The DCIT, Circle-3, Surat V. Shri Mulchandbhai Shankarbhai Amin, Surat

ITA 3124/AHD/2010

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3622 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 25-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIA
• Assessee Lawyers: SHAH
• Keywords: Business income

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.3124/AHD/2010 WITH CO NO.1/AHD/2011 / ASSTT. YEAR: 2007-2008 DCIT, CIR.3 SURAT. VS SHRI MULCHANDBHAI SHANKARBHAI AMIN A-503, MEGHDHANUSH APARTMENT SARELA WADI, GHOD DOD ROAD SURAT. PAN : ABWPA 7967 M ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAMES KURIA, SR.DR ASSESSEE BY : SHRI M.R. SHAH, AR / DATE OF HEARING : 25/05/2016 / DATE OF PRONOUNCEMENT: 01/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)- II, SURAT DATED 13.9.2010 FOR THE ASSTT.YEAR 2007-0 8. ON RECEIPT OF NOTICE IN REVENUES APPEAL, THE ASSES SEE HAS FILED CO BEARING NO. CO.1/A/2011. 2. THOUGH THE REVENUE HAS TAKEN SIX GROUNDS OF APPE AL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY, IT HAS PLE ADED THAT THE LD.CIT(A) HAS ITA NO.3124/AHD/2010 2 ERRED IN HOLDING THAT GAIN ARISEN TO THE ASSESSEE O N SALE OF SHARES IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN INSTEAD OF BUSIN ESS INCOME TREATED BY THE AO. 3. IN THE CO THE ASSESSEE HAS PLEADED THAT HE MADE INVESTMENT IN SHARES. ON SALE OF SHARES, HE HAS SHOWN SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. THE LD.CIT(A) HAS ERRED IN DIRECTING THE LD. AO TO TREAT THE GAIN ARISEN ON SALE OF SHARES AS BUSINESS INCOME IN RESPECT OF THOSE SHARES, WHICH WERE HELD BY THE ASSESSEE FOR PERIOD LESS THAN ONE MONTH . . SINCE BOTH THE ISSUES ARE INTER-CONNECTED WITH EACH OTHER, THEREFO RE, WE TAKE THEM TOGETHER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME ELECTRONICALLY ON 1.11.2007 DECLARING TOTAL INCOME AT RS.63,08,282/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE H AS SHOWN SHORT TERM CAPITAL GAIN FOR SALE OF SHARES AT RS.36,89,026/- AND LONG TERM CAPITAL GAIN OF RS.29,39,046/-. THE LD.AO AFTER ELABORATE DISCUSSI ON IN THE ASSESSMENT ORDER TREATED THE ASSESSEE AS TRADER IN THE SHARES. HE A SSESSED INCOME OF THE ASSESSEE FROM SALE OF SHARES AS BUSINESS INCOME. 5. ON APPEAL, THE LD.CIT(A)HAS HELD THE ASSESSEE AS INVESTOR, BUT DIRECTED THE AO TO TREAT THE GAIN ON TRANSFER OF SHARES WHIC H WAS HELD BY THE ASSESSEE FOR LESS THAN ONE MONTH AS BUSINESS INCOME BY OBSER VING AS UNDER: 4.1 THE MAIN ISSUE IN THE FIRST GROUND OF APPEAL IS AS TO WHETHER PROFIT DECLARED UNDER LONG TERM CAPITAL GAIN AND SH ORT TERM CAPITAL GAIN CAN BE TREATED AS BUSINESS INCOME; IN REGARD T O LONG TERM CAPITAL GAIN DECLARED, THE APPELLANT HAS RELIED UPON THE OR DER DTD.30.4.2009 IN APPEAL NO.CAS/II/260/08-09 OF MY PREDECESSOR PASSED IN HIS OWN CASE IN THE A.Y.2006-07, A COPY OF, WHICH HAS ALSO BEEN ENCLOSED WITH THE ABOVE WRITTEN SUBMISSION, WHEREIN THE CIT(A) HAS HE LD THAT THE VARIOUS ITA NO.3124/AHD/2010 3 CRITERIA WHICH THE ASSESSING OFFICER HAS APPLIED IN THE ALLEGED SHORT TERM CAPITAL GAIN, AS INCOME FROM BUSINESS COULD NO T BE APPLIED TO THE TRANSACTIONS IN SHARES WHICH HAD BEEN HELD FOR MUCH LONGER DURATION, WHERE THE MOTIVE WAS OBVIOUSLY TO INVEST AND NOT TO DEAL AS IN A BUSINESS AND THE FREQUENCY OF THE TRANSACTION IS MO RE INFREQUENT AND SPACED OUT, AND, ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF THE AMOUNT OF LONG TERM CAPITAL GAI N AS BUSINESS INCOME AND ALLOWED THE APPELLANT'S GROUND OF APPEAL. I FIN D THAT THE FACTS RELATING TO LONG TERM CAPITAL GAIN IN THE YEAR UNDE R CONSIDERATION ARE SAME AS IN THE IMMEDIATE PRECEDING YEAR AND HOLD TH AT THE FINDING GIVEN BY THE CIT(A) IN THE A.Y.2006-07 IS ALSO APPL ICABLE IN THE YEAR UNDER CONSIDERATION AND, ACCORDINGLY, DIRECT THE AS SESSING OFFICER TO TREAT THE CAPITAL GAIN AMOUNTING TO RS.29,39,046/-U NDER THE HEAD 'LONG TERM CAPITAL GAIN'. 4.2. IN REGARD TO SHORT TERM CAPITAL GAIN, THE APPE LLANT HAS RELIED UPON THE ITAT, AHMEDABAD'S ORDER DTD.29.01.2010 IN THE C ASE OF SUGAMCHAND C SHAH IN ITA NO.3554/AHD/2008 AND 1932/ AHD/2009 IN THE A.YRS 2005-06 & 2006-07 AND ITAT, DELHI BENCH'S DECISION IN THE CASE OF ARJUN KAPUR VS DCIT 70 ITD 161. IN SO FAR A S THE APPLICABILITY OF THE DECISION IN THE CASE OF ARJUN KAPUR (SUPRA), IS CONCERNED, THE ITAT, DELHI BENCH HAS HELD THAT SHARES HELD FOR A P ERIOD OF ONE YEAR OR MORE SHOULD BE TREATED AS LONG TERM CAPITAL GAIN. T HEREFORE, AS FAR AS THIS DECISION IS CONCERNED, IT IS APPLICABLE TO LON G TERM CAPITAL GAINS. ON THE SALE OF SHARES HELD FOR MORE THAN A YEAR OR SO, I HAVE ALREADY RELIED UPON THE APPELLATE ORDER IN THE CASE OF THE APPELLANT IN THE A.Y.2006-07 AND DIRECTED THE ASSESSING OFFICER TO T REAT THE LONG TERM CAPITAL GAIN DECLARED IN THE RETURN OF INCOME UNDER THE SAID HEAD. 4.3. AS FOR THE APPLICABILITY OF THE AHMEDABAD ITAT 'S DECISION IN THE CASE OF SHRI SUGAMCHAND C SHAH, I. FIND THAT THE HO N'BLE TRIBUNAL HAS DISCUSSED THIS ISSUE IN PARA 15 TO 19 OF THE ORDER. THE OPERATIVE PART OF THE ORDER BEING, AS UNDER:- 'CONSIDERING THE TOTALITY AND PECULIARITY OF THE FA CTS OF THIS CASE, WE FIND THAT ASSESSEE IS NEITHER FULLY ACTING AS A TRADER NOR AS FULLY INVESTOR. DEMARCATION IS QUITE HAZY; THOUGH I N THE BOOKS HE IS SHOWING ALL THE PURCHASES AS INVESTMENT BUT FREQ UENCY OF TRANSACTION IN SEVERAL CASES IS SO LARGE AND HOLDIN G PERIOD IN MANY CASES IS SO SMALL - FROM 0 TO A WEEK OR SO THA T ASSESSEE IS DE FACTO SELLING AND PURCHASING SHARES AS TRADER. H E IS ALSO HOLDING SHARES FOR LONG PERIOD -INDICATING THAT THE Y ARE HELD AS INVESTMENT. THEREFORE, A CRITERIA HAS TO BE FIXED F OR DETERMINING ITA NO.3124/AHD/2010 4 AS TO WHEN HE IS ACTING AS TRADER AND WHEN AS INVES TOR. ACCORDINGLY, WE DECIDE FOLLOWING CRITERIA TO HOLD W HEN GAINS ARE TO BE TAXED AS PROFIT TO BE EARNED UNDER THE BUSINE SS OR TO BE TAXED AS SHORT TERM CAPITAL GAIN, WE HOLD THAT IF S HARES ARE NOT HELD EVEN SAY FOR A MONTH, THEN THE INTENTION IS CL EARLY TO REAP PROFIT BY ACTING AS A TRADER AND HE DID NOT INTEND TO HOLD THEM IN INVESTMENT PORT-FOLIO. WE BELIEVE THAT IF, A PERSON ' INTENDS TO HOLD HIS PURCHASES OF SHARES AS INVESTMENT, HE WOULD WAT CH THE FLUCTUATION OF RATES IN THE MARKET FOR WHICH A MINI MUM TIME IS NECESSARY, WHICH WE ESTIMATE AT ONE MONTH. WHERE SH ARES ARE HELD FOR MORE THAN A MONTH, THEY SHOULD BE TREATED AS INVESTMENT AND ON THEIR SALE SHORT TERM CAPITAL GAIN SHOULD BE CHARGED. WHEN SHARES ARE HELD FOR LESS THAN A MONTH, GAIN ON THEM SHOULD BE TREATED AS PROFIT FROM BUSINESS.' THE DECISION IN THE CASE OF SHRI SUGAMCHAND C SHAN IS, THEREFORE, TO BE CONSIDERED IN THE TOTALITY AND PECULIARITY OF THE F ACTS OF THE SAID CASE. AS TO WHAT ARE THE PECULIARITIES IN THE CASE OF SHR I SUGAMCHAND C SHAH, CAN BE CULLED OUT FROM THE ORDER, AS UNDER:- (I) THE HOLDING OF SHARES SOLD, THE PROFIT OF WHIC H HAS BEEN SHOWN UNDER SHORT TERM CAPITAL GAIN HAS BEEN VALUED AT COST, AND SUCH ACCOUNTING HAS BEEN ACCEPTED BY THE REVENUE IN EARLIER YEARS (PARA 16) (II) THERE IS NO MATERIAL TO SHOW THAT THE ASSESSE E HAD DECLARED HIMSELF AS A TRADER IN SHARES AND LEGAL REQUIREMENTS THEREFORE HAVE BEEN COMPLIED WITH (PAR A 16). (III) THE ASSESSEE HAS NOT BORROWED ANY MONEY FOR INVESTING IN SHARES (PARA 16) (IV) HIGH FREQUENCY TRANSACTIONS AND LOW PERIOD HO LDINGS INDICATE TRADE, WHEREAS LOW FREQUENCY TRANSACTIONS AND HIGH PERIOD HOLDING INDICATE INVESTMENT (PARA 16) (V) THE ASSESSEE HAS DISCHARGED ONUS OF SHOWING TH AT IT IS MAKING INVESTMENT BUT REVENUE IS ABLE TO SHOW THAT THERE ARE HIGH FREQUENCY AND LOW HOLDINGS IN MANY TRANSAC TIONS OF SHARES INDICATING THAT ASSESSEE HAS SOME INTENTI ON OF PURCHASING AND SELLING SHARES AS A TRADER (PARA 17) . (VI) THERE CANNOT BE FIXED CRITERIA TO DECIDE AS IN THE PRESENT CASE WHETHER ASSESSEE HAS TRADED IN SHARES EVENTHOU GH THE ASSESSEE HELD THEM AS INVESTMENT (PARA 17) ITA NO.3124/AHD/2010 5 4.4. THUS, THE TRIBUNAL IN THE ABOVE CASE HAS HELD THAT THERE CANNOT BE A FIXED CRITERIA TO DECIDE WHETHER AN ASSESSEE H AS TRADED IN SHARES EVEN THOUGH THOSE SHARES WERE SHOWN BY HIM AS HELD IN INVESTMENT. THIS OBSERVATION OF THE ITAT ITSELF SHOWS THAT THE DECISION GIVEN IN THE CASE OF SHRI SUGAMCHAND C SHAH CANNOT BE UNIVERSALL Y APPLIED. IN THE LIGHT OF THE FACTS AND THE DISCUSSION MADE ABOVE, T HE DECISION GIVEN BY THE I BENCH OF THE ITAT, MUMBAI VIDE ORDER DTD.26.3 .2010 IN ITA NO.2586/MUM/2007 IN THE CASE OF SMT SAD HNA NABERA IN THE A.Y.2005-06 ALSO BECOMES IMPORTANT. THE ITAT, MUMBAI BENCH IN THE SAID DECISION UPHELD THE ACTION OF THE ASSESSIN G OFFICER IN TREATING THE INCOME FROM SALE OF SHARES DECLARED BY THE APPE LLANT DURING THE YEAR UNDER THE HEAD 'SHORT TERM CAPITAL GAIN' AS 'I NCOME FROM BUSINESS ACTIVITIES' AND DISMISSED THE APPEAL OF THE APPELLA NT. THE HON'BLE MEMBERS WHILE DECIDING THE APPEAL OF THE APPELLANT HAD EXAMINED THE PURCHASES AND SALES OF SCRIPS TRADED BY THE APPELLA NT, INCOME FROM WHICH HAD BEEN DECLARED UNDER THE HEAD 'SHORT TERM CAPITAL GAIN' AND AFTER CONSIDERING THE SAME, OBSERVED THAT THE APPEL LANT PURCHASED THE SHARES WITH AN INTENTION TO MAKE PROFIT IN THE SHAR E MARKET. IN THE SAID DECISION, THE HON'BLE BENCH ALSO DIFFERENTIATED THE FACTS OF THE CASE BEFORE THEM WITH THE FACTS IN THE CASE OF GOPAL PUR OHIT DECIDED BY THE ITAT, MUMBAI BENCH REPORTED IN 122 TTJ 97 AND ANOTH ER DECISION OF ITAT, MUMBAI IN THE CASE OF JANAK RANGWALA VS AC IT, 11 SOT 627(MUM) AND HELD THAT THE FACTS INVOLVED IN THE AB OVE TWO CASES WERE NOT APPLICABLE TO THE FACTS OF THE CASE OF SMT SADH NA NABERA. I HAVE ALLUDED TO THE ABOVE DECISIONS TO HIGHLIGHT THE FAC T THAT IN SO FAR AS THE TAXABILITY OF THE SHARES TRADED FROM WHICH CAPITAL GAIN INCOME HAS BEEN SHOWN IS CONCERNED, THERE CANNOT BE A UNIVERSAL FOR MULA. HOWEVER, THIS ISSUE HAS TO BE DECIDED ON THE BASIS OF SOME GUIDELINES/ PRINCIPLES WHICH WILL DEPEND ON TH E FACTS OF EACH CASE. WITHIN THE PARAMETERS LAID DOWN IN TWO DECISIONS DI SCUSSED ABOVE, THE DETAILS RELATING TO CAPITAL GAIN/LOSS, FIXED ASSETS , INVESTMENT IN FDS, SHARES ETC. AND INTEREST EXPENSE OF THE APPELLANT AS ON 31.3.2007 HAVE BEEN EXAMINED AND IT IS SEEN THAT THE TOTAL C APITAL OF THE APPELLANT IS OF RS.6.95 CRORE, OUT OF WHICH INVESTMENT IN SHA RES IS TO THE EXTENT OF RS.4.66 CRORE. THERE IS SECURED LOAN FROM BANK TO THE EXTENT OF RS.25.25 LAC, AND UNSECURED LOAN OF RS.72.58 LAC, W HICH IS INTEREST FREE AND OUT OF THE SAME RS.40 LAC IS FROM SHARE OF HUF OF THE APPELLANT. THE APPELLANT HAS ALSO SUBMITTED THAT UNSECURED LOA N OF RS.72.63 LAC HAS BEEN INVESTED IN FD WITH THE ICICI BANK AND SBI AND FOR PAYMENT OF ADVANCE TAX, WHEREAS SECURED LOAN OF RS.25.25 LA C HAS BEEN OBTAINED FROM ICICI BANK AND UTILIZED FOR MAKING PA YMENT TO ASHIT C MEHTA - SHARE BROKER, HOWEVER, THIS LOAN HAS BEEN O BTAINED ONLY IN THE MONTH OF MARCH, 2007 BY WAY OF OVERDRAFTS AGAINST T HE FDR AND OUT OF ITA NO.3124/AHD/2010 6 INTEREST EXPENSE OF RS.1.79 LAC, INTEREST OF RS.28, 057/- HAS BEEN PRIMARILY INCURRED FOR PAYMENT OF INTEREST TO THE I CICI BANK ON LOAN(OD A/C), WHICH HAS BEEN TAKEN ON FD CREATED BY INVESTING UNSECURED LOAN OF RS.72.63 LAC, AND INTEREST ON OLD LOANS HAS NO NEXUS WITH INVESTMENT IN SHARES. THE BALANCE SHEET OF THE APPELLANT ALSO SHOWS THAT SHARES OF RS.4,36,50,976/- AS ON 31.3.20 07 ARE APPEARING IN THE SCHEDULE OF INVESTMENT. THE APPELLANT HAS ALSO NOT CLAIMED ANY INTEREST ON UNSECURED LOANS OF RS.72.63 LAC TAKEN F ROM HIS WIFE AND FROM HUF OF HIS FATHER. THE INVESTMENT IN THOSE SHA RES WHICH IS FROM THE OD A/C. WITH THE ICICI BANK HAS BEEN FROM 06.3. 2007 ONWARDS ONLY, WHICH PERIOD IS LESS THAN THIRTY DAYS. THE FA CTS DISCUSSED ABOVE, THEREFORE, SHOW THAT THE DECISION IN THE CASE OF SH RI SUGAMCHAND C SHAH(SUPRA) RELIED UPON BY THE APPELLANT SHALL BE A PPLICABLE. FOLLOWING THE SAID DECISION, I DIRECT THE ASSESSING OFFICER THAT WHERE SHARES ARE HELD FOR MORE THAN A MONTH THEY SHOULD B E TREATED AS INVESTMENT AND ON THEIR SALE, PROFIT SHALL BE CHARG EABLE UNDER THE HEAD 'SHORT TERM CAPITAL GAIN', AND, WHERE SHARES ARE HE LD FOR LESS THAN A MONTH, GAIN ON THEM SHOULD BE TREATED AS 'PROFIT FR OM BUSINESS'. THE GROUND OF APPEAL NO.L IS, THEREFORE, PARTLY ALLOWED . 6. AT THE VERY OUTSET, THE LD.COUNSEL FOR THE ASSES SEE POINTED OUT THAT RIGHT FROM THE ASSTT.YEAR 2005-06, THE AO HAS BEEN TREATI NG THE ASSESSEE AS TRADER IN THE SHARES, BUT HIS CONCLUSION DID NOT MEET APPR OVAL OF THE HIGHER APPELLATE AUTHORITY. THIS ISSUE HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE BY THE ORDER OF THE ITAT PASSED IN ITA NO.127/AHD/2009 AND 2076/ AHD/2009 OF THE ASSTT.YEARS 2005-06 AND 2006-07. SIMILARLY, THE AP PEAL OF THE REVENUE BEARING ITA NO.2226/AHD/2011 HAS ALSO BEEN DISMISSE D BY THE TRIBUNAL IN THE ASSTT.YEAR 2008-09. HE PLACED ON RECORD COPIES OF THE TRIBUNALS ORDERS. THE DISCUSSION MADE BY THE TRIBUNAL IN THE ASSTT.YE AR 2008-09 READS AS UNDER: 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT IN THIS ASSESSMENT Y EAR, ASSESSING OFFICER HAS NOT INDEPENDENTLY DISCUSSED THE FACTS AND CIRCU MSTANCES EXHIBITING THE NUMBER OF TRANSACTIONS OF PURCHASE AND SALES OF SHARES OF THE ASSESSEE. HE SIMPLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER IN ASSESSMENT YEAR 2007-08. WE FIND THAT IN ASSESSMENT YEAR 2005-06 UNDER SIMILAR CIRCUMSTANCES AN ADDITION OF RS. 68,87,173/- WAS MADE BY THE ASSESSING OFFICER. THE ASSESSEE IN THAT YEAR ALSO ITA NO.3124/AHD/2010 7 CLAIMED INVESTMENT IN SHARES AND DISCLOSED INCOME U NDER THE HEAD OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. THE LD. ASSESSING OFFICER TREATED THE ASSESSEE AS TRADING IN SHARE AN D ASSESSED THE INCOME FROM PURCHASE AND SALES OF SHARES AS A BUSIN ESS INCOME. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCURRED WITH THE CONCLUSIONS OF THE ASSESSING OFFICER BUT THE ITAT IN ITA NO. 12 7/AHD/2009 VIDE ITS ORDER DATED 13-05-2011 HELD THAT ASSESSEE IS AN INV ESTOR AND NOT A TRADER IN SHARES. 7. IN ASSESSMENT YEAR 2006-07 AGAIN, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 62,67,735/- UNDER THE HEAD BUSIN ESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN DISCLOSED BY THE ASSESSE E. THE APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE BUT THE TRIBUNAL HAS ACCEPTED THE CONTENTI ONS OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO TREAT THE PRO FIT ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN. THE ITAT HAS MADE AN EL ABORATE DISCUSSION ON THE ISSUE AND REFERRED A LARGE NUMBER OF DECISIO NS IN ORDER TO DETERMINE WHETHER THE TRANSACTIONS OF THE ASSESSEE WERE OF AN INVESTOR OR OF A TRADER. THE CONCLUSIONS DRAWN BY THE ITAT O N PAGE 21 OF THE ORDER ARE WORTH TO NOTE. IT READS AS UNDER:- 5.12 IN VIEW OF THE FOREGOING, FOLLOWING THE VIEW TAKEN IN THE AFORESAID DECISIONS, IF WE ANALYSE THE TRANSACTIONS IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE DISCLOSED INCOME FR OM CAPITAL GAINS / DIVIDENDS IN EARLIER YEARS AND THE SHARES H AVE ALL ALONG BEEN TREATED AS INVESTMENTS IN THE BOOKS OF ACCOUNT /BALANCE SHEETS. IN THESE CIRCUMSTANCES, WE, THEREFORE, DIRE CT THE AO TO ACCEPT THE SHORT-TERM CAPITAL GAIN AMOUNTING TO RS, 62,67,735/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. T HEREFORE, GROUND NO.1 IN THE APPEAL IS ALLOWED. 6. AS REGARDS GROUND NO.1 IN THE APPEAL OF THE REVE NUE, THE ID. CIT(A) POINTED OUT IN THE IMPUGNED ORDER THAT THE A O IGNORED THE FACT THAT THE RELEVANT SHARES HAD BEEN HELD BY THE ASSESSEE FOR A SUBSTANTIALLY LONGER PERIOD AND THE VARIOUS CRITE RIA WHICH THE AO APPLIED THROUGHOUT THE ASSESSMENT ORDER IN TREAT ING THE SHARE TRANSACTIONS ALLEGEDLY GIVING RISE TO STCG AS INCOME FROM BUSINESS, COULD NOT BE APPLIED TO THE TRANSACTION I N SHARES WHICH HAD BEEN HELD FOR MUCH LONGER DURATIONS. IT WAS FUR THER OBSERVED BY THE ID. COMMISSIONER OF INCOME TAX(A) WHEN SHARE S ARE HELD FOR LONG TERM, THE MOTIVE IS OBVIOUSLY TO INVEST AN D NOT TO DEAL AS IN A BUSINESS WHILE THE FREQUENCY OF THE TRANSACTIO NS WAS ALSO MORE INFREQUENT AND SPACED OUT. ACCORDINGLY, THE ID . CLT(A) ITA NO.3124/AHD/2010 8 WHILE OBSERVING THAT THE SAID SHARES WHICH ARE HELD FOR INVESTMENT PURPOSES FOR LONG TERM, WOULD NOT REQUIR E INFRASTRUCTURE FOR TRANSACTING IN SHARES, CONCLUDED THAT THE LTCG CLAIMED BY THE ASSESSEE COULD NOT IN ANY WAY B E TREATED AS INCOME FROM BUSINESS. THE ID. DR APPEARING BEFORE U S DID NOT CONTROVERT THESE FINDINGS OF THE ID. CIT(A). IN THE SE CIRCUMSTANCES, ESPECIALLY WHEN THE REVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY MATERIAL OR CONTRARY DECISION IN ORD ER TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE N OT INCLINED TO INTERFERE WITH THE FINDINGS OF THE ID. CIT(A). THER EFORE, GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 8. THOUGH THE ASSESSMENT ORDER IS BASED UPON THE OB SERVATION OF THE ASSESSING OFFICER RECORDED IN ASSESSMENT YEAR 2007- 08 BUT IT IS DEMONSTRATED THAT THE STAND OF THE REVENUE IS IDENT ICAL STARTING FROM ASSESSMENT YEAR 2005-06 TO THIS ASSESSMENT YEAR. TH EREFORE, FOLLOWING THE ORDER OF THE ITAT IN ASSESSMENT YEAR 2005-06 AN D 2006-07, WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED THE FACTS AND CIRCUMSTANCES AND NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THIS APPE AL OF THE REVENUE IS DEVOID OF ANY MERIT AND DISMISSED. 7. IN VIEW OF THE CONSISTENT STAND OF THE TRIBUNAL IN THE ASSTT.YEARS 2005- 06 AND 2006-07 AND 2008-09, WE ARE OF THE VIEW THAT THE ASSESSEE HAS TO BE TREATED AS AN INVESTOR. THE LD.CIT(A) HAS CONSIDER ED THE CIRCUMSTANCES IN AN ELABORATE MANNER IN ORDER TO BRING THE POINT AT HOM E THAT THE ASSESSEE WAS AN INVESTOR. THE LD.DR HAS POINTED OUT THAT THE ASSESS EE HAS TAKEN LOAN OF RS.84.50 LAKHS WHICH MIGHT HAVE BEEN USED FOR THE P URPOSE OF INVESTMENT IN SHARES. HE READ OVER STATEMENT OF FACTS FILED ALON G WITH APPEAL. WE FIND THAT THE LD.CIT(A) HAS CONSIDERED THIS ASPECT IN THE FIN DING EXTRACTED (SUPRA). ACCORDING TO THE FINDING OF THE LD.CIT(A), THE LOA N TAKEN BY THE ASSESSEE WAS NOT SPECIFICALLY USED FOR THE PURPOSE OF MAKING INV ESTMENT. THE LOAN WAS TAKEN IN THE MONTH OF MARCH, 2007 BY WAY OF OVERDRA FT AGAINST FDRS. IT WAS FOR A VERY SHORT PERIOD OF TIME. HENCE, THIS CIRCU MSTANCE CANNOT BE USED AGAINST THE ASSESSEE TO RECORD A FINDING THAT THE A SSESSEE WAS A TRADER. ITA NO.3124/AHD/2010 9 8. AS FAR AS THE GROUND RAISED IN CO IS CONCERNED, NEITHER IN THE ACT NOR IN THE INCOME TAX RULES ANY CLASSIFICATION HAS BEEN CA LLED FOR THAT IF SHARES ARE HELD LESS THAN 30 DAYS, THEN, THE PROFIT ON SALE OF SUCH SHARES WOULD BE TREATED AS BUSINESS INCOME. ON THE STRENGTH OF THE CIRCUMS TANTIAL EVIDENCES, A COMPOSITE OPINION HAS TO BE FORMED BY THE ADJUDICAT OR EXHIBITING THE FACT WHETHER THE ASSESSEE IS AN INVESTOR OR TRADER. THE REFORE, THERE CANNOT BE ANY FURTHER CLASSIFICATION. THE LD.CIT(A) HAS ERRED IN CARVING OUT AN ARTIFICIAL CLASSIFICATION ON THE BASIS OF HOLDING PERIOD OF CE RTAIN SHARES. IN THE RESULT, WE ALLOW THE CO FILED BY THE ASSESSEE AND DIRECT TH E AO TO TREAT PROFIT ON SALE OF SHARES AS LONG TERM CAPITAL GAIN OR SHORT TERM C APITAL GAIN IN ACCORDANCE WITH THE HOLDING PERIOD OF THE SHARES. CONSEQUENTL Y, THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER