Amit Jain, New Delhi V. ACIT, New Delhi

ITA 309/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3643 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GEETMALA MOHNANI
• Assessee Lawyers: JA IPRIYA ADVS; SSH AJAY VOHRA ROHIT JAIN
• Keywords: Gift; Business income; Business expenditure; Cost of acquisition
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE G.E. VEERABHADRAPPA, HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO. 309/DEL/2010 ASSESSMENT YEAR: 2006-07 AMIT JAIN, VS. ASST. COMMISSIONER OF IT, 7/33, ANSARI ROAD, CIRCLE 30(1), DARYAGANJ, DELHI. NEW DELHI. (PAN: AAEPJ3715H) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. AJAY VOHRA, ROHIT JAIN & MS.JA IPRIYA, ADVS. RESPONDENT BY: MS. GEETMALA MOHNANI, CI T(DR) ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 24.12.2009 PASSED FOR THE ASSESS MENT YEAR 2006-07. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUMENT ATIVE IN NATURE. IN BRIEF, THE ASSESSEE HAS RAISED TWO FOLD GRIEVANCES. HE HAS PLEADED THAT ASSESSMENT ORDER PASSED UNDER SEC. 143(3) OF THE INCOME-TAX AC T, 1961 IS NULL AND VOID, BECAUSE NOTICE UNDER SEC. 143(2) WAS NOT SERVED WIT HIN THE STATUTORY TIME LIMIT PROVIDED IN THE PROVISO APPENDED WITH THIS SE CTION. IN THE SECOND FOLD OF GRIEVANCE, HE HAS PLEADED THAT GAIN ARISEN TO HI M ON TRANSFER OF SHARES IS 2 TO BE ASSESSED AS A SHORT-TERM CAPITAL GAIN INSTEAD OF TREATING IT AS A BUSINESS INCOME. 2. AS FAR AS THE FIRST FOLD OF GRIEVANCE IS CONCERN ED, WE DO NOT FIND MUCH FORCE IN THE CONTENTIONS RAISED BY THE ASSESSEE. HE HAS FILED THE RETURN ON 29 TH JULY, 2007 DECLARING AN INCOME OF RS.2,62,78,928. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U NDER SEC. 143(2) OF THE ACT WAS ISSUED ON 16 TH SEPTEMBER 2008 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 20 TH SEPTEMBER 2008. THE PROVISO APPENDED TO SUB-SECTIO N (2) OF SECTION 143 OF THE ACT HAS BEEN AMENDED BY THE FINA NCE ACT, 2008. PRIOR TO AMENDMENT IN THIS PROVISO, NO NOTICE UNDER SECTION 143(2) COULD BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED. HOWEVER, AFTER THE AMENDMENT WHICH HAS BEEN GIVEN EFFECT FROM 1.4.1988, NO NOTICE UNDER SE C. 143(2) CAN BE SERVED AFTER THE EXPIRY OF 6 MONTHS FROM THE END OF THE FI NANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. THE BOARD HAS ALSO EXPLAINED T HAT AMENDED PROVISO OF SUB-SECTION(2) OF SECTION 143 WOULD APPLY TO ALL SU CH RETURN WHERE NOTICE UNDER SECTION 143(2) COULD STILL BE ISSUED ON IST O F APRIL 2008 UNDER THE PRE- AMENDED PROVISIONS. THE RETURN WAS FILED BY THE ASS ESSEE ON 29 TH JULY 2007. AS ON 1.4.2008, NOTICE UNDER SECTION 143(2) COULD B E SERVED UPON THE 3 ASSESSEE. THUS, THE TIME LIMIT FOR ISSUANCE OF A NO TICE IN THE CASE OF ASSESSEE IS AVAILABLE UP TO 30 TH SEPTEMBER 2008 I.E. 6 MONTHS FROM 31.3.2008. THERE IS NO ILLEGALITY IN THE SERVICE OF NOTICE UNDER SEC . 143(2) UPON THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DID NOT A DVANCE ANY ELABORATE ARGUMENTS ON THIS ISSUE. THEREFORE, THE FIRST FOLD OF GRIEVANCE RAISED BY THE ASSESSEE IN GROUND NOS. 1 AND 1.1 HAS NO MERIT, IT IS REJECTED. 3. THE NEXT ISSUE REMAINED FOR ADJUDICATION IS WHET HER ASSESSEE IS INVOLVED IN TRADING OF SHARES OR HE HAS ONLY MADE I NVESTMENT IN SHARES, WHICH RESULTED HIM LONG TERM CAPITAL GAIN AS WELL A S SHORT-TERM CAPITAL GAIN? 4. THE BRIEF FACTS OF THE CASE ARE THAT IN THE RETU RN OF INCOME ASSESSEE HAD DECLARED FOLLOWING INCOME UNDER THE HEAD CAPITAL G AINS: A) SHORT TERM CAPITAL GAIN-TAX @10% RS.2,60,73,5 58 B) LONG TERM CAPITAL GAIN- CLAIMED AS RS. 47, 14,432 EXEMPT U/S.10(38). ASSESSING OFFICER HAD ISSUED A SHOW-CAUSE NOTICE, I NVITING EXPLANATION OF ASSESSEE AS TO WHY HIS INCOME FROM SHORT TERM CAPIT AL GAIN BE NOT CONSIDERED AS BUSINESS INCOME. THE ASSESSEE HAS FILED HIS REPL Y VIDE LETTERS DATED 4 3.12.2008 AND 28.12.2008. ASSESSING OFFICER HAS REP RODUCED THE GIST OF ASSESSEES CONTENTION ON PAGE 2 WHICH READS AS UNDE R: I. THE INVESTMENTS WERE MADE INITIALLY FROM THE AMOUNT RECEIVED FROM THE EMPLOYER UPON RESIGNATION TOGETHER WITH SA VINGS ALONG WITH THE MONEY OBTAINED AS GIFT. II. FULL TIME WAS BEING CONSUMED TO LOOK AFTER ANCESTRA L PROPERTIES & THUS HARDLY ANY TIME WAS AVAILABLE FOR BUSINESS; III. ACTUAL DELIVERIES OF SHARES WERE ALWAYS TAKEN UNLIK E IN SPECULATION; IV. NO CLAIM OF STT SERVICES TAX ETC. HAS BEEN MADE. V. NO BUSINESS EXPENDITURE HAS BEEN CLAIMED; VI. BUSINESS NEEDS BORROWING OF FUNDS WHEREAS THE ASSES SEE HAS MADE NO BORROWINGS; VII. THERE WAS NO ATTEMPT TO CHANGE THE POSITION FROM YE AR TO YEAR; VIII. INVESTMENT WAS NOT MADE IN THE NAME OF ANY BUSINESS CONCERN; IX. RESALE IS DONE BASED ON PERCEPTION OF CHANGE IN NAT IONAL ENVIRONMENT AND GOVERNMENT POLICIES AND CANNOT BE S TATED TO HAVE BEEN CARRIED OUT IN COURSE OF TRADE; X. INVESTMENTS HAVE BEEN VALUED AT COST OF ACQUISITION AND NOT LOWER OF COST OF PURCHASES OR MARKET PRICE WHICHEVE R IS LOWER. XI. INVESTMENTS WERE NOT CONVERTED INTO STOCK-IN-TRADE; XII. SUBSTANTIAL INCOME IS EARNED BY WAY OF DIVIDENDS. 5. ASSESSING OFFICER THEREAFTER OBSERVED THAT IN OR DER TO EXAMINE ASSESSEES CONTENTIONS THAT THE SHARES WERE HELD AS INVESTMENT AND NOT AS 5 STOCK IN TRADE, IT IS PERTINENT TO EXAMINE THE FACT S OF THE ASSESSEES CASE IN THE LIGHT OF GUIDELINES LAID DOWN BY THE CBDT VIDE CIRC ULAR NO. 4 OF 2007. ACCORDING TO THE ASSESSING OFFICER, THE BOARD HAS R EFERRED VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS AS WELL AS OF HON'BLE SU PREME COURT. IT ALSO INCLUDES THE RULING GIVEN BY THE AUTHORITY OF ADVAN CE RULLING IN 288 ITR 641. ASSESSING OFFICER ON THE STRENGTH OF THIS CIRC ULAR HAS OBSERVED THAT THERE ARE THREE BASIC PARAMETERS FOR APPLYING ON AN Y TRANSACTION FOR JUDGING WHETHER IT IS ADVENTURE IN TRADE OR AN INVESTMENT. ACCORDING TO HIM, MERE EXISTENCE OF THE POWERS IN THE MEMORANDUM OF ASSOCI ATION FOR PERMITTING A COMPANY TO PURCHASE AND SALE SHARES IS NOT A DESSIV E FACTOR FOR DECIDING THE NATURE OF THE TRANSACTION. THE NATURE OUGHT TO BE A PPRECIATED FROM THE ACCOUNTS WHETHER THE SHARES WERE HELD AS STOCK-IN-T RADE OR NOT. THE SUBSTANTIAL NATURE OF TRANSACTION, THE MANNER OF MA INTENANCE BOOKS OF ACCOUNT, THE MAGNITUDE OF PURCHASE AND SALE AND THE RATIO BETWEEN PURCHASE AND SALES AND THE HOLDING WOULD FURNISH A GOOD GUID E TO DETERMINE THE NATURE OF TRANSACTION. ASSESSING OFFICER THEREAFTER HAS OB SERVED THAT ASSESSEE HAS DEALT IN AS MANY AS 329 SCRIPTS AND SECURITIES. HE HAS DEALINGS WITH MANY BROKERS AND HE WAS MAINTAINING MANY D-MAT ACCOUNTS. THE BOOKS OF ACCOUNT COULD NOT BE EXAMINED BECAUSE ASSESSEE HAS NOT BEEN MAINTAINING BOOKS OF ACCOUNT AND FAILED TO FILE ANY AUDIT REPOR T. ON AN ANALYSIS OF TEST 6 PROPOUNDED IN THE CIRCULAR, ASSESSING OFFICER HAS H IGHLIGHTED FOLLOWING CIRCUMSTANCES FOR HOLDING THE ASSESSEE AS INVOLVED IN TRADING OF SHARES: (I) THE GUIDELINES LAID DOWN BY THE CBDT IN THE CIRCUL AR NO.4/2007 AS DISCUSSED IN THIS ORDER CLEARLY SUGGES T THAT THE ASSESSEE HAS HELD THESE SHARES AS STOCK-IN-TRAD E AND NOT AS INVESTMENT. (II) AT THE BEGINNING OF THE FINANCIAL YEAR I.E. ON 1.4. 2005 THE ASSESSEE WAS HAVING A BANK BALANCE OF RS.169314 & C ASH OF RS.15000 ONLY. INVESTMENT IN COMMON PARLANCE MEA NS PUTTING UP SURPLUS MONEY IN ANY INSTRUMENT/SHARES F OR QUITE SOME PERIOD FOR EARNING THROUGH INTEREST OR DIVIDEND OR VALUE APPRECIATION. HOWEVER, IN THE PRE SENT CASE THE ASSESSEE WAS NOT HAVING ANY SUBSTANTIAL SU RPLUS MONEY WHICH COULD BE USED FOR INVESTMENT IN SHARES. (III) THE ASSESSEE IS MAKING SHARE TRANSACTIONS THROUGH VARIOUS BROKERS INCLUDING SAM GLOBAL SECURITIES LTD . NETWORK STOCK BOOKING LTD., GLOBE CAPITAL MARKETS LTD., BONANZA STOCK BROKERS LTD. THE ASSESSEE HAS F ILED THE COPY OF HIS ACCOUNT WITH THESE. THESE CLEARLY S HOW THAT THE ASSESSEE WAS MAKING SALE OR PURCHASE TRANSACTIONS IN SHARES ALMOST DAILY WHICH MEANS ASS ESSEE IS A DAY TRADER AND NOT AN INVESTORS. (IV) FURTHER THE ASSESSEES PLEA THAT THE INVESTMENT WAS MADE WITH THE INTENTION TO EARN DIVIDEND BY HOODING THE INVESTMENT FOR A LONGER PERIOD IS IN CONTRAVENTION TO HIS CONDUCT. HAD IT BEEN SO, THE ASSESSEE WOULD NOT HAV E 7 ENTERED IN SO MANY SHARE TRANSACTIONS ON A REGULAR BASIS AND WOULD HAVE WAITED FOR DIVIDEND. ON THE OTHER HA ND THE ASSESSEE HAS WHENEVER FELT COMFORTABLE, PURCHAS E AND SOLD THE SHARES AND EARNED PROFIT. AS A RESULT OF P ROFIT OF RS.2,60,73,558 WAS EARNED ON TRADING OF SHARES AGAI NST A DIVIDEND INCOME OF RS.9,56,447. THE FREQUENCY OF TRANSACTIONS AND THE SUBMISSIONS OF THE ASSESSEE SU GGEST THAT THE PURCHASE AND SALE OF SHARES WAS DONE WITH THE MOTIVE OF EARNING PROFIT MEANING THAT THE TRANSACTI ONS ARE IN THE NATURE OF TRADE. (V) INVESTMENT IS DONE FROM SAVINGS/WEALTH/MONEY/CAPITA L GENERATED FROM ONES REGULAR ACTIVITY. FOR EXAMPLE A SALARIED PERSON OBTAINS SALARY AND THE EXCESS/SURPL US MONEY IS PUT IN INVESTMENTS. SIMILARLY SURPLUS MONEY/SAVINGS OF A BUSINESS MAN IS PUT IN INVESTMEN TS. IN THIS CASE, ASSESSEE HAS NO OTHER SOURCE OF EARNI NG BUT THE ACTIVITY OF INVESTMENT ITSELF. SUCH AN ACTIVITY THUS CANNOT BE TERMED AS THAT OF INVESTMENT. IN FACT ASS ESSEE IS IN THE BUSINESS OF TRADING IN SHARES & SECURITIES. (VI) ASSESSEES CONTENTION THAT HE HAS NO TIME TO UNDERT AKE ANY BUSINESS BECAUSE HE IS FULL TIME INVOLVED IN TH E UPKEEP OF ANCESTRAL PROPERTIES IS ALSO NOT ACCEPTAB LE. THE SCALE AND FREQUENCY OF HIS TRANSACTIONS DEMAND LOTO FF ATTENTION AND TIME. MOREOVER AS PER ASSESSEES OWN SUBMISSION, A CAREFUL ANALYSIS, STUDY & RISK MANAGE MENT IS DONE BY HIM BEFORE INVESTING. THESE ACTIVITIES C ERTAINLY DEMAND SUBSTANTIAL TIME DEVOTION. THUS IT CANNOT BE 8 ACCEPTED THAT ASSESSEE IS FULL TIME ENGAGED IN THE UPKEEP OF ANCESTRAL PROPERTIES. IN FACT ASSESSEE IS FULL T IME INVOLVED IN THE ACTIVITY OF SHARE TRADING. (VII) THAT ASSESSEE TAKES DELIVERY OF SHARES, MERELY SHOW S HE IS NOT INDULGING IN SPECULATION BUSINESS. IT DOES N OT PROVE THAT ASSESSEE IS NOT INVOLVED IN THE BUSINESS OF SH ARE TRADING. AS SUCH THE I.T. ACT DISTINGUISHES BETWEEN SPECULATION BUSINESS AND NON SPECULATION BUSINESS. (VIII) THE SUBMISSION THAT NO EXPENSES ARE CLAIMED BY THE ASSESSEE IS ALSO WITHOUT MERIT. THIS IS PART OF A C AREFUL STRATEGY TO CLAIM BUSINESS INCOME AS CAPITAL GAIN S INCE THE TAX RATES ARE MUCH LOWER IN THE LATTER CASE. MO REOVER, THE SCOPE OF CLAIMING EXPENSES IS LOW IN CASE OF SH ARE TRANSACTIONS. THUS, IT IS BENEFICIAL TO THE ASSESSE E IF HIS ACTIVITY IS PRESENTED AS THAT OF INVESTMENT RATHER THAN BUSINESS. (IX) THAT ASSESSEE HAS NOT BORROWED ANY FUNDS IS CONTRAR Y TO HIS OWN SUBMISSION THAT SOME AMOUNT WAS GIVEN TO HI M BY HIS WIFE ALTHOUGH IT WAS IN THE NATURE OF GIFT. (X) THERE WAS NO ATTEMPT TO CHANGE THE POSITION FROM YE AR TO YEAR BY THE ASSESSEE BECAUSE IT WAS SUITABLE TO HIS INTEREST AND STRATEGY OF SHOWING BUSINESS INCOME AS CAPITAL GAINS AS HE HAS BEEN MAKING PROFITS. MOREOVER, EVEN IF TH E POSITION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS, IT IS NOT NECESSARY TH AT IT NEEDS TO BE SO IN ALL THE SUBSEQUENT YEARS. 9 (XI) THE ASSESSEE HAS BEEN UNDERTAKING SUCH TRANSACTIONS QUITE REPEATEDLY. AND ACCORDING TO THE GENERAL PRIN CIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF G.VENKATA SWAMI NAIDU & CO. VS. CIT (1959) 35 ITR 594, REPETITIVE NATURE OF TRANSACTIONS IS A PARTNER TO AN ACTIVITY BEING IN THE NATURE OF TRADE AND NOT INVES TMENT. (XII) THE CONTENTION OF THE ASSESSEE THAT AMPLE OPPORTUNI TY TO HIM WAS NOT GIVEN IS ALSO WITHOUT BASE. THE ASSESSE E HAD HIMSELF FILED A BELATED RETURN DUE TO WHICH ITS SEL ECTION IN SCRUTINY WAS DONE IN THE F.Y. 2008-09. DESPITE THIS , THE ASSESSEE WAS AFFORDED ENOUGH OPPORTUNITY TO EXPLAIN ITS POSITION. MOREOVER, THE ASSESSEE HAS BEEN ABLE TO F ILE ALL THE DETAILS ASKED FOR AND HAS FILED DETAILED SUBMIS SION IN ITS SUPPORT. (XIII) THE ASSESSEE IS A TRADER AND NOT AN INVESTOR IS ALS O BORNE OUT BY THE FACT THAT HE HAS AN INCOME OF RS.2,60,73 ,558 FROM SHORT TERM CAPITAL GAINS AND AN INCOME OF RS.47,14,431 FROM LONG TERM CAPITAL GAINS. THUS APP ROX 85% OF HIS INCOME FROM CAPITAL GAINS IS FROM SHORT TERM CAPITAL GAIN AND ONLY 15% FROM LONG TERM CAPITAL GA INS. THIS INDICATES THAT ASSESSEE OPERATES IN THE NATURE OF TRADER AND NOT AN INVESTOR. (XIV) THE PORTFOLIO OF THE ASSESSEE WOULD HAVE MOSTLY COMPRISED GOVERNMENT BONDS AND SECURITIES IF ASSESS EE WAS AN INVESTOR. WHEREAS IN HIS CASE IT IS NOT SO. MOREOVER, THIS IS PARTICULARLY NOTEWORTHY WHEN HE HIMSELF SUBMITS THAT HIS OBJECTIVE IS TO REFRAIN FR OM 10 PARTICIPATION IN RISK POTENTIAL ACTIVITIES. THIS AG AIN POINTS TO HIS BEING A TRADER AND NOT AN INVESTOR. 6. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 7. SHRI AJAY VOHRA, LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ISSUE, WHETHER AN ASSESSEE HAS MADE INVESTMENT OR T RADED IN SHARES HAD ALWAYS GIVEN RISE TO LOTOFF DEBATE. IT IS ALWAYS DI FFICULT FOR THE ADJUDICATING AUTHORITY TO CLEARLY DRAW A LINE BETWEEN THESE TWO ACTIVITIES. HE DREW OUR ATTENTION TOWARDS TWO PAPER BOOKS FILED BY THE ASSE SSEE, ONE CONTAINS COPIES OF 20 JUDGMENTS RENDERED BY THE HON'BLE HIGH COURT AS WELL AS ITAT. THE OTHER CONTAINS 243 PAGES OF DIFFERENT DETAILS SUBMI TTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE POI NTED OUT THAT RIGHT FROM THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F BENGAL & ASSAM INVESTORS LTD. VS. CIT REPORTED IN 59 ITR 547 UP TO RECENT JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF ITO VS. ROHIT ANA ND REPORTED IN 327 ITR 445, A LONG LIST OF JUDGMENTS DEALING WITH DIFFEREN T FACTUAL ASPECTS, IS AVAILABLE TO HELP THE ADJUDICATING AUTHORITY TO ARR IVE AT JUST CONCLUSION. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ISSUE WHETHER SHARES ARE HELD BY AN ASSESSEE AS INVESTMENT OR AS STOCK I N TRADE AND WHETHER PROFIT DERIVED FROM THE SALE OF SHARES/SECURITIES IS ASSES SABLE AS A CAPITAL GAIN OR 11 BUSINESS GAIN DEPENDS UPON THE INTENTION OF THE A SSESSEE. IT IS ALWAYS DIFFICULT TO ARRIVE AT A PROPER CONCLUSION AND TO G ATHER THE INTENTION OF AN ASSESSEE, BECAUSE DIFFERENT HUMAN MINDS ACT UNDER D IFFERENT CIRCUMSTANCES IN A DIFFERENT DIRECTIONS, BUT IN SOME OF THE AUTHO RITATIVE PRONOUNCEMENT, HONBLE COURTS HAVE LAID DOWN BROAD PRINCIPLES FOR JUDGING THE INTENTION. HE REFERRED THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF SUTLEJ COTTON MILLS SUPPLY AGENCY LTD. REPORTED IN 100 ITR 706 AND SUBMITTED THAT IN ORDER TO ASCERTAIN THE INTENTION OF AN ASSE SSEE, ONE HAS TO LOOK INTO THE ASPECTS, NAMELY, WHAT WAS THE OBJECT OF ACQUIRING T HE SHARES? WHETHER OBJECT WAS TO ACQUIRE SHARES AS AN INVESTMENT AND E NJOY INCOME THERE FROM OR TO MAKE PROFIT BY HOLDING THE SHARES AS STOCK IN TRADE? THE PERIOD FOR WHICH SHARES HAVE BEEN HELD WOULD BE A RELEVANT FAC TOR, SOURCE OF INVESTMENT I.E. WHETHER ASSESSEE HAS BORROWED THE F UNDS, METHOD OF VALUATION OF SHARES AT THE CLOSE OF THE YEAR AND WH ETHER SHARES ARE CLASSIFIED AND HELD AS STOCK IN TRADE OR NOT? HE TOOK US THE O RDERS OF THE REVENUE AUTHORITIES BELOW AND POINTED OUT THAT ONE OF THE F ACTORS CONSIDERED AGAINST THE ASSESSEE IS FREQUENCY OF THE TRANSACTIONS. ON T HE STRENGTH OF ITATS ORDER IN THE CASE OF NAGINDAS P. SETH VS. ACIT, REN DERED IN ITA NO. 961 & 1836/MUM/2010, HE SUBMITTED THAT FREQUENCY OF THE T RANSACTION CANNOT BE THE SOLE CRITERIA FOR HOLDING AN ASSESSEE AS INVOLV ED IN TRADING OF SHARES. IN 12 THIS CASE, ITAT FOUND THAT THE ASSESSEE HAD MADE 15 8 SHARE TRANSACTIONS DURING THE PREVIOUS YEAR. ON AN ANALYSIS OF ASSESSE ES TRANSACTIONS AND THE POSITION OF LAW, ITAT OBSERVED THAT MERELY BECAUSE THE ASSESSEE TRANSACTED IN 158 SHARES THAT SHOULD NOT BE TAKEN AS A SOLE CR ITERIA TO COME TO THE CONCLUSION THAT ASSESSEE IS A TRADER IN SHARES. FOR BUTTRESSING THIS CONTENTION, LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED UPO N THE ORDER OF THE ITAT IN THE CASE OF SHRI PRAKASH BABURAO PASSED IN ITA NO. 3719/DEL/09. HE PLACED ON RECORD COPY OF THE ITATS ORDER. IN THIS CASE AL SO, ASSESSEE WAS A RETIRED LECTURER DEVOTED HIMSELF FOR PROPAGATING IN RELIGIO US ACTIVITIES AS A MEMBER OF ISCON. HE HAD TRANSACTED IN 54 SCRIPTS WHICH RE SULTED IN SALES OF MORE THAN RS.24 CRORES. BECAUSE OF THIS MAGNITUDE, ASSES SING OFFICER TREATED HIM AS A TRADER IN SHARES. ON APPEAL, LEARNED CIT(APPEA LS) HELD THAT ASSESSEE MADE INVESTMENTS. THE ITAT HAS UPHELD THE ORDER OF THE LEARNED CIT(APPEALS). THUS, ACCORDING TO THE LEARNED COUNSE L FOR THE ASSESSEE, FREQUENCY OF TRANSACTION CANNOT BE A CRITERIA FOR B RANDING ANY ASSESSEE AS CONDUCTING BUSINESS IN SHARES. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER EXPLAINED THE POSITION OF THE ASSESSEE VIS--VIS TH E OBJECTION POINTED OUT BY THE ASSESSING OFFICER AS WELL AS LEARNED CIT(APPEAL S). WE WILL DEAL WITH EACH REASON ASSIGNED BY THE ASSESSING OFFICER AND E XPLAINED BY THE ASSESSEE. 13 8. LEARNED DR ON THE OTHER HAND SUBMITTED THAT FREQ UENCY OF TRANSACTION CONDUCTED BY THE ASSESSEE ITSELF SUGGESTS THAT HE H AS BEEN CARRYING OUT THE SHARES TRANSACTION ACTIVITIES IN AN ORGANIZED MANNE R WHICH COME WITHIN THE AMBIT OF EXPRESSION BUSINESS PROVIDED IN SECTION 2(13) OF THE ACT. THE ASSESSEE HAD CARRIED A REGULAR WATCH ON THE SHARES PURCHASED BY HIM AND SOLD THEM AS AND WHEN A PROFIT IS AVAILABLE. SHE RE LIED UPON TWO DECISIONS OF THE ITAT IN THE CASE OF IMMORTAL FINANCIAL SERVICES VS. DCIT REPORTED IN 44 SOT 88, SMT. HARSHA & MEHTA VS. DCIT REPORTED IN 43 SOT 332. IN THE CASE OF SMT. HARSHA & MEHTA, THERE WERE 37 TRANSACT IONS DEALING WITH 31 SCRIPTS AND HER ACTIVITY HAS BEEN TREATED AS A BUSI NESS ACTIVITY. 9. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE HAVE GONE THROUGH THE JUDGMENT S PLACED ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE. IN THE CASE O F ITO VS. JORA SHARES RENDERED BY THE ITAT, AHMEDABAD IN ITA NO. 352/AHD/ 2009, THE ITAT HAS MADE A REFERENCE TO THE ORDER OF THE ITAT IN THE CA SE OF SARNATH INFRA- STRUCTURE (P) LTD. VS. ACIT REPORTED IN 120 TTJ 216 . IN THE CASE OF SARNATH, LUCKNOW BENCH OF THE ITAT HAS MADE A DETAILED ANALY SIS OF VARIOUS AUTHORITATIVE PRONOUNCEMENT AND CULLED OUT FOLLOWIN G BROADER TESTS FOR APPLYING ON ANY TRANSACTION IN ORDER TO ASCERTAIN W HETHER IT IS IN THE NATURE OF TRADE OR AN INVESTMENT ONLY: 14 (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE T IME OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT I S TREATED AS STOCK-IN- TRADE OR INVESTMENT. WHETHER SHOWN IN OPENING/CLOSI NG 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 G OODS FOR THE PURPOSES OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DIS POSAL IN THAT PARTICULAR ITEM ? IF PURCHASE AND SALE ARE FREQUENT, OR THERE ARE SUBSTANTIAL TRANSACTIONS IN THAT ITEM, IT WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE . SIMILARLY, RATIO BETWEEN THE PURCHASES AND SALES AND THE HOLDINGS MA Y SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTING (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HO LDINGS INDICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROF IT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE ? FORME R WILL INDICATE INTENTION OF TRADE AND LATTER, AN INVESTMENT. IN TH E CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIAL MOTIVE IS AN ESSEN TIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN TH E BALANCE SHEET ? IF THE ITEMS IN QUESTION ARE VALUED AT COST, IT WOULD INDI CATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MAR KET VALUE OR NET 15 REALIZABLE VALUE (WHICHEVER IS LESS), IT WILL INDIC ATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEM ORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION ? WHETHER FOR T RADE OR FOR INVESTMENT ? IF AUTHORIZED ONLY FOR TRADE, THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY ? AND VICE VERSA. (7) IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SH OW THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE H AS KEPT IN THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS. IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY, STOCK-IN-TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPARENT IS NOT REAL. (8) THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHA RES (OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICI ENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) F OR INVESTMENT. (9) ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISIT ES FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE ASSESSEE IS C OMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS, IF IT IS CLAIMED THAT IT IS DEALING A S A TRADER IN THAT ITEM ? WHETHER IT HAD SUCH AN INTENTION (TO CARRY ON ILLEG AL BUSINESS IN THAT ITEM) SINCE BEGINNING OR WHEN PURCHASES WERE MADE ? (10)IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 O F 2007 OF 15TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS, ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, 16 THERE ARE DISTINCTIVE FEATURES FOR BOTH AND THERE I S NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. (11)NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EFFECT OF SE VERAL FACTORS HAS TO BE SEEN. 10. LET US CONSIDER THE FACTS DISCUSSED BY THE LEAR NED REVENUE AUTHORITIES BELOW IN THE IMPUGNED ORDERS. ACCORDING TO THE ASSE SSEE, THE PRIMARY INTENTION FOR MAKING INVESTMENT IN SHARES IS TO EAR N DIVIDEND INCOME, TO KEEP THE CAPITAL FUNDS AVAILABLE WITH THE ASSESSEE INTACT, TO ENSURE THAT THE CAPITAL INVESTED IN THE SHARES GROW OVER A PERIOD O F TIME ON ACCOUNT OF THE CAPITAL APPRECIATION AND TO BE PART OF GROWTH OF TH E INVESTEE COMPANY. HE DEMONSTRATED ON THE RECORD THAT HE HAS BEEN MAKING INVESTMENT FROM THE LAST TWO DECADES AS AN INVESTOR. THE PAST HISTORY AVAILA BLE ON PAGE NOS. 223, 234, 379 AND 420 OF THE PAPER BOOK DEPICTS THE FOLL OWING POSITION IN RESPECT TO HIS INVESTMENT: ASSESSMENT YEAR IN THE RETURN OF INCOME ASSESSMENT 2003-04 LTCG & STCG INTIMATION U/S 143(1) OF THE INCOME-TAX ACT, 1961 (THE ACT) 2004-05 LTCG & STCG INTIMATION U/S.143(1) OF THE ACT. 2005-06 LTCG & STCG ASSESSMENT U/S.143(3) 17 OF THE ACT, ACCEPTING THE APPELLANT AS INVESTOR AND THE GAINS AS CAPITAL GAINS. 2006-07 LTCG & STCG LTCG= ACCEPTED BY THE ASSESSING OFFICER STCG=IN DISPUTE. 2007-08 LTCG & STCG INTIMATION U/S 143 OF THE ACT. 2008-09 LTCG & STCG ASSESSMENT U/S 143(3) OF THE ACT, ACCEPTING THE LONG TERM CAPITAL GAINS DECLARED IN THE RETURN. 11. IT ALSO EMERGES OUT FROM THE RECORD THAT ASSESS EE BEING INVESTOR HAS NOT BEEN MAINTAINING ANY OFFICE ESTABLISHED OR KEEP ING ANY STAFF. HE IS ALSO NOT REGISTERED WITH ANY AUTHORITY OR BODY SUCH AS S TOCK EXCHANGE AND SEBI ETC. HE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT BUT SUBMITTED THE DETAILS IN RESPECT OF THE INVESTMENT BEFORE THE ASSESSING O FFICER. HE HAS NOT CLASSIFIED THE SHARES HELD BY HIM AS STOCK-IN-TRADE . THE ENTIRE PORTFOLIO IS VALUED AT COST AND NOT AT COST OR MARKET PRICE WHIC HEVER IS LOWER BECAUSE THAT CAN ONLY BE APPLIED IF THE SHARES WERE HELD AS A STOCK-IN-TRADE. HE IS NOT 18 HAVING ANY CURRENT ACCOUNT AND IS ONLY MAINTAINING S/B ACCOUNT. THE ENTIRE INVESTMENT HAS BEEN MADE OUT OF HIS OWN FUND AND NO T OUT OF BORROWED FUNDS. THE ENTIRE INVESTMENT HAS BEEN HELD BY THE A SSESSEE IN HIS OWN NAME AND NOT IN THE NAME OF ANY BUSINESS ENTITY I.E. FIR M ETC. ACCORDING TO THE ASSESSEE, HE HAS RECEIVED SUBSTANTIAL DIVIDEND INCO ME OF RS.10.10 LACS. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING POINTED OUT THAT DIVIDEND YIELD ON INVESTMENT WAS AROUND 2.10% WHICH IS MUCH HIGHER THAN THE NORMAL EXPECTED YIELD OF 1.5% ON THE SHARES INV ESTED. FOR BUTTRESSING THIS ASPECT, HE DREW OUR ATTENTION TOWARDS INDICES OF THE SENSEX. HE PLACED ON RECORD THESE DETAILS. 12. THE FIRST OBJECTION OF THE ASSESSING OFFICER IS THAT ASSESSEE HAS UNDERTAKEN LARGE NUMBER OF TRANSACTIONS AND, THEREF ORE, THE FREQUENCY AND MAGNITUDE OF TRANSACTION CARRIED OUT BY THE ASSESSE E GOES TO SUGGEST THAT HE PURCHASED AND SELL THE SHARES WITH THE MOTIVE OF EA RNING PROFIT. NO DOUBT, ASSESSEE HAD MADE INVESTMENT IN A LARGE NUMBER OF S HARES, NAMELY, 329 SHARES. HE IS HOLDING A DIVERSE PORT-FOLIO COMPRISI NG OF 1833 SCRIPTS OUT OF WHICH 329 WERE SOLD PARTLY OR FULLY. THE ASSESSEE H AS POINTED OUT THAT ASSESSING OFFICER HAS FAILED TO APPRECIATE THE TRUE NATURE OF THE TRANSACTION. THE TOTAL SHORT TERM CAPITAL GAIN EARNED BY THE ASS ESSEE IS OF 2.60 CRORES, OUT 19 OF THIS 1.72 CRORES WAS EARNED FROM 35 SCRIPTS ONLY . THE REFERENCE TO 329 SHARES BY THE ASSESSING OFFICER IS JUST TO BRING TH E ASSESSEE IN THE AMBIT OF A TRADER. THE ASSESSEE ALSO DEMONSTRATED THAT OUT OF 1.72 CRORES GAINS, RS.97,96,784 WAS EARNED ON SHARES WHICH WERE HELD A S PART OF OPENING STOCK. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING REFERRED TO PAGE NO.12 FOR BUTTRESSING THIS POSITION. THERE IS ONE MORE ANGLE. THE INVESTMENT IN ASSESSMENT YEAR 2005-06 OF THESE SCRI PTS WAS ACCEPTED AS ON CAPITAL ACCOUNT. THIS INVESTMENT BECOME OPENING STO CK AND GAVE RISE TO A SHORT TERM CAPITAL GAIN OF RS.97,96,784. IN OUR OPI NION, AT THE TIME OF SALE, IT CANNOT CHANGE THE COLOUR OF THE TRANSACTION. FROM T HE DETAILS AVAILABLE ON PAGE 12 OF THE PAPER BOOK, IT REVEALS THAT 65% OF T HE SHORT TERM CAPITAL GAIN WAS EARNED FROM 35 SCRIPTS. ASSESSING OFFICER HAS N OT DOUBTED THE OTHER FACTS DISCLOSED BY THE ASSESSEE I.E. NO BUSINESS EX PENDITURE CLAIMED BY THE ASSESSEE, NO CLAIM OF STT, SERVICE-TAX ETC. AND FUN DS WERE USED FROM HIS OWN. WE FIND THAT LEARNED CIT(APPEALS) HAS POINTED OUT TWO MORE ASPECTS APART FROM THE ONE POINTED OUT BY THE ASSESSING OFF ICER IN RESPECT OF FREQUENT TRANSACTION. LEARNED CIT(APPEALS) HAS OBSE RVED THAT ASSESSEE ENTERED INTO TRANSACTION WITHOUT TAKING DELIVERIES. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING, SUBMITTED THAT IN PARAGRAPH NO. 5.5.3, LEARNED FIRST APPELLATE AUTHORITY HAS MADE A REFERE NCE OF ACKNIT-KNITTING. 20 HE POINTED OUT THAT THIS OBSERVATION OF THE LEARNED CIT(APPEALS) IS BASED ON JUST FOUR TRANSACTIONS WHICH WERE BASICALLY A PU NCHING ERROR BY THE BROKER OF THE ASSESSEE. HE POINTED OUT THAT ASSESSEE HAD G IVEN ORDERS TO THE BROKER ON 6.4.2005 AND 16.5.2005 BUT DUE TO PUNCHING ERROR , THE BROKER ALSO ENTERED SALE TRANSACTION OF THE VERY SAME SHARES AND THE TR ADE GOT EXECUTED ON THE BSE TERMINAL WHICH COULD NOT BE REVERSED. THE ASSES SEE HAD PLACED ON RECORD THE DETAILS OF THIS TRANSACTION. IT RELATES TO BROKER BONANZA STOCK (BT 39). THE AMOUNT INVOLVED IS RS.16,944 AND RS.53,885 . THE SQUARE OFF DIFFERENCE IS 188 AND 110 RUPEES. THUS, ASSESSEE HA S SQUARED UP THESE TRANSACTIONS WITHOUT TAKING THE DELIVERIES AND THIS ONE INSTANCE CANNOT BE SUFFICIENT TO PERSUADE THE LEARNED CIT(APPEALS) TO DISBELIEVE ALL OTHER TRANSACTIONS AND SAY THAT ASSESSEE IS CARRYING OUT BUSINESS ACTIVITIES, BECAUSE HE HAS ENTERED INTO THE TRANSACTION WITHOUT TAKING THE DELIVERIES. SIMILARLY, THE NEXT OBJECTION POINTED OUT BY THE LEARNED FIRST APPELLATE AUTHORITY IS IN THE CASE OF SCRIPTS OF CENTURY TEXTILES AND ABHESHE K INDUSTRIES. IT WAS POINTED OUT THAT THESE TRANSACTIONS WERE SQUARED UP BECAUSE OF THE MIS- COMMUNICATION BETWEEN THE ASSESSEE AND THE BROKERS. THE OTHER OBJECTIONS POINTED OUT BY THE LEARNED CIT(APPEALS) IS THAT ASS ESSEE DID NOT PAY STT ON THE SHARES TRANSACTED, WE FIND THAT WHOLE DISPUTE F OR TREATING THE ASSESSEE AS A TRADER IN SHARES IS THE RESULT OF THIS SECURITY T RANSACTION TAX. HAD THE 21 ASSESSEE NOT PAID STT THEN SHORT TERM CAPITAL GAIN TAX WOULD BE LEVIED @ 30% WHICH IS AT PAR WITH NORMAL RATE OF TAX ON INCO ME IN THE CASE OF ASSESSEE. THE ASSESSEE HAD PAID STT AND, THEREFORE, RATE OF TAX APPLICABLE ON THE SHORT TERM CAPITAL GAIN ARISEN TO ASSESSEE IS 1 0%. THE ASSESSING OFFICER IS TRYING TO TAX THIS GAIN @ 30% BY CONVERTING THE ASSESSEE FROM INVESTOR TO TRADERS. 13. FROM THE PERUSAL OF THE RECORD, WE FIND ONE MOR E DIMENSION IN THE APPROACH OF THE ASSESSING OFFICER FOR TREATING THE ASSESSEE AS A TRADER IN SHARES. WE FIND THAT IN CERTAIN SHARES, ASSESSEE HA S SHOWN AS A LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN. AS FAR AS LONG TERM CAPITAL GAIN IS CONCERNED, ASSESSING OFFICER DID NOT DISPUT E THE TREATMENT GIVEN BY THE ASSESSEE AS OF INVESTOR BUT THE SHORT TERM CAPI TAL GAIN HAS BEEN CONSIDERED AS A BUSINESS ACTIVITIES IN RESPECT OF T HOSE VERY SCRIPTS. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING BROUGHT TO OUR NOTICE THIS CONTRADICTION IN THE FOLLOWING SHARES: NAME OF THE SECURITY LTCG STCG AUTOMOTIVESTAMPING/JBN FAZE THREE EXPORTS IDBI/IDBI BANK 128975 2541 3027362 184423 -215 106545 22 JAYSHREE TEA NUCLEUS SECURITIES ORIENTAL HOTELS 441 23206 708750 -244 101270 747910 TOTAL 3891275 1139709 14. ON AN ANALYSIS OF ALL THE FACTS AND CIRCUMSTANC ES IN THE LIGHT OF VARIOUS AUTHORITATIVE PRONOUNCEMENT WE ARE OF THE VIEW THAT ASSESSEE HAS MADE INVESTMENT IN THE SHARES AS A INVESTOR AND HE CANNOT BE TREATED AS A TRADER. WE ALLOW THIS FOLD OF GRIEVANCE AND SET ASI DE THE FINDINGS OF THE LEARNED CIT(APPEALS) AS WELL AS OF ASSESSING OFFICE R. THE ASSESSING OFFICER IS DIRECTED NOT TO ACCESS THE INCOME ARISEN TO THE ASSESSEE FROM SALE OF SHARES AS BUSINESS INCOME RATHER ASSESS IT AS A LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN, AS THE CASE MAY BE . AS FAR AS CHARGING OF INTEREST UNDER SEC. 234A AND 234B OF THE INCOME-TAX ACT, 1961 IS CONCERNED, IT IS CONSEQUENTIAL. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 30.06.2 011 SD/- SD/- (G.E. VEERABHADRAPPA ) ( RAJPAL YAD AV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 30/06/2011 MOHAN LAL 23 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR