES AND APPELLANT SHOWN THE SHORT TERM CAPITAL GAIN OF RS.39,95,535/- AND L ONG TERM CAPITAL GAIN OF RS.36,00,950/- . HOWEVER, THE A.O. TREATED BOTH THE CAPITAL GAINS AS BUSINESS INCOME CONSIDERING THE VOLUME, FREQUENCY OF THE TRANSACTIONS AND PERIOD OF HOLDING ETC. 5.3. THEREAFTER, THE CIT(A) BIFURCATED SHARE TRANSA CTIONS INTO TWO CATEGORIES AND HELD THAT WHENEVER THE APPELLANT HELD THE SHARES FOR THE PERIOD OF MORE DAYS THE SAME SHALL BE TREATED AS INVESTMENT AND WHENEVER SHARES ARE HELD FOR LESS THAN 30 DAYS INCOME ARISING THERE-FROM SHOULD BE HELD AS BUSINESS INCOME. 5.4. ON REVENUE'S APPEAL THE HON'BLE ITAT SET-ASIDE THE MATTER WITH THE DIRECTIONS TO THIS OFFICE TO GIVE THE CLEAR FINDING AND TO DECIDE WHET HER THE APPELLANT WAS AN INVESTOR AND ACCORDINGLY INCOME WAS ASSESSABLE UNDER THE HEAD CA PITAL GAINS OR HE WAS A TRADER AND ACCORDINGLY INCOME WAS LIABLE AS BUSINESS INCOME. D URING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS, THE APPELLAN T HAS ARGUED THAT THE APPELLANT HAS THE MAIN ACTIVITIES OF DIAMOND TRADING AND TO GIVE FUNDS ON INTEREST AND LETTING OUT THE PROPERTY BESIDES INVESTMENT IN EQUITY SHARES. THE A PPELLANT DID NOT HAVE ANY BACKGROUND ABOUT THE SHARE TRANSACTION BUSINESS. THE APPELLANT WAS NOT A SHARE BROKER OR A BROKER AND DID NOT HAVE ANY REGISTRATION WITH ANY STOCK EX CHANGE. ALL THE EQUITY SHARES PURCHASE HAS BEEN SHOWN AS INVESTMENT UNDER BALANCE SHEET IN THE BOOKS OF ACCOUNTS. SHE NEVER DISCLOSED THE SAME AS CLOSING STOCK. NEITHER THE IN VESTMENT HAS BEEN SHOWN EVEN AS OPENING STOCK, PURCHASE, SALES AND CLOSING STOCK IN PROFIT & LOSS ACCOUNT. THE APPELLANT HAS MADE INVESTMENT OUT OF ITS OWN FUNDS WITHOUT AN Y BORROWINGS. THE INVESTMENT WAS MADE FOR THE PURPOSE OF THE SECURITY AND BESIDES, EARNING GOOD DIVIDEND. THE INTENTION WAS TO GET REGULAR DIVIDEND INCOME AS WELL AS CAPIT AL APPRECIATION. LIKE IN A NORMAL' BUSINESS APPELLANT DID NOT HAVE ANY LETTER HEADS, N O VISITING CARDS, NO OFFICE, NO EMPLOYEE, NO SIGN BOARDS, NO ADVERTISEMENTS, NO SPE CIAL LICENSE FOR DOING BUSINESS, NO TRAVELLING, NOT SPENDING MUCH TIME DUE TO ENGAGEMEN T IN ACTIVITY OF DIAMOND BUSINESS. FEW TRANSACTIONS OF SHARES WERE MADE FOR THE PERIOD RANGING FROM 10 DAYS TO 30 DAYS WITH THE INTEREST AS GETTING THE INVESTMENT FOR LON G TIME WAS NOT ADVISABLE. SAID SHARES ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 5 WERE DISPOSED OF WITHIN SHORT SPAN OF TIME AFTER CO NSIDERING TREND IN THE CAPITAL MARKET AS HELD IN THE CASE OF DCIT VS. SMK SHARES AND STOC K BROKING (ITAT MUMBAI). FURTHER THE TRANSACTIONS OF SELLING AND PURCHASE OF THE EQU ITY SHARES HAVE NOT BEEN DONE ON DAY TO DAY BASIS WHICH SHOWS THAT THERE WAS NO DAY TO D AY CONTROL AND NEXUS WITH THE PROFIT & LOSS OF THE BUSINESS CARRIED OUT ON BY THE APPELL ANT IF ANY IN TERMS OF SECTION 28. FURTHER DELIVERY IN ALL THE SHARES WERE TAKEN THROU GH DEMAT ACCOUNT AND THE SAME HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES. MOREOVER, THE EQUITY SHARES WERE VALUED AT THE COST AS PER THE ACCOUNTING STANDARD- 13 WHICH AMPLY ESTABLISHES THE INVESTMENT IN SHARES. IF THE SAME WOULD HAVE BEEN SHOWN AS CLOSIN G STOCK BEING BUSINESS ASSET THEN AS PER THE ACCOUNTING STANDARD-2 THE VALUATION OF THE CLOSING STOCK WOULD HAVE BEEN AT THE COST OR MARKET PRICE WHICHEVER IS LESS AND IN THAT CASE THERE WOULD HAVE BEEN HEAVY LOSSES DURING THE YEAR UNDER CONSIDERATION IN PLACE OF THE POSITIVE SHORT TERM AND LONG TERM CAPITAL GAIN SHOWN IN THE RETURN OF INCOME. A COMPARATIVE FIGURES OF THE SAME ARE GIVEN AS UNDER:- YEAR ENDING VALUE AT COST (RS.) TAKING BY APPELLANT AS PER AS- 13 VALUE AT COST OR MARKET PRICE WHICHEVER IS LESS AS PERAS- 2(RS.) 31.03.2005 51,82,321/- 39,64,049/- 31.03.2006 99,54,663/- 46,08,548/- 31.03.2007 93,19,537/- 66,01,705/- 31.03.2008 1,32,92,384/- 80,82,638/- SO, IT IS VERY MUCH APPARENT FROM THE ABOVE TABLE T HAT THE VALUATION AT COST AS PER AS-13 IS MUCH HIGHER THAN THE VALUATION OF COST OR MARKET PRICE WHICHEVER IS LOWER AS PER AS-2. BUT THE APPELLANT HAS TAKEN THE VALUATION AT COST O F THE SHARES WHICH ITSELF PROVES THAT THE INTENTION OF THE APPELLANT WAS INVESTMENT AND NOT T HE BUSINESS. IF IT WAS NOT THE INTENTION HE COULD HAVE VALUED AS PER AS-2 AND CLAIMED HEAVY LOSSES RATHER TO PAY THE CAPITAL GAIN TAXES. 5.5. MOREOVER, THE APPELLANT HAS EARNED THE HUGE DI VIDEND INCOME DURING THE PRECEDING YEARS AS IS APPARENT FROM THE FOLLOWING CHART. DIVIDEND RECEIVED 31/03/05 RS.39,64,049/- 31.03.06 RS.46,08,548/- 31.03.07 RS.66,01,705/- 31.03.08 RS.80,82,638/- THE INTENTION OF THE APPELLANT SINCE BEGINNING WAS VERY CLEAR FROM THE AFORESAID DISCUSSION THAT THE SHARES WERE HELD TO BE AS INVES TMENT AND NOT IN STOCK IN TRADE. THE APPELLANT HAS EARNED THE GAIN OF RS.37,52,281/- ON SALE OF THOSE SHARES WHICH WERE HELD FOR MORE THAN 366 DAYS AND UPTO 6832 DAYS. ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 6 5.6. IT WAS ALSO ARGUED THAT IN THE PRECEDING ASSES SMENT YEARS THE DEPARTMENT HAS ACCEPTED THE SHARES AS INVESTMENT AND NOT DISTURBED THE DISCLOSURE OF HER INVESTMENT IN BALANCE SHEETS OF THOSE YEARS. THEY HAVE ACCEPTED T HE LONG TERM AND SHORT TERM CAPITAL GAIN SHOWN IN RETURNS OF INCOME ON TRANSACTION OF S HARES OF THOSE YEARS. BEING THE TRANSACTIONS IDENTICALLY THERE IS NO REASON IN THE YEAR UNDER CONSIDERATION TO TREAT THE SAME DIFFERENTLY WITHOUT ANY NEW INFORMATION OR EVI DENCES. IT WAS ARGUED THAT DELIVERY OF THE SHARES WERE ALSO TAKEN IN DMAT ACCOUNT. SHARES WERE REGISTERED IN THE NAME OF THE APPELLANT. NO DEALINGS IN FUTURE AND OPTIONS AND DE RIVATIVES HAVE BEEN MADE BY THE APPELLANT. IT WAS CONTENDED BY THE APPELLANT THAT T HE INVESTMENT IN 19 SCRIPTS OF LONG TERM INVESTMENT WERE MADE AND OUT OF THE SALE PROCEEDS O F THIS LONG TERM INVESTMENT SHE ACQUIRED 74 SCRIPTS OF SHORT TERM INVESTMENT WHICH SHOWS THE INTENTION TO INVESTMENT IN SHARES AND NOT THE TRADE BECAUSE IN BUSINESS REGULA RLY TRADERS TRADES IN SIMILAR TYPES OF FEW ITEMS ONLY SO THAT THEY CAN GET FAMILIAR WITH T HAT ITEM AND GET PROFIT IN THAT ITEM IN EVERY KIND OF MARKET. IN THE CASE OF MANAGEMENT STR UCTURE & SYSTEMS (P) LTD. VS. ITO IT IS HELD THAT THE INTENTION OF THE APPELLANT CANNOT BE READ FROM HIS MIND BUT IT REFLECTS IN ITS CONDUCT, THE WAY HE TREATS THE TRANSACTIONS. IT WAS ALSO CONTENDED THAT SOME OF THE SCRIPTS WERE HELD FOR MORE THAN 5 YEARS AND NO TRAN SACTIONS WITHOUT DELIVERY HAS TAKEN PLACE. 5.7 THE APPELLANT HAS NOT BORROWED ANY MONEY FOR IN VESTMENT IN SHARES NOT PAID ANY INTEREST AND USED HIS OWN SURPLUS FUNDS WHICH HAS N OT BEEN DOUBTED BY THE A.O. THIS PROPOSITION HAS ALSO BEEN ACCEPTED BY THE BOARD IN CIRCULAR NO.4/2007 THAT THE APPELLANT IS ENTITLED TO MAINTAIN TWO PORTFOLIOS OF THE SHARE I.E. ONE AS INVESTMENT AND ANOTHER AS STOCK IN TRADE. IN THE PRECEDING YEARS, THE APPELLANT WAS CONSTANTLY DECLARING THE CAPITAL GAIN EITHER LONG TERM OR SHORT TERM AS PER THE PERIOD OF HOLDING ON THE SALE OF SHARES. IT IS TRUE THAT THE RULE OF RES JUDICATA DO ES NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS BUT AT THE SAME TIME IT IS ALSO NECESSA RY TO FOLLOW ACCOUNTING PRINCIPLE THAT IF THERE IS NO CHANGE IN THE FACTS THEN THERE SHOULD B E CONSISTENCY IN THE APPROACH OF REVENUE AUTHORITIES WHILE DECIDING THE TAX LIABILIT Y OF THE APPELLANT. 5.8. THE A.R. ALSO EMPHASIZED ON THE RATIO OF HON'B LE MUMBAI HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT WHEREBY THE APPEAL OF THE REV ENUE WAS DISMISSED STATING THAT THE APPELLANT HAS FOLLOWED A CONSISTENT PRACTICE IN REG ARD TO THE NATURE OF ACTIVITIES, THE MANNER OF KEEPING RECORDS AND THE PRESENTATION OF S HARES AS INVESTMENT AT THE END OF THE YEAR, IN ALL THE YEARS. THE REVENUE SUBMITTED THAT A DIFFERENT VIEW SHOULD BE TAKEN FOR THE YEAR UNDER CONSIDERATION, SINCE THE PRINCIPLE OF RE S JUDICATA IS NOT APPLICABLE TO THE ASSESSMENT PROCEEDINGS. THE TRIBUNAL HELD THAT THER E OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES AR E IDENTICAL PARTICULARLY IN THE CASE OF APPELLANT. THIS APPROACH OF THE TRIBUNAL CANNOT BE FAULTED. THE REVENUE DID NOT FURNISH ANY JUSTIFICATION OF ADOPTING A DIVERGENT APPROACH FOR THE ASSESSMENT YEAR IN QUESTION. THE A.R. OF THE APPELLANT HEAVILY RELIED UPON THE A FORESAID JUDGMENT AS IDENTICAL TO THE FACTS OF THE PRESENT CASE. THE A.R. ALSO RELIED UPO N IN NUMBER OF OTHER JUDGMENTS. 5.9. HOWEVER, THE VIEW OF THE APPELLANT IS SUPPO RTED BY VARIOUS DECISIONS ON IDENTICAL ISSUE DEALT IN THE SAME FASHION AND HELD THAT THE I NCOME ON INVESTMENT IN SHARE HAS TO BE TAKEN AS CAPITAL GAIN WHEN THE TRANSACTION HAS BE EN MADE WITH DELIVERY OF SHARES, THE ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 7 INTENTION OF HOLDING THEM AS INVESTMENT AT THE TIME OF ACQUIRING SUCH SHARES, HELD FOR EARNING THE DIVIDEND, INVESTMENT IS MADE OUT OF OWN FUNDS, DID NOT OWN INFRASTRUCTURE TO CARRY ON THE BUSINESS ETC. IT HAS ALSO BEEN HELD TH AT MERE VOLUME OF TRANSACTIONS AND FREQUENCY WOULD NOT ALTER THE NATURE OF TRANSACTION S. EVEN HON'BLE ITAT, AHMEDABAD BENCH C' IN THE CASE OF SRI GARGI SHITAL KUMAR PAT EL HAS HELD THAT WHEN THE APPELLANT WAS HOLDING THE SHARES AS INVESTMENT FROM YEAR TO Y EAR IT WAS THE INTENTION OF THE APPELLANT TO DETERMINE THE NATURE OF TRANSACTIONS. THOUGH THE INVESTMENT IN SHARE WAS ON A LARGE MAGNITUDE BUT THE SAME WOULD NOT DECIDE THE NATURE OF TRANSACTIONS. SIMILAR TRANSACTIONS OF SALE AND PURCHASE OF SHARES IN THE PRECEDING YEARS HAVE BEEN HELD AS CAPITAL GAIN. HENCE, THE TRANSACTIONS OF THE SIMILA R NATURE IN THE YEAR UNDER CONSIDERATION CANNOT BE TREATED AS TRADING WITHOUT ANY BASIS WHEN IT WAS NOT A STOCK-IN- TRADE. THE FACTS ARE IDENTICAL TO THE FACTS OF THE CASE CITED AND FOR THIS PROPOSITION.. 7. WE FURTHER OBSERVE THAT LD. COMMISSIONER OF INCO ME TAX(A) HAS RELIED ON VARIOUS JUDGMENTS OF HON. JURISDICTIO NAL HIGH COURT, TRIBUNALS DECISION WHEREIN IT IS AN ESTABLISHED FA CT THAT IF AN ASSESSEE IS ENGAGED IN THE TRANSACTION OF PURCHASE AND SALE OF EQUITY SHARES SHOWING THE INVESTMENTS IN EQUITY SHA RES AS INVESTMENT IN THE BALANCE SHEET AT COST AND NOT AS A CLOSING STOCK AND IS CONSISTENTLY SHOWING THE GAIN AS SHORT TERM CAPITAL GAIN (IF HELD FOR LESS THAN 12 MONTHS) OR LONG TERM CAPITAL GAIN (IF HELD FOR 12 MONTHS OR MORE) THEN THE CLAIM OF ASSESSEE IS HELD TO BE JUSTIFIED. WE FURTHER OBSERVE THAT LD. COMMISSIONER OF INCOME TAX (A) HAS REFERRED AND RELIED ON VARIOUS DECISIONS BUT WE FIND IT PERT INENT TO OBSERVE A FEW OF THEM WHICH SQUARELY COVER THE FACTS OF THE A SSESSEE WHICH ARE REPRODUCED BELOW :- (1) VINOD S. SANGHVI, MUMBAI VS. ACIT, MUMBAI IN IT A NO.3415/MUM/2012 HELD AS UNDER :- '15. WE NOTED THAT THE MAIN CONTENTION OF THE REVEN UE IN TREATING THE GAIN TO BE THE INCOME FROM BUSINESS IS THE NUMBER OF TRANSA CTIONS AND THE PERIOD OF THE HOLDING BY THE ASSESSEE. THE PERIOD OF THE HOLD ING AND NUMBER OF ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 8 TRANSACTIONS CANNOT BE THE ONLY BASIS TO DETERMINE WHETHER THE ASSESSEE HAS CARRIED OUT THE BUSINESS IN SHARES TRANSACTIONS. IT MAY BE ONE OF THE RELEVANT CONSIDERATION BUT CANNOT BE THE MAIN CONSIDERATION FOR DECIDING WHETHER THE ASSESSEE IN THIS CASE IS ENGAGED IN A BUSINESS OR N OT. WE HAVE TO LOOK INTO ALL THE SURROUNDING CIRCUMSTANCES. THIS IS A FACT ON RE CORD THAT THE ASSESSEE IN THIS CASE IS ENGAGED IN THE EMPLOYMENT AND HAS DERI VED THE SALARY INCOME. OUT OF THE SURPLUS FUND, HE INVESTED INTO THE SHARE S AND THE UNITS AND THOSE SHARES AND UNITS HAS DULY BEEN SHOWN BY THE ASSESSE E AS INVESTMENT IN HIS BALANCE SHEET IN THE EARLIER YEAR AS WELL AS DURING THE YEAR. IN THE EARLIER YEAR ALSO, THE ASSESSEE DERIVED THE INCOME ON THE S ALE OF THE SHARES, WHICH HAS BEEN RETURNED BY THE ASSESSEE AS CAPITAL GAIN A ND REVENUE HAS DULY ACCEPTED THE SAME. THE ASSESSEE WAS NOT HOLDING THE SHARES OF THE UNITS AS A STOCK IN TRADE. THIS FACT IS ALSO NOT DENIED BY THE REVENUE. THE PERIOD OF HOLDING ITSELF HAS BEEN TREATED BY THE LEGISLATURE TO BE A RELEVANT CONSIDERATION FOR DETERMINING WHETHER THE CAPITAL G AIN DERIVED IS A LONG TERM CAPITAL GAIN OR A SHORT TERM CAPITAL GAIN. THE RE IS NO PROVISION UNDER THE INCOME-TAX ACT WHICH HAS PROVIDED THAT IN CASE THE ASSESSEE IS HOLDING THE SHARES FOR A LESSER PERIOD THAN THE ONE PRESCRI BED, IT WILL BE REGARDED TO BE THE BUSINESS INCOME. DIVIDING THE CAPITAL GAIN INTO TWO PARTS I.E. THE S HORT TERM GAIN OR THE LONG- TERM GAIN ITSELF PROVE THAT THE PERIOD OF THE HOLDI NG CANNOT BE THE CRITERIA FOR DETERMINING WHETHER THE PROFIT DERIVED BY THE ASSES SEE IS A LONG TERM CAPITAL ' GAIN OR SHORT TERM CAPITAL GAIN. 16. THE CIT(A), WE NOTED IN THIS CASE WHILE ALLOWIN G THE APPEAL OF THE ASSESSEE HAS RELIED ON THE DECISION OF THE ITAT NAG PUR BENCH IN THE CASE OF DINESHBHAI C. PATEL (HUF) IN 1TA NO.616/2008, WHICH CONFIRMED THE DECISION OF THE C1T(A), THE COPY OF THE DECISION WA S FILED BEFORE US. THE APPEAL AGAINST THE DECISION OF THE NAGPUR BENCH IN THE CASE OF DINESHBHAI C. PATIL (SUPRA) HAS BEEN DISMISSED BY THE HIGH COU RT VIDE ORDER DATED 28 10 2010 HOLDING THAT NO SUBSTANTIAL POSITION ARISE AND THE TRIBUNAL, ON THE BASIS OF THE MATERIAL ON RECORD, HOLD THAT THE SHAR ES WERE PURCHASED BY THE ASSESSEE AS INVESTMENT AND THE GAIN ARISING ON SALE OF THOSE SHARES WERE ALLOWABLE TO BE TAXED AS CAPITAL GAIN. IT IS NOT DE NIED THAT IN THIS CASE ALSO, THE ASSESSEE WAS HOLDING THE SHARES AS INVESTMENT. HOLDING OF THE SHARES AS INVESTMENT ITSELF PROVE THE INTENTION OF THE ASSESS EE AS REGARDS TO THE NATURE OF THE TRANSACTION. HAD THE SHARES BEEN THE BUSINES S ASSETS, IT WOULD HAVE SHOWN BY THE ASSESSEE AS A STOCK IN TRADE. APPARENT IS REAL, IF THE REVENUE FEELS THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 9 INVESTMENT. THE ONUS IN OUR OPINION IS ON THE REVEN UE TO PROVE THAT APPARENT IS NOT REAL. NO EVIDENCE WAS BEING PLACED OR BROUGH T TO OUR KNOWLEDGE BY THE LD. D.R. WHICH MAY PROVE THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS INVESTMENT. IT IS ALSO A FACT TH AT THE ASSESSEE DERIVED THE DIVIDEND INCOME AND HAS ALSO MADE THE INVESTMENT IN THE SHARES NOT OUT OF THE BORROWED FUNDS, BUT OUT OF ITS OWN SURPLUS FUND S. THE CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS EXTENSIVELY DEALT WITH THE VARIOUS FACTORS AS WELL AS VARIOUS CASE LAWS TO ARRIVE AT A FINDING THAT THE SHARES WERE HELD BY THE ASSESSEE AS A CAPITAL INVESTMENT A ND NOT AS STOCK IN TRADE. HE HAS ALSO RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF CIT VS. DINESHBHAI C. PATEL (SUPRA). IT IS NOT DENIED THAT THE FACTS INVOLVED IN THIS CA SE IN THE CASE OF DINESHBHAI C. PATEL (SUPRA) ARE SIMILAR TO THE FACTS IN THE CA SE OF THE ASSESSEE. SIMILARLY, THE FACTS INVOLVED IN THE CASE OF GOPAL PUROHIT VS. JC1T 20 DTR 99 (MUMBAI) WERE ALSO THE SAME AS IN THE CASE OF TH E ASSESSEE. IN ALL THOSE CASES, THE TRIBUNAL TOOK THE VIEW THAT PERIOD OF HO LDING CANNOT BE THE BASIS TO DETERMINE WHETHER THE SHARE TRANSACTION ENTERED INTO BY THE ASSESSEE IS A BUSINESS INCOME OR CAPITAL GAIN. IN THIS CASE ALSO, WE NOTED THAT THE ASSESSING OFFICER HAS BUILT UP HIS CASE MAINLY ON T HE BASIS O PERIOD OF HOLDING AND ON THAT BASIS, HE TOOK THE VIEW THAT TH E SHARES HELD FOR A SHORT PERIOD OR FOR A NUMBER OF DAYS WOULD NOT BE CAPITAL GAIN. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT( A). THE CIT(A) HAS RIGHTLY TAKEN THE VIEW THAT THE DECISION OF THIS TRIBUNAL I N ITA NO.616/2008 IN THE CASE OF ACIT VS. DINESHBHAI C. PATEL (HUF) IS CLEAR LY APPLICABLE IN THE CASE OF THE ASSESSEE. THE DECISION OF THE COORDINAT E BENCH WHICH HAS BEEN APPROVED BY THE HON'BLE JURISDICTIONAL HIGH COURT I S BINDING ON US. WE CANNOT TAKE A DIFFERENT VIEW. WE NOTED THAT THE NAG PUR BENCH OF THIS TRIBUNAL IN THE CASE OF DINESHBHAI C. PATEL ,,I (SU PRA) HAS FOLLOWED THE DECISION OF GOPAL PUROHIT VS. JCIT (SUPRA), THAT DE CISION HAS ,ALSO BEEN APPROVED BY THE HON'BLE JURISDICTIONAL HIGH COURT A ND SLP AGAINST THAT DECISION HAS BEEN DISMISSED BY THE SUPREME COURT WE ACCORDINGLY, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS BOTH THE APPEAL S.' 10. SIMILAR FACTS ARE INVOLVED FOR THE ASSESSMENT Y EAR 2007-08, THE YEAR UNDER CONSIDERATION. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDING OF THE LEARNED CIT(A), WHO ALLOWED THE ISSUE IN FAV OUR OF THE ASSESSEES FOLLOWING THE DECISION OF ITS PREDECESSOR FOR ASSES SMENT YEAR 2006-07 AND THE SAME HAS BEEN CONFIRMED BY THE TRIBUNAL AS STAT ED ABOVE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) IN BOTH THE CASE S.' ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 10 8. SINCE FACTS ARE SIMILAR IN THE PRESENT CASE, THE REFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DE CISION OF THE TRIBUNAL IN THE CASE OF SHRI SANJAY ISHWARLAL RANKA (SUPRA), WE ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO TREAT T HE GAIN ON ACCOUNT OF SALE OF SHARES AS SHORT TERM CAPITAL GAIN.' 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF TIKUCHAND D . JOGANI (SUPRA), WE ALLOW THIS GROUND IN FAVOUR OF THE ASSESSEE AS FACT S ARE SIMILAR.' (2) ACIT -20(3) VS. ASSESSEE ITAT MUMBAI DTD.21.08.2013 IN ITA NO.2081/ MUM/2011 HELD AS UND ER:- '5. WE HAVE CONSIDERED THE ISSUES AS RAISED BY THE AO AND DETAILED SUBMISSIONS AS STATED ABOVE. THERE IS NO DISPUTE WI TH REFERENCE TO THE FACT THAT ASSESSEE'S MAIN BUSINESS IS MANUFACTURING OF P VC POUCHES AND TUBINGS. THE ASSESSEE ALSO FOR THE FIRST TIME ENTERED INTO S HARE TRADING IN F&A BUSINESS AND EARNED PROFIT OF RS.47,88,079/- WHICH IS SHOWN AS BUSINESS INCOME. AS FAR AS SHARE TRANSACTIONS ARE CONCERNED, ASSESSEE WAS INVOLVED IN SHARE TRANSACTIONS IN EARLIER YEARS AND ALSO IN LATER YEARS. CONSIDERING THE TRANSACTIONS AND SUBMISSIONS OF THE ASSESSEE, W E ARE OF THE OPINION THAT THE SAME CANNOT BE TREATED AS BUSINESS INCOME AS AS SESSEE HAD NO BORROWED FUNDS, NO SET UP TO DO SHARE TRANSACTIONS AS A TRAD ING ACTIVITY AND FURTHER LONG TERM GAINS ASSESSED AS BUSINESS INCOME WAS TRE ATED AS LONG TERM CAPITAL GAIN, FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF GOPAL PUROHIT VS. JCIT 228 CTR582(BOM), THE INVESTMENT ACTIVITY IN EARLIER YEAR CAN NOT BE TAKE N AS BUSINESS ACTIVITY IN THIS YEAR. COUPLED WITH THE FACT THAT THE ASSESSEE HAS NEITHER CLAIMED BENEFIT OF OPENING AND CLOSING STOCK, NOR AO DISTURBED THE WORKING OF THE ASSESSEE EXCEPT TREATING THE GAIN AS BUSINESS INCOME, WE ARE OF THE OPINION THAT INCOME DECLARED BY THE ASSESSEE AS SHORT TERM CAPIT AL GAIN CAN NOT BE TREATED AS BUSINESS INCOME. EVENTHOUGH BOTH THE PAR TIES RELIED ON VARIOUS CASE LAW ON THE ISSUE, BUT ISSUE IS TO BE DECIDED O N FACTS AND CONSIDERING THE CONDUCT OF THE ASSESSEE IN EARLIER YEARS AND LATER YEARS AND THE FACT THAT THE ASSESSEE SEPARATELY DEALT WITH TRADING ACTIVITY AND INVESTMENT ACTIVITY, THE SHORT TERM CAPITAL GAIN HAS TO BE ACCEPTED AS SUCH AND CAN NOT BE CONSIDERED AS BUSINESS INCOME. ACCORDINGLY THIS GRO UND IS ALLOWED.' ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 11 (3) ACIT VS. NAISHADH V. VACHHARAJANI (ITAT MUMBA I) ITA NO.6429 (MUM) 2009 & C.O. NO.L36/MUM/2010 DTD. 25.2.2011 HELD AS UNDER:- 'THE ASSESSEE, A MARINE CONSULTANT, OFFERED INCOME BY WAY OF LTCG, STCG, SPECULATIVE PROFIT & PROFIT FROM FUTURES TRADING. T HE AO HELD THAT AS THE VOLUME OF TRANSACTIONS WAS HIGH (222), THE PERIOD O F HOLDING OF THE STCG SHARES WAS SHORT (2 -5 MONTHS) & THERE WAS SPECULAT ION & F&O PROFIT, THE LTCG & STCG WAS ASSESSABLE AS BUSINESS PROFIT. ON A PPEAL, THE CIT AND TRIBUNAL UPHELD THE ASSESSEE'S CLAIM ON THE BASIS T HAT (A) AS THE LTCG SHARES WERE HELD FOR SEVERAL YEARS, THE ASSESSEE AC TED AS INVESTOR, (B) THE STCG SHARES WERE ASSESSABLE AS SUCH BECAUSE (I) THE RE WASNO INTRA-DAY TRADING, (II) MOST OF THE SHARES WERE HELD FOR A PE RIOD OF 2 TO 5 MONTHS, (III) IN THE PRECEDING AY, THE AO DID NOT ASSESS THE STCG AS BUSINESS INCOME AND ON THE PRINCIPLES OF CONSISTENCY, A DIFFERENT V IEW CANNOT BE TAKEN ON THE SAME FACTS, (IV) THE ASSESSEE HAS NO BORROWINGS AND (V) MERELY BECAUSE THERE WAS A SPECULATIVE BUSINESS DOES NOT MEAN THAT EVEN DELIVERY BASED TRANSACTIONS OF SHARES SHOULD BE ASSESSED UNDER THE HEAD BUSINESS. ON APPEAL BY THE DEPARTMENT, HELD DISMISSING THE APPEA L: THE TRIBUNAL RECORDED THE FINDING THAT IN A NUMBER OF CASES THE ASSESSEE HAD HELD THE LTCG SHARES FOR MORE THAN 10 YEARS AND THAT THE PURCHASE AND SALE OF SHARES WITHIN A PERIOD OF ONE YEAR HAD BEEN OFFERED AS STCG. IN THE PRECEDING AY, THE AO ACCEPTED THIS. AS PER GOPAL PU ROHIT 228 ITR 582 (BOM) (SLP DISMISSED) IT IS OPEN TO AN ASSESSEE TO TRADE IN THE SHARES A ND ALSO TO INVEST IN SHARES. WHEN SHARES ARE HELD AS I NVESTMENT, THE INCOME ARISING ON SALE OF THOSE SHARES IS ASSESSABLE AS LT CG/STCG. ACCORDINGLY, THE DECISION OF THE TRIBUNAL IN HOLDING THAT THE IN COME ARISING ON SALE OF SHARES HELD AS INVESTMENT WERE LIABLE TO BE ASSESSE D AS LTCG/STCG CANNOT BE FAULTED.' (4) NAGINDAS P. SHETH (HUF) VS. ACIT (ITAT MUMBAI) ITA NO.961/MUM/2010 & ITA NO.L836/MUM/2010 DTD.5.4.2011 HELD AS UNDER- 'DESPITE LARGE NUMBER OF TRANSACTIONS IN SHARES, PR OFIT ASSESSABLE AS CAPITAL GAINS THE ASSESSEE HUF OFFERED INCOME FROM SALE OF SHARES AS SHORT-TERM CAPITAL GAINS (STCG). THE AO HELD THE INCOME TO BE BUSINESS PROFITS ON THE GROUND ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 12 THAT (I) THE ASSESSEE HAD 158 SHARE TRANSACTIONS IN THE YEAR WHICH SHOWED THE INTENTION TO TRADE, (II) THE REGULARITY AND FRE QUENCY OF TRANSACTIONS SHOWED NO INTENTION TO HOLD SHARES TO EARN DIVIDEND AND (III) INSTEAD OF ONE OR TWO DEMAT ACCOUNTS, THE ASSESSEE HAD ADOPTED A P ROFESSIONAL APPROACH AND TRANSACTED THROUGH SEVERAL BROKERS,. ON APPEAL, THE CIT (A) HELD THAT PROFIT ON SALE OF SHARES HELD FOR LESS THAN 30 DAYS WAS BUSINESS PROFITS WHILE OTHER PROFITS WAS STCG. ON APPEAL BY THE ASSESSEE A ND DEPARTMENT, HELD DECIDING IN FAVOUR OF THE ASSESSEE: THE FACT THAT THE ASSESSEE HAS TRANSACTED IN 158 SH ARES SHOULD NOT BE THE SOLE CRITERION TO COME TO THE CONCLUSION THAT ASSESSEE I S A TRADER IN SHARES. THE GAINS EARNED BY THE ASSESSEE DESERVE TO BE ASSESSED AS CAPITAL GAINS BECAUSE: (A) THE ASSESSEE WAS HOLDING THE SHARES IN ITS BOOK S AS AN INVESTOR; (B) THE ASSESSEE DID NOT HAVE ANY OFFICE OR ADMINIS TRATION SET UP; (C) THE SHARES WERE ACQUIRED OUT OF OWN FUNDS AND F AMILY FUNDS AND NOT THROUGH BORROWINGS; (D) THERE WAS NOT A SINGLE INSTANCE WHERE THE ASSES SEE HAD SQUARED-UP TRANSACTIONS ON THE SAME DAY WITHOUT TAKING DELIVER Y OF THE SHARES; (E) IN THE PREVIOUS AND SUBSEQUENT ASSESSMENT YEARS , THE AO HAD VIDE SCRUTINY ASSESSMENTS TREATED THE ASSESSEE AS AN INV ESTOR.' 8. WE FURTHER OBSERVE THAT LD. COMMISSIONER OF INCO ME TAX(A) CONCLUDED HIS FINDINGS AFTER ADJUDICATION OF FACTS AND RELIANCE PLACED ON VARIOUS JUDICIAL PRECEDENCE DECIDED THE APPEAL I N ASSESSEES FAVOUR BY OBSERVING AS FOLLOWS :- 5.10. IN THE AFORESAID JUDGMENTS AND DECISIONS, IT IS CLEAR THAT THERE CANNOT BE A SINGLE PARAMETER TO DECIDE THE NATURE OF TRANS ACTIONS AS INVESTMENT OR BUSINESS INCOME. TO TAKE SUCH DECISION, VARIOUS FAC TORS HAVE TO BE CONSIDERED TAKING THEM TOGETHER. AS DISCUSSED ABOVE , THE GUJARAT HIGH COURT HAS ALSO LAID DOWN CERTAIN TEST TO DETERMINE THE NATURE OF THE TRANSACTIONS AND IF WE APPLY THE SAME ON THE FACTS OF THE APPELLANT THEN THE TREATMENT OF SHARES GIVEN AS INVESTMENT AND INCOME DERIVED THEREFROM AS CAPITAL GAINS IS CORRECTLY SHOWN. FROM THE DAY ONE THE APPELLANT IS SHOWING THE SHARES AS INVESTMENT IN THE BALANCE SHEET AND N EVER SHOWN AS CLOSING STOCK. NO TREATMENT OF THE SAME WAS GIVEN IN THE PR OFIT & LOSS ACCOUNT IN THE FORM OF PURCHASE, SALES, OPENING STOCK AND CLOSING STOCK ETC. THE SALE WAS ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 13 AFFECTED WHEN IT WAS FOUND BENEFICIAL WITHOUT LOSIN G THE MONEY INVESTED. THE INVESTMENT WAS NOT SHOWN AS PURCHASE AND SALE ACCOU NT. FROM THE VERY BEGINNING THE INCOME DERIVED ON SALE OF SHARES WAS SHOWN AS CAPITAL GAIN EITHER AS LONG TERM OR SHORT TERM DEPENDS UPON THE PERIOD OF HOLDING. MOREOVER, AS PER VARIOUS JUDICIAL DECISIONS REFERRE D ABOVE INCLUDING JURISDICTIONAL HON'BLE HIGH COURT AND HON'BLE IT AT , AHMEDABAD, THE VOLUME AND FREQUENCY CANNOT BE THE SOLE CRITERIA TO TAKE THE DECISION. HOWEVER, IN THE INSTANT CASE, NO SUCH HIGH TRANSACTIONS HAVE BEEN M ADE IN A PARTICULAR SCRIPT. FURTHER, THE DECISION OF THE HON 'BLE ITAT, AHMEDABAD IN THE CASE OF SHRI SUGAM CHAND C. SHAH VS. ACIT, CIRC LE (3) IN WHICH HOLDING PERIOD WAS HELD TO BE DECISIVE IN TREATING THE TRAN SACTIONS AS BUSINESS OR CAPITAL GAIN IS NOT VERY RELEVANT NOW IN VIEW OF TH E GUJARAT HIGH COURT DECISION MENTIONED EARLIER. UNLESS THERE IS SPECIFI C PROVISION IN THE ACT IN SECTION 94(7) HOLDING PERIOD CANNOT DETERMINE THE N ATURE OF TRANSACTIONS AS BUSINESS OR CAPITAL GAIN. 5.11. IN VIEW OF THE ABOVE DISCUSSION, ON FACTS AND LEGALLY ALSO THE APPELLANT HAS CORRECTLY SHOWN THE CAPITAL GAINS FOR TAXATION AND THE INCOME CANNOT BE TERMED AS BUSINESS INCOME. THEREFORE, THE A.O'S ACT ION FOR TREATING THE SAME AS BUSINESS INCOME IS REJECTED AND SHORT TERM AND L ONG TERM CAPITAL GAIN OFFERED BY THE APPELLANT ARE ACCEPTED. THUS, GROUND OF APPEAL IS ALLOWED. 9. IN VIEW OF ABOVE DISCUSSION AND LUCID FINDINGS O F LD. COMMISSIONER OF INCOME TAX(A) AND ALSO REFERRING TO THE PAPER BOOK FILED BY THE ASSESSEE WE FIND THAT ASSESSEE IS CONS ISTENTLY SHOWING INCOME FROM SHORT TERM AND LONG TERM CAPITAL GAIN I N SALES OF SHARES AND SHOWING THE INVESTMENTS AT COST PRICE IN THE BA LANCE SHEET AND NOT AS A STOCK-IN-TRADE. WE FURTHER OBSERVE THAT AS SESSEE IS MAINLY ENGAGED IN THE BUSINESS OF DIAMOND TRADING AND APAR T FROM SHE IS HAVING INCOME FROM SHORT TERM AND LONG TERM CAPITAL GAINS FROM SALE OF SHARES. FURTHER FOR ASST. YEAR 2009-10 ALSO PROF IT FROM SHARES IS SHOWN AS LONG TERM AND SHORT TERM CAPITAL GAIN. IN VIEW OF THESE RELEVANT FACTS AND THE CONSISTENT APPROACH OF ASSES SEE SHOWING INCOME FROM SHARES UNDER THE HEAR LONG TERM AND SH ORT TERM CAPITAL ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 14 GAIN AND ALSO SHOWING OF INVESTMENTS IN SHARES AND DEBENTURES UNDER THE HEAD INVESTMENT AND NOT AS A CLOSING STOC K, WE ARE OF THE FIRM VIEW THAT LD. COMMISSIONER OF INCOME TAX(A) HA S RIGHTLY ALLOWED THE ASSESSEES CLAIM. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) AND WE UPHOLD THE SAME. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 10. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 11. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 14/03/2017 MAHATA/- 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 ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 3026/AHD/2013 ASST. YEAR 2008-09 15 1. DATE OF DICTATION: 9/03/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 9/03/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 14/3/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: