ACIT 19(3), MUMBAI V. KANTI VANECHAND SHAH, MUMBAI

ITA 3519/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8211 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: SANJUKTA CHOW DHURY
• Keywords: Capital asset; Business income; Rule of consistency
• Section: 143(3); 11A; 2(14); 32; 68; 69; 27; 54; 37; 11

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 3 5 19 /MUM/20 12 (ASSESSMENT YEAR: 200 8 - 0 9 ) ACIT 19 (3) , R. NO. 305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 VS SHRI KANTI V ANECHAND SHAH , TEJAL, 35 PALI HILL, BANDRA (WEST), MUMBAI - 400 050 PAN: AA D PS 4 111 P (APPELLANT - CROSS OBJECTOR ) (RESPONDENT) APPELLANT BY : SHRI PITAMBAR DAS RESPONDENT BY : SHRI PRAMOD KUMAR PARIDA & MS SANJUKTA CHOWDHURY /DATE OF HEARING : 06 - 08 - 2014 DATE OF PRONOUNCEMENT : 31 - 10 - 2014 O R D E R , PER VIVEK VARMA, J.M . : THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) - 3 0 , MUMBAI, DATED 12 .0 3 .201 2 , WHEREIN , THE FOLLOWING GROUNDS HAVE BEEN TAKEN : (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESS ING OFFICER TO TREAT THE SHORT TERM CAPITAL GAINS OF RS. 87,28,906/ - AS SUCH AND NOT AS BUSINESS INCOME WITHOUT APPRECIATING THE FACT THAT THE MAGNITUDE OF TRANSACTIONS ARE VOLUMINOUS IN VERY FREQUENT INTERVAL WHICH CLEARLY ESTABLISH THAT THE MOTIVE FOR TR ANSACTIONS WAS TO EARN PROFIT BY PURSUING AN ADVENTURE IN THE NATURE OF TRADE. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE DECISION IN THE CASE OF GOPAL PUROHIT [122 TTJ (MUM) 87] HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND ALSO THAT THE DECISION IN THIS CASE IS NOT APPLICABLE IN THE INSTANT CASE AS THE FACTS ARE DISTINGUISHABLE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE GUIDELINES LAID DOWN IN CBDT CIRCULAR NO. 4/2007 DATED 15/06/2007. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THIS YEAR ALSO THE GAIN SHOULD BE TREATED AS MR. KANTI V SHAH ITA 3519 /MUM/ 2012 2 CAPITAL GAINS IN VIEW OF THE FACT THAT I N PAST THE DEPARTMENT HAD ACCEPTED THE GAINS AS CAPITAL GAINS WITHOUT EXAMINING WHETHER THE FACTS WERE SIMILAR OR WHETHER THE DEPARTMENT'S STAND IN EARLIER YEAR WAS CORRECT. (5) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET SI DE AND THAT OF THE AO BE RESTORED. (6) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 2. THE SOLITARY ISSUE PERTAINS TO TREATMENT OF GAIN OF RS. 87,28,906/ - , WHETHER IT IS SHORT TERM CAPITAL GAINS (STC G) AS CLAIMED BY THE ASSESSEE OR IS IT BUSINESS INCOME, AS HELD BY THE AO. 3. THE FACTS ARE THAT THE ASSESSEE IS AN ARCHITECT AND STRUCTURAL CONSULTANT BY PROFESSION. OVER THE YEARS, THE ASSESSEE HAD BEEN PARKING ITS SURPLUS FUNDS IN STOCKS AND SECURITIES , WHICH HAVE GROWN. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD LTCG AT RS. 1,85,37,643/ - AND STCG AT RS. 87,28,906/ - . 4. ACCORDING TO THE AO THAT , IN THE CATEGORY OF STCG THERE WAS A LARGE TURNOVER, FREQUENCY AND MULTIPLICITY OF TRANSACTIONS, WHICH ARE INDICATIVE OF THE INTENTION TO TRADE IN THE PORTFOLIO MANAGED BY THE ASSESSEE. THE AO, RELYING ON THE FOLLOWING DECISIONS: I) BURNSIDE INVESTMENTS & HOLDINGS LTD. VS. DCIT 61 I TD 501 MADRAS. II) JAIPURIA BROTHERS LTD. VS. CIT 180 ITR 208 (CALCUTTA). III) ATLAS CORPORATION VS. ITO 57 I TD BOMBAY 139. IV) FIDELITY ADVISOR SERIES VIII, IN RE 271 ITR 1 (AR) V) PARI MANGALDAS GIRIDHARDAS VS. CIT 1977 CTR (GUJARAT) 647 VI) RAJA BAHADUR VISHESHWARA SINGH (DECEASED) & ORS. VS. CIT 14 ITR 685 SC VII) RAJPUTANA TEXTILES (AGENCIES) LTD. VS. CIT 42 ITR 743 SC SMT. SADHANA NABERA VS. ACIT 25(3) MUMBAI ITA NO. 2586/MUM/2009 DATED 26 - 03 - 2010 HELD THAT THE ASSESSEE WAS IN FACT TRADING IN SHARES AND THEREFORE CANNOT BE GIVEN THE BENEFIT OF TAXATION ON CAPITAL GAINS IN THE SHARES WHICH SHO WED STCG. 5. THE ASSESSEE APPROACHED THE CIT(A) AND SUBMITTED BEFORE HIM, 2.2 BESIDES EARNING PROFESSIONAL INCOME, THE APPELLANT HAD MADE MR. KANTI V SHAH ITA 3519 /MUM/ 2012 3 SOME INVESTMENTS IN SHARES FOR SO MANY YEARS WHICH HE HAD REFLECTED IN HIS BALANCE SHEET AS INVESTMENTS, OUT OF THE SALE OF FEW SHARES, THE APPELLANT HAD EARNED CAPITAL GAINS WHICH HE HAD SHOWN AND PAID TAXES ON SHORT - TERM CAPITAL GAINS AND HAD ALSO DECLARED LONG TERM CAPITAL GAINS WHICH HAD BEEN CLAIMED AS EXEMPT U/S. 10(38). 2.3 THE ASSESSING OFFICER HAS ACCEPTED THE LONG TERM CAPITAL GAINS (LTCG) AS EXEMPT U/S.10(38) BUT TREATED THE SHORT TERM CAPITAL GAINS (STCG) DECLARED BY THE APPELLANT AS BUSINESS INCOME WITH THE FINDING AS STATED IN PAGE 15 AND PARA 4.10 OF THE ASSESSMENT ORDER, THE CONCLUSIONS DRAWN BY THE ASSES SING OFFICER ARE STATED IN PARA 4.3 - 4.4 IN PAGE 3 - 4 OF THE ASSESSMENT ORDER. EARLIER YEAR, THE REVENUE HAS ACCEPTED CAPITAL GAINS ON SALE OF INVESTMENTS IN SHARES. THE ASSESSING OFFICER AFTER PASSING THE PRESENT ORDER DATED 15.11.2010, HAD ALSO PASSED THE ORDER OF KANTI V. SHAH, HUE ORDER ON 26.11.2010 WHEREIN BOTH THE LANG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAINS HAD BEEN TREATED AS BUSINESS INCOME. BUT IN THE INSTANT CASE, STCG HAS BEEN TREATED AS BUSINESS INCOME. IT IS ON THE SAME SET OF FACTS, TH E APPELLANT HAD DEALT IN FOR SO MANY YEARS. THE APPELLANT'S FAMILY MEMBERS ARE ALSO ASSESSED TO TAX. NOTABLY, HIS WIFE'S CASE WHEREIN BOTH STCG AND LTCG DECLARED BY HER HAD BEEN ASSESSED BY ACCEPTING THE DECLARED VALUES AS SUCH. BUT IN THE PRESENT CASE, ON LY SHORT TERM CAPITAL GAINS HAD BEEN TREATED AS BUSINESS INCOME. IN SHORT, THE ASSESSING OFFICER HAD APPLIED HIS DIFFERENT VIEWS IN RESPECT OF DIFFERENT ASSESSES ON THE BASIS OF SOME JUDICIAL DECISIONS AND ON THE STRENGTH OF CIRCULAR 4 DTD. 15.06.2007 ISSU ED BY CBDT AS REPORTED IN 291 !TR (ST) 384. AS A MATTER OF FACT, THE ASSESSING OFFICER HAS ACCEPTED THE DECLARED LTCG AND STCG AS MADE BY THE APPELLANT FOR PRIOR YEARS BEFORE THE A. Y. 2006 - 07. FOR THE A. Y. 2006 - 07 HON'BLE CIT(A) HAD ALLOWED THE APPEAL OF THE APPELLANT BY ACCEPTING THE APPELLANT'S STCG AS CAPITOL GAINS CASE INSTEAD OF ALLEGED BUSINESS INCOME. THE ASSESSING OFFICER HAD MISGUIDED HIMSELF BY NOT RESPECTING THE PRINCIPLES OF CONSISTENCY. ASST YEAR STCG LTCG 2004 - 05 ACCEPTED/OFFERED 2 005 - 06 ACCEPTED BY THE REVENUE AND THE BALANCE IN INVESTED ACCOUNT AS REFLECTED IN B/L ACCEPTED ACCEPTED 2006 - 07 AO DIFFERED TREATED AS BUSINESS INCOME. CIT(A) ACCEPTED AS CAPITAL GAINS TREATED AS LTCG AND WAS EXEMPT U/S 10(38) IN APPEAL, THE APPE LLANTS APPEAL WAS ALLOWED WITH THE DIRECT TO TREAT STCG AS CAPITAL GAINS 2007 - 08 BOTH STCG AND LTCG HAD BEEN ACCEPTED BY THE REVENUE ACCEPTED ACCEPTED THE APPELLANT HAD CARRIED OUT THE PURCHASE AND SALE OF CERTAIN MR. KANTI V SHAH ITA 3519 /MUM/ 2012 4 SHARE TRANSACTIONS WHICH WERE PURELY ON INVESTMENT BASIS. ALL HIS INVESTMENTS ORE REFLECTED IN HIS BALANCE SHEET ON COST BASIS. THE APPELLANT HAD TOKEN WISE AND PRUDENT DECISION ON THE FACE OF UNCERTAINLY AND REGULAR SLUMP IN THE MARKET TO DISPOSE OF HIS FEW INVESTMENTS. ALL THE TRANSA CTIONS EFFECTED ARE STRICTLY ON DELIVERY BASIS, THE APPELLANT HAD OFFERED SHORT TERM CAPITOL GAINS AND LONG TERM CAPITAL GAINS AS APPLICABLE UNDER THE TAX LAW. THE APPELLANT HAD NOT CARRIED OUT ANY SPECULATION TRANSACTIONS NOR DERIVATIVE TRANSACTIONS IN FU TURES AND OPTIONS SEGMENTS AS COULD BE APPARENT FROM HIS COMPUTATION OF INCOME. IN RESPECT OF HIS SHORE TRANSACTIONS, THE APPELLANT HAD PAID SECURITIES TRANSACTION TAX AS PER THE NORMS OF SEC. 1 11 IN CHAPTER XII. THE APPELLANT HAD PROVIDED THE ENTIRE LIST OF SHARES BOUGHT AND SOLD SHOWING THE PERIOD OF HOLDING FOR HIS CLAIM OF SHORT TERM AND LONG TERM CAPITOL GAINS. AS A MATTER OF FACT, ALL THESE SHARES ARE THROUGH HIS DE M AT ACCOUNT. IT MAY FURTHER BE NOTED THAT ON A SINGLE DAY, NO PURCHASE AND SALE OF SAM E SHARE HAD TAKEN PLACE. IT IS LUST DUE TO THE UNCERTAIN PRICE FLUCTUATION, THE SALE DECISION HAD BEEN TAKEN BY THE APPELLANT TO AVOID FURTHER LOSS OF HIS INVESTMENT AND TO MAXIMIZE HIS WEALTH CREATION. BUT ALL THE SHARES ARE DELIVERY BASED AND THROUGH HIS DEMAT ACCOUNT. THE LONG TERM CAPITAL GAINS HAD BEEN CLAIMED AS EXEMPT U/S. 10(33) AND SHORT TERM CAPITAL GAINS HAD BEEN OFFERED FOR TAXATION ON WHICH STT HAS BEEN PAID. THE APPELLANT WISHES TO STATE THAT AN THE FACE OF ABOVE FACTS, THE VOLUMES AND FREQUEN CY HAS NO BEARING TO THE ISSUE OF DETERMINATION OF CAPITAL GAINS BUT ITS PERIODICITY, DELIVERY AND SUBSEQUENT PAYMENTS ARE RELEVANT FACTORS. IN FACT, ON HIS INVESTMENTS THE APPELLANT HAD EARNED DIVIDEND OF RS. 5,39,530/ - . 6. THE ASSESSEE ALSO GAVE THE HO LDING PERIOD OF THE GAINS IN SHARES HELD AS STCG DETAILS OF ST CAPITAL GAINS ON EQITY SHARS OF KANTI V SHAH REF NO. DT. OF PUR - CHASE DT. OF S ALE NAME OF COMPANY NAME LT/ ST MONTH D A - YS 1 2 3 4 5 6 7 8 PERIOD OF HOLDINGS 1 1 3 - MAR - 0 7 04 - APR - 0 7 BAJAJ HIND KVS ST 0 22 1 29 - SEP - 06 04 - APR - 07 MCLEOD RUSSEL KVS ST 6 7 1 17 - MAY - 06 04 - APR - 07 SONA K O YA STEERING KVS ST 10 22 1 18 - MAY - 06 04 - APR - 07 TUBE INVESTMENTS KVS ST 10 21 4 29 - SEPT - 06 19 - APR - 07 SRF LIMITED KVS ST 6 22 7 05 - MAR - 07 24 - APR - 07 ROLT A IND KVS ST 1 20 8 06 - MAR - 07 24 - APR - 07 TULIP IT SERICES KVS ST 1 19 9 06 - MAR - 07 25 - APR - 07 ROLTA IND KVS ST 1 20 12 11 - MAY - 07 15 - MAY - 07 NIIT TECH KVS ST 4 14 11 - MAY - 07 16 - MAY - 07 NIIT TECH KVS ST 5 15 15 - MAY - 07 16 - MAY - 07 DENA BANK KVS ST 1 18 04 - AP R - 07 28 - MAY - 07 AUROBINDO PHARMA KVS ST 1 24 23 15 - MAY - 07 18 - JUL - 07 DENA BANK KVS ST 1 4 MR. KANTI V SHAH ITA 3519 /MUM/ 2012 5 24 13 - MAR - 07 18 - JUN - 07 ITC KVS ST 3 7 26 23 - NOV - 06 18 - JUN - 07 GEMINI COMMUNICATION KVS ST 7 15 27 23 - NOV - 06 06 - JUL -- 07 GEMINI COMMUNICATION KVS ST 7 15 29 23 - NOV - 06 10 - AUG - 07 GEMINI COMMUNICATION KVS ST 8 20 30 23 - NOV - 06 13 - AUG - 07 GEMINI COMMUNICATION KVS ST 8 22 32 15 - MAY - 07 27 - AUG - 07 JYOTI STRUCTURE KVS ST 3 14 34 31 - MAY - 07 29 - AUG - 07 SINTEX INDUSTRIES KVS ST 3 0 35 27 - AUG - 07 04 - SEP - 07 TAKE SOLUTION KVS ST 8 3 6 31 - MAY - 07 06 - SEP - 07 SINTEX INDUSTRIES KVS ST 3 8 39 06 - SEP - 07 12 - SEP - 07 MIC ELECTRONICS LTD KVS ST 6 40 23 - MAY - 07 28 - SEP - 07 CEAT LTD. KVS ST 4 8 40 22 - JUN - 07 28 - SEP - 07 INDO ASIAN FUSE GEAR KVS ST 3 8 41 05 - FEB - 07 28 - SEP - 07 IGATE GLOBAL KVS ST 7 25 40 05 - MAR - 07 28 - SEP - 07 SASKEN COMM. KVS ST 6 27 41 23 - MAY - 07 28 - SEP - 07 CEAT LTD. KVS ST 4 8 41 20 - APR - 07 28 - SEP - 07 HCL TECHNO KVS ST 5 11 46 18 - JUL - 07 06 - NOV - 07 GEMINI COMMUNICATION KVS ST 3 21 46 4 - JAN - 07 06 - NOV - 07 RPG TRANSMISSION KVS ST 10 6 47 14 - JUN - 07 15 - NOV - 07 MCNALLY BHARAT ENG. KVS ST 5 4 48 28 - FEB - 07 23 - NOV - 07 C & C CONSTRUCTION KVS ST 8 28 52 04 - MAY - 07 29 - NOV - 07 MPHASIS LTD. KVS ST 6 29 53 22 - OCT - 07 29 - NOV - 07 INFOTECH ENTERP KVS ST 1 8 59 06 - NOV - 07 20 - DEC - 07 MIC ELECTRONICS LTD. KVS ST 1 14 60 06 - NOV - 07 20 - DEC - 07 MIC ELECTRONICS LTD. KVS ST 1 14 58 28 - NOV - 07 19 - DEC - 07 LANCO INFRATECH KVS ST 21 61 06 - NOV - 07 26 - DEC - 07 MIC ELECTRONICS LTD KVS ST 1 20 62 06 - NOV - 07 26 - DEC - 07 MIC ELECTRONICS LTD KVS ST 1 20 67 29 - NOV - 07 04 - JAN - 08 TECHNO ELECTRIC ENGG. KVS ST 7 10 68 06 - NOV - 07 09 - JAN - 08 ORBIT CORPORATION LTD. KVS ST 2 4 69 16 - AUG - 07 09 - JAN - 08 HDIL KVS ST 4 26 69 06 - NOV - 07 09 - JAN - 08 ORBIT CORPORATION LTD. KVS ST 2 4 70 06 - NOV - 07 11 - JAN - 08 ORBIT CORPORATION LTD. KVS ST 2 6 71 06 - NOV - 07 11 - JAN - 08 ORBIT CORPORATION LTD. KVS ST 2 6 TOTAL TOTAL SHORT TERM PROFIT 10,215,992.97 LESS: SHORT TERM LOSS (1,487,087.15) NET SHORT TERM PROFIT 8,728,905.82 7. THE ASSESSEE FURTHER SUBMITTED THAT BEFORE THE AO , THE ASSES SEE HAD SUBMITTED: STOCK PURCHASED BY THE ASSESSEE HAS BEEN SHOWN AND ACCEPTED BY THE DEPORTMENT AS INVESTMENT AND NOT STOCK - IN - TRADE IN ASSESSMENTS FOR EARLIER ASSESSMENT YEARS SUCH AS 2004 - 05, 2005 - 06 AND 2007 - 08. FOR A. Y. 2006 - 07, THE LD. CIT(A) HAS A CCEPTED THE STCG AS A CASE OF CAPITAL GAINS BY AL/OWING ASSESSEE'S APPEAL. D) AT THE FIRST ENTRY LEVEL, THE ASSESSEE TREATS HIS PURCHASES AS INVESTMENT. NO DENYING OF THIS IN EARLIER YEARS, THE REVENUE HAS ACCEPTED THE INVESTMENTS MADE BY THE ASSESSEE AS I NVESTMENT. EVEN IN SUBSEQUENT ASSESSMENT YEARS, THE REVENUE HAS ACCEPTED THE STATUS QUO. THEREFORE. RES JUDICATA APPLIES MR. KANTI V SHAH ITA 3519 /MUM/ 2012 6 E) THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS. 5,39,5301 - . A TRADER NORMALLY DOES NOT EARN DIVIDEND. BUT AN INVESTOR DOES EARN. F) T HE ASSESSEE IS NEITHER ON ARBITRAGER A REMISSER IN STOCK MARKET. G) THE ASSESSEE DOES NOT HAVE ANY ON - LINE TRADING FACILITY FROM HIS BROKER. H) ALL TRANSACTIONS HAVE RESULTED INTO DELIVERY. THE ASSESSEE HAD NEVER INDULGED IN DAY TRADING IN RESPECT OF HIS I NVESTMENTS. I) MUTUAL FUND UNITS ARE PURELY TAKEN AS INVESTMENTS AND NOT BUSINESS ACTIVITY. THE ASSESSING OFFICER DOES AGREE ON THAT. THE APPELLANT'S MUTUAL FUNDS INVESTMENTS STAND AT RS. 38,10,263/ - AS ON 31.03.2008. 4.8 BASED ON THE ABOVE FACTS AND MERIT S OF THE CASE, THE APPELLANT ATTEMPTS TO ADVANCE THE FOLLOWING PROPOSITIONS IN SUPPORT OF HIS CASE WHICH ARE STATED HEREINBELOW: PROPOSITIONS AND CASE LAWS : 1. SINCE THE ASSESSEE HAS A LARGE CAPITAL BASE, IT CANNOT BE HELD THAT DUE TO VOLUMINOUS SIZE AND M AGNITUDE OF INVESTMENT, HIS ACTIVITY IS NOTHING BUT TRADING ACTIVITY. HE IS IN FACT AN INVESTOR IN EARLIER YEARS AND ALSO IN SUBSEQUENT YEARS TILL TODAY. 2. AT THE FIRST LEVEL OF ENTRY, WHILE MAKING PURCHASES, THE ASSESSEE TREATS HIS PURCHASES AS INVESTMEN T. 3. THE ASSESSEE DOES NOT SALE HIS INVESTMENTS FREQUENTLY. 4. THE ASSESSEE HAD BEEN INVESTING IN SHARES FOR MANY YEARS AND HIS INVESTMENTS HAD BEEN ACCEPTED AND THE INCOME HAD BEEN ASSESSED AS CAPITAL GAIN. RULE OF CONSISTENCY SHOULD BE RESPECTED. 5. THE AUTHORITIES H A VE ALREADY ACCEPTED THAT AN ASSESSEE CAN SIMULTANEOUSLY ENGAGE IN TWO DIFFERENT ACTIVITIES, ONE OF WHICH CAN BE INVESTMENT AND SECOND CAN BE OF TRADING NATURE. IN FACT, CBDT CIRCULAR RECOGNIZES THE FACT. 6. THE VALUATIONS FOR HIS INVESTMENTS HAD BEEN DONE AT COST ONLY. FOR STOCK - IN - TRADE, ONE VALUES IN MOST OF THE CASES, AT COST OR MARKET PRICE WHICHEVER IS LOWER: IN THE INSTANT CASE, YOUR ASSESSEE HAD NOT CLAIMED ANY DIMINUTION OR APPRECIATION IN THE VALUE OF HIS SHARES WHICH WERE PURELY REC ORDED AS INVESTMENT AT THE CLOSE OF THE YEAR. 7) THE CLASSIFICATION OF SHARES INVESTMENTS INTO STOCK - IN - TRADE HAS BEEN FORCED BY THE ASSESSING OFFICER. THE ACTION OF THE ASSESSING OFFICER HAS NO BASE SINCE EARLIER YEARS ACCEPTANCE OF SHARES AS INVESTMENT CANNOT AUTOMATICALLY BE CHANGED INTO STOCK - IN - TRADE FOR PLAUSIBLE REASONS. IN THIS CASE, RES JUDICATA IN FACT APPLIES. THE ASSESSING OFFICER CANNOT HAVE DOUBLE STANDARD JUST BECAUSE SEC. 11 1A WAS INTRODUCED. 8) NO DOUBT, PRINCIPLE OF RES - JUDICATA WILL N OT BE APPLICABLE IN INCOME TAX PROCEEDINGS BUT WHEN ON THE SOME SET OF FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER HAS ACCEPTED ONE STAND, IT WILL BE ADVENTURES, RATHER UNJUSTIFIABLE ON HIS PART, TO ADAPT AND APPLY A DIFFERENT STAND. THIS SHOULD NOT BE P ERMITTED UNDER THE TAX LAWS AND LOOKING TO THE CREDIBILITY OF REVENUE. COMPARISONS HAVE ITS OWN MERITS. (2010) 34 DTR (BORN) 52 CIT VS. GOPAL PUROHIT 9) A PRUDENT INVESTOR SHOULD ALWAYS REMAIN ALERT. THE ASSESSEE HAD DONE THAT. RATHER, THE UNCERTAIN MARKE T FARCES AN INVESTOR TO REMAIN ALERT. IF THE RIGHT OPPORTUNITY ARISES, AN INVESTOR MUST SELL HIS HOLDINGS. THAT DOES NOT CHANGE OR CONVERT HIM FROM AN INVESTOR TO A TRADER AUTOMATICALLY. SIR, WHO WANTS TO BECAME A MUTE SPECTATOR WHEN THE MR. KANTI V SHAH ITA 3519 /MUM/ 2012 7 VALUE OF A SCRIP R ISES OR WHEN THE VALUE FALLS BELOW THE INVESTMENT AMOUNT? NA BODY INDEED L OOKING INTO THE VOLATILE MARKET. 10) IF A STOCK ON WHICH DELIVERY IS TAKEN IS SOLD AT THE OPPORTUNE TIME, NO ADVERSE INFERENCE SHOULD BE DRAWN THAT THE ASSESSEE IS IN THE HABIT OF SE LLING HIS STOCKS TOO FREQUENTLY. BECAUSE, NO INVESTOR CAN ILL AFFORD TO SEE THE EROSION OF HIS INVESTED FUNDS (CAPITAL AMOUNT). 11) IN INVESTMENT ACCOUNT, A PRUDENT INVESTOR HAS THE INTENTION TO SELL HIS SHARES IF THE ORICES SHOW .1 REFLECT ENHANCED TREND IN ITS VALUE. 12) LOW ROTE OF TAX (U/S. 11A ) IS THE CREATION OF THE STATUTE. NO ADVERSE INTERFERENCE SHOULD BE DRAWN TO THE PREJUDICE OF THE ASSESSEE, JUST BECAUSE IT IS FOUND TO BE OF ADVANTAGE TO THE ASSESSEE'S AT LARGE. IF THE ASSESSEE HAS TAKEN ADVANTAG E OF THAT SECTION, THE REVENUE PLEASED RATHER THAN ATTEMPTING TO FRUSTRATE. 13) MAGNITUDE DOES NOT CHC.WGE THE N A TURE OF TRANSACTIONS. VOLUME OF TRANSACTIONS SHOULD NOT BE THE BASIS OF CONSIDERING THE INCOME EARNED BY WAY OF CAPITAL GAINS AS BUSINESS INCOM E. (2010) 130 T TJ (MUM) 85 BHARAT KUNVERJI KENIA VS. ADD L . CIT (2007) 11 SOT 627 (MUM) JANAK S. RANGWA L A VS. ASST. CIT 14) THE SHARES INVESTED ARE ALL DELIVERY BASED WHICH IS NOT IN DOUBT. ALL PURCHASE AND SALE ARE THROUGH DE M AT ACCOUNT. STT HAS BEEN PAI D. 15) RESPECTIVE PAYMENTS THEREOF ARE NOT IN DOUBT. 16) EARNING OF DIVIDEND IS OUT OF INVESTED FUNDS ONLY. BIG DIVIDEND OR SMALL DIVIDEND ARE NOT DETERMINING FACTOR. IN THE PRESENT CASE, THE APPELLANT HAD CARRIED SUBSTANTIAL DIVIDEND. 17) ALL THE SHARES P URCHASED ARE REFLECTED AS INVESTMENTS IN THE BALANCE SHEET OF THE ASSESSEE. 18) BUYING AND SELLING OF SHARES HAD BEEN DONE FROM INVESTMENT ACCOUNT ONLY, NOTHING IS STOCK /N - TRADE, 19) AS VALUATION IS DONE ON COST BASIS (WHICH HAPPENS ONLY IN CASE OF INVEST MENT, THE ASSESSEE HAD NOT CLAIMED ANY DIMINUTION OR APPRECIATION ON HIS INVESTMENT STOCK (WHICH RATHER HAPPENS ONLY IN CASE OF STOCK - IN - TRADE). THE ASSESSEE DOES NOT HAVE STOCK - IN - TRADE. 20) A TRADER WOULD NOT NORMALLY BLOCK HIS MONEY FOR SUBSTANTIAL PERI OD. AN INVESTOR CONDO SO. IF INTERMITTENTLY, ONE SELLS AS PER THE MOOD OF THE MARKET AND TO SAFEGUARD HIS INVESTMENT, HE SHOULD NOT BE LABE L LED AS A TRADER. IT IS AN INCORRECT ASSUMPTION THAT ONLY BUSINESSMEN WOULD BE INTERESTED TO EARN PROFIT AND THE INVE STOR SHOULD NOT SELL FOR PROFIT (WHEN THE PRICES RISE IN A SHORT SPAN). 21) SHARES HELD AS INVESTMENT AND HEADS OF INCOME ARE MUTUALLY EXCLUSIVE. 61 ITR 428 (SC) NALIKANT AMBALAL MODY VS. S.A.L. N AR AYAN ROW 22 ) IT IS NOT A CASE WHERE YOUR ASSESSEE HAD EAR NED THE DIFFERENCE IN PRICES WITHOUT TAKING THE DELIVERY. ALL DEALINGS ARE DELIVERY BASED IN HIS CASE OF SHORT TERM CAPITAL GAINS. IN FACT, SHORT TERM CAPITAL GAINS HAD BEEN CLAIMED ONLY IN RESPECT OF 25 SCRIPS ONLY. 23) LAW DOES NOT PREVENT A PERSON FROM BEING AN INVESTOR AS WELL AS TRADER AT THE SAME TIME DUAL POSITION IS ACCEPTED. 24) THE SHARES SOLD FOR BETTER RE - INVESTMENT CANNOT BE CONSIDERED AS A TRADING ACTIVITY. 25) INVESTMENT IN IMMOVABLE PROPERTIES (SUCH LAND AND BUILDING) AND INVESTMENT IN SHARE SHOULD NOT BE TREATED OR GAUGED IN THE SAME BREATH. MR. KANTI V SHAH ITA 3519 /MUM/ 2012 8 STATUTE ITSELF HAD MODE THE DISTINCTION. LONG TERM PERIOD FOR IMMOVABLE PROPERTIES IS MORE THAN THREE YEARS AND SHORT TERM PERIOD IS LESS THAN THREE YEARS. AND IN CASE OF SHARES, THE DE TE RMINATIVE PERIOD IS 12 MONTHS. DISTINCTION CREATED SHOULD NOT BE CONFUSED TO THE PREJUDICE OF THE ASSESSEE. 26) THE REASON FOR THIS DIFFERENTIATION IS FOR CONSTRUCTIVE INTERPRETATION THAT INVESTMENT IN SHARES ALTOGETHER STAND IN A DIFFERENT FOOTING. 27) NO DOUBT, CIRCU LARS ARE BINDING ON THE REVENUE. IT GUIDES THE REVENUE IN ITS ACTS OF ASSESSMENTS. BUT CIRCULARS NEVER ACT TO SUPERSEDE OR OVERRIDE THE STATUTE OR ANY OF ITS PROVISIONS. WHEN THE PROVISION OF A STATUTE LAW IS VERY CLEAR AND UNAMBIGUOUS WITH ITS MEANING AND IMPLICATION, THE SOME SHOULD BE RESPECTED BY THE ASSESSEE, REVENUE AND THE BENCHES OF ITAT. 28) EARLIER YEARS SHORT TERM CAPITAL GAINS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE AS CAPITAL GAINS. 29) THE STATUTE DOES NOT DEFINE TRADING ASSE T BUT DEFINES CAPITAL ASSET 2(14) AND SHORT TERM CAPITAL GAINS [SEC. 2(42B)]. THE ACT DOES NOT ALSO DEFINE EXHAUSTIBLY THE TERM BUSINESS BUT PROVIDES AN INCLUSIVE DEFINITION U/S.2(13) 30) THE ASSESSEE HAS ACTED AS A PRUDENT INVESTOR. 31) THE ASSESSEE HAD N OT CONVERTED HIS INVESTMENT INTO STOCK - IN - TRADE DURING THE YEAR. THE ASSESSING OFFICER IS, THEREFORE, WRONG TO FORCE HIM TO TREAT HIS INVESTMENT AS STOCK - IN - TRADE. 32) THAT INVESTMENTS MADE BY THE ASSESSEE ARE NOT OUT OF BORROWED FUNDS. THEREFORE, IT IS NO T A CASE OF THE ASSESSING OFFICER THAT BORROWED FUNDS UTILIZED FOR INVESTMENT ACTIVITIES. SO RELIANCE IS PLACED ON: (2005) 2 SOT 126 (DELHI) IT. CIT VS. DINESH KUMAR GUPTA 33) VOLUMINOUS TRANSACTION IS NOT THE DETERMINING FACTOR. (2005) 2 SOT 371 (HYD.) S HAH - LA INVESTMENTS & FINANCIAL CONSULTANTS (P.) LTD. 4.9 CASE LAWS 130 TT J (MUM) 86 BHARAT KUNVERJI KENIA VS. ADDL. CIT VOLUMINOUS TRANSACTIONS ARE NOT DETERMINING FACTOR, NO BORROWED FUNDS USED FOR MAKING / INVESTMENT IN SHARES. HOLDING OF SHORES AS IN VESTMENT ACCEPTED BY THE ASSESSING OFFICER IN THE PAST. B) M/S. AXIS CAPITOL MARKETS (INDIA) LTD. VS. ITO, 4(1)(1) A. Y. 2004 - 05, DOTE OF ORDER 30.11.200 - 9 AS THE ASSESSEE H AD SOLD THE SHORES AND UNITS OF MUTUAL FUNDS WHICH WERE SHOWN AS INVESTMENTS AND NO BORROWED FUNDS UTILIZED WHILE ACQUIRING THEM, PROFIT EARNED OUT OF THESE SALE HAS TO BE TREAT AS CAPIT A L GAINS AND NOT BUSINESS INCOME. EVEN SEC. 73 HAS NO APPLICATION TO THE CASE. FURTHER THE ASSESSING OFFICER ACCEPTED THE TREATMENT OF ASSESSEE IN SUBSEQ UENT YEARS. IT IS THEREFORE, NOT A SPECULATION INCOME. C) ADD L . CIT RG, 24(2) VS. TEJAS B. TRIVEDI 5412/M / 09, A. Y. 2006 - 07 AS THE SHARES ARE SHOWN AS INVESTMENTS AND VALUED AT COST AND THE REVENUE HAD ACCEPTED THE POSITION IN EARLIER YEARS AND THE TRANSAC TIONS ORE DELIVERY BASED AND NO BORROWED FUNDS UTILIZED, IT IS HELD THAT PROFIT ON ACCOUNT OF PURCHASE AND SOLE OF SHARES CANNOT BE HELD AS BUSINESS INCOME AND HAS TO BE TREATED AS LTCG AND STCG AS PER THE PERIOD OF HOLDING. D) (2010) 41 DTR (MUM - TRIB) 426 MANAGEMENT STRUCTURE & SYSTEMS (P) LTD. VS. ITO MR. KANTI V SHAH ITA 3519 /MUM/ 2012 9 AS ENTIRE INVESTMENT IN SHARES ARE SHOWN AS INVESTMENT ONLY AND NOT STOCK - IN - TRADE AND THE ASSESSEE HAS NOT BORROWED FUNDS, IT IS A CASE OF CAPITOL GAINS SINCE THE SOME ARE DELIVERY BASED. THEREFORE, IT IS NOT TRADING ACTIVITY. E) (2010) 38 SOT 503 (MUM) VINOD M. SHAH VS. ADD L . CIT AS INVESTMENT ACTIVITY H A D BEEN ACCEPTED AS INVESTMENT IN PAST YEARS, THE TRANSACTIONS HAVE TO BE ACCEPTED AS INVESTMENT ACTIVITY ONLY. F) 277 1TR 149 (MAD) CIT VS. NSS INVESTMEN TS (P) LTD. THE SHARES ACQUIRED BY THE ASSESSEE FOR EARNING DIVIDEND AND NOT HELD AS STOCK - IN - TRADE; THEREFORE, PROFITS FROM SUCH SALE OF DELIVERED SHARES ARE CAPITAL GAINS AND NOT BUSINESS INCOME. G) OTHER SUPPORTING JUDGMENTS (2010) 34 DTR (BORN) 52 CIT VS. GOPAL PUROHIT. 8. BEFORE THE CIT(A), THE ASSESSEE ALSO DISTINGUISHED THE RATIO LAID DOWN IN THE CASE OF SADHANA NABERA ( SUPRA ) AND OTHER CASE LAWS CITED BY THE AO. 9 . TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BEFORE HIM, THE CIT(A) HELD, I HAV E CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE FACTS OF THE CASE. I HAVE ALSO REFERRED THE IMPORTANT CASE LAWS RELIED UPON BY BOTH THE A.O. AND THE APPELLANT. AT THE OUTSET, IT MAY BE MENTIONED THAT THIS CASE, FOR T HE A.Y. 2006 - 07, THE A.O. HAD TREATED THE SHORT TERM CAPITAL GAINS DECLARED BY THE APPELLANT AS BUSINESS INCOME. THE APPELLANT FILED THE APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE CIT(A) - 30, MUMBAI. THE UNDERSIGNED DECIDED THE APPEAL IN FAVOUR OF THE A PPELLANT VIDE ORDER NO. CIT(A) - 30/ACIT 19(3)/IT - 791/09 - 10 DATED 29 - 03 - 2010. THE REVENUE CARRIED THE MATTER BEFORE THE ITAT, MUMBAI. THE ITAT 'A' BENCH, MUMBAI VIDE ITS ORDER DATED 28THE DECEMBER, 2011 IN ITA NO. 4859/MUM/2010 CONFIRMED THE ORDER OF THE UND ERSIGNED AND DISMISSED THE APPEAL OF THE REVENUE. THE RELEVANT FINDINGS OF THE HON'BLE ITAT ARE AS UNDER: 'THE SHORT ISSUE IN CONTROVERSY IS IN RESPECT OF THE TREATMENT OF THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN RESPECT OF THE SHARE TRANSAC TIONS. BOTH THE ASSESSES ARE NOT IN TRADING OR BUSINESS OF THE SHARES AS A BROKER OR SUB - BROKER. THE A.O. HAS ONLY CONSIDERED VOLUME OF THE TRANSACTIONS FOR ARRIVING AT CONCLUSION THAT BOTH THE ASSESSEES ARE ENGAGED IN THE TRADING OF THE SHARES. IT IS PERT INENT TO NOTE HER THAT SO FAR AS THE DECLARATION OF THE LONG T ERM CAPITAL GAIN ON THE SHARE TRANSACTION IS CONCERNED IN RESPECT OF BOTH THESE ASSESSES, THE A.O. AS ACCEPTED THE SAME AND ALSO ALLOWED THE EXEMPTION. THERE IS NO DISPUTE IN BOTH THE CASES THAT THE ASSESSES ARE SHOWING THE SHARES AS AN INVESTMENT IN THE BALANCE SHEET AND SAME TREATMENT IS GIVEN IN PAST MANY YEARS. THE LD. COUNSEL HAS PLACED HIS RELIANCE ON THE PLETHORA OF DECISIONS OF OTHER COORDINATE BENCHES OF THE TRIBUNAL. IT IS VERY DIFFICUL T TASK FOR MR. KANTI V SHAH ITA 3519 /MUM/ 2012 10 JUDICIAL ADJUDICATION WHEN THE PART OF THE SHARE TRANSACTIONS ARE TREATED OUT OF THE INVESTMENT AND PART OF THE SHARE TRANSACTIONS ARE TREATED TOWARDS THE BUSINESS OR TRADING IN SHARES. THOUGH THERE IS NO STRAIGHT JACKET FORMULA TO ARRIVE AT A C ONCLUSION FOR DETERMINING WHETHER THE ASSESSEE IS AN INVESTOR OR IN THE BUSINESS OF SHARES BUT THERE ARE SOME GUIDING LAID DOWN IN THE DIFFERENT JUDICIAL PRONOUNCEMENTS. ONE OF THE FACTORS TO BE CONSIDERED IS THE BUSINESS OF SHARES BUT THERE ARE SOME GUIDI NG LAID DOWN IN THE DIFFERENT JUDICIAL PRONOUNCEMENTS. ONE OF THE FACTORS TO BE CONSIDERED IS THE INTENTION OF THE ASSESSSEE AT THE TIME OF PURCHASING THE SHARES WHETHER TO EARN THE PROFIT OR TO GET THE APPRECIATION IN THE VALUE OF THE ASSET. ANOTHER FACTO R WHETHER THE ASSESSEE IS HAVING ORGANIZED ACTIVITY AS BUSINESS REQUIRES CERTAIN INFRASTRUCTURE. IT IS TRUE THAT IN THE NEW ERA OF THE ECOMMERCE, THE HUGE INFRASTRUCTURE MAY NOT BE REQUIRED FOR DOING ANY BUSINESS BUT THERE ARE BASIC REQUIREMENTS LIKE GENER ATING THE FUNDS FOR DOING THE DAY TODAY TRANSACTIONS AND IT IS NORMAL PRACTICE IN THE BUSINESS WORLD TO GENERATE THE FUNDS FROM THE BANKS AND OTHER FINANCIAL INSTITUTIONS AND TO AVAIL THE CREDIT ALSO. IN THE PRESENT CASE, AS PER THE RECORD BEFORE US, BOTH THE ASSESSEES HAVE UTILIZED THEIR OWN FUNDS AND NO BORROWED FUNDS ARE USED. WHICH SHOWS THAT THE FUNDS AVAILABLE WITH THE ASSESSEE ARE PUT FOR THE INVESTMENT PURPOSE. THOUGH, IT MAY NOT BE 100% LOGICAL BUT AS PER THE HUMAN PSYCHOLOGY THE PERSON PUTS HIS MO NEY IN ANTICIPATION OF GETTING APPRECIATION OF HIS OWN MONEY AND MANY TIMES HE CONVERT MONEY INTO SOME VALUABLE ASSET WITH SAME INTENTION. ANOTHER ASPECT HERE TO BE CONSIDERED IS THAT BOTH THE ASSESSEES, ARE CONSISTENTLY SHOWING SHARES AS AN INVESTMENT IN PAST MANY YEARS AND SAID FACT REMAINED UNDISTURBED BY THE AO. IN THE CASE OF CIT VS GOPAL PUROHIT 336 ITR 287 (BOM) THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT AS IN THE SAID CASE THE DE PARTMENT HAS ACCEPTED THE SHARES HELD BY THE ASSESSEE AS AN IN VESTMENT CONSISTENTLY FOR MANY YEARS, THE DEPARTMENT CANNOT TAKE SUMMERSAULT AND TAKE THE DIFFERENT APPROACH. IN SUM AND SUBSTANCE, IN THERE IS NO CHANGE IN THE FACTS AND NATURE OF TRANSACTION, THE CONSISTENCY IN JUDICIAL APPROACH IS DESIRED. AFTER GIVEN O UR ANXIOUS CONSIDERATION TO ENTIRETY OF THE FACTS IN BOTH THE CASES, WE ARE OF THE OPINION, THAT THE ORDERS OF THE LD. CIT (A) IN BOTH THE CASES HAVE TO BE CONFIRMED. WE ACCORDINGLY, DO SO. 3.10 IN ADDITION TO THE ABOVE, IN THE CASE OF THE APPELLANT, THER E ARE NO LOANS FROM WHICH SHARES HAVE BEEN PURCHASED. FURTHER, THE AO HAS NOT BROUGHT OUT ANY INSTANCE OF THE REPETITIVE TRANSACTION OF THE SAME SCRIP. ALL THE INVESTMENTS OF THE APPELLANT ARE REFLECTED IN HIS DMAT ACCOUNT. ALL THE SHARES ARE DELIVERY BASE D. THE APPELLANT HAS NOT INDULGED IN ANY SPECULATIVE OR F/O TRANSACTION. THE APPELLANT HAS ALSO EARNED DIVIDEND INCOME OF RS. 5,39,530/ - . IT IS ALSO SUBMITTED BY THE APPELLANT THAT THE STOCK PURCHASED BY THE APPELLANT HAS BEEN SHOWN AND ACCEPTED BY THE DEP ARTMENT AS INVESTMENT AND NOT STOCK IN TRADE IN ASSESSMENTS FOR EARLIER AYS SUCH AS 2004 - 05, MR. KANTI V SHAH ITA 3519 /MUM/ 2012 11 2005 - 06 AND 2007 - 08. THE APPELLANT IS NEITHER ARBITRAGER OR REMISSER IN STOCK MARKET. THE APPELLANT DOES NOT HAVE ANY ONLINE TRADING FACILITY FORM HIS BROKER. THE APPELLANT HAS VALUED HIS STOCK AT COST ONLY. THE APPELLANT HAS NOT CLAIMED ANY DIMINUTION OR APPRECIATION IN THE VALUE OF HIS SHARES. 10 . THE CIT(A), THUS DIRECTED THE AO TO ACCEPT THE CLAIM OF THE ASSESSEE AND TREAT THE GAINS AS STCG. 1 1 . AGAINST THIS O RDER, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 1 2 . BEFORE US, THE DR VOCIFEROUSLY AND VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT ONE OF THE MAIN ASPECTS IN SUCH TYPE OF CASES IS THE INTENTION OF THE ASSESSEE, WHICH THE CIT(A) HAS COM PLETELY IGNORED AND SECONDLY THE CASE SO HEAVILY RELIED UPON BY THE CIT(A), I.E. SPECIAL BENCH DECISION IN THE CASE OF JCIT VS GOPAL PUROHIT IS DISTINGUISHABLE ON FACTS. THE DR, BASED ON THESE ARGUMENTS STRENUOUSLY ARGUED THAT THE ORDER OF THE CIT(A) DESER VES TO BE REVERSED. 1 3 . ON THE OTHER HAND, THE AR, BESIDES HEAVILY RELYING ON THE ORDER OF THE CIT(A), WHEREIN THE CIT(A) HAD ACCEPTED THE CONTENTIONS OF THE ASSESSEE SUBMITTED AND REITERATED THAT THE ISSUE IN QUESTION HAS BEEN CONSISTENTLY HELD IN FAVOUR OF THE ASSESSEE IN THE PAST AS WELL AS IN THE SUBSEQUENT YEAR , ASSESSMENT HAVING BEEN FRAMED U/S 143(3) . THE AR, THEREFORE, SUBMITTED THAT ON FACTS PERTAINING TO THE ISSUE AND CONSISTENT DECISIONS BY THE DEPARTMENT, ACCEPTING THE CLAIM OF THE ASSESSEE OVE R THE YEARS CANNOT CHANGE THE COMPLEXION OF THE FACTS IN THE CURRENT YEAR. 1 4 . THE AR, THEREFORE, PLEADED THAT THE CLAIM MADE BY THE ASSESSEE MERITS TO BE ACCEPTED. 1 5 . WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDERS AND THE DETAILS AS PLACED IN T HE APB. IT IS AN UNDISPUTED FACT THAT ON SAME MR. KANTI V SHAH ITA 3519 /MUM/ 2012 12 SET OF FACTS, THE COORDINATE BENCH OF THE ITAT HAS ACCEPTED THE CLAIM OF THE ASSESSEE. NO DOUBT THE FACTS MAY CHANGE FROM CASE TO CASE, BUT WHAT IS TO BE SEEN IS THE RATIO DECIDED BY THE COURTS. WE FIND THAT TH E RATIO LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF GOPAL PUROHIT ( SUPRA ) HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT, REPORTED IN 336 ITR 287. 1 6 . GOING INTO THE FACTS AS WELL, WE FIND THAT THE ASSESSEE HAS NEITHER USED ANY BORROWED FUNDS, NEITHER DEAL T IN DAY TRADING NOR THE ASSESSEE HAS SPECULATED IN STOCKS & SECURITIES AND MOST IMPORTANTLY , ACQUIRED THE SHARES AND VALUED THEM AT COST. IN SO FAR AS THE INTENTION OF THE ASSESSEE IS CONCERNED, IT HAS TO BE EXAMINED, AT THE TIME OF ACQUISITION OF THE SHA RES. THIS VIEW HAS BEEN LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS MADANGOPAL RADHEYLAL, REPORTED IN 73 ITR 65 2 . ALL THESE FACTORS COMBINED BY THE CONSISTENT APPROACH BY THE DEPARTMENT, RELIANCE OF THE CIRCULAR ISSUED BY THE CBDT AND THE RATIO LAID DOWN IN THE CASE OF GOPAL PUROHIT ( SUPRA ), DESERVES TO BE RECKONED WITH IN FAVOUR OF THE ASSESSEE. 1 7 . WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A), CONSEQUENTIALLY REJECTING THE GROUNDS AS RAISED BY THE DEPARTMENT. 1 8 . IN THE RESULT, THE A PPEAL AS FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER , 2014. SD/ - SD/ - ( B R BASKARAN ) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 31 ST OCTOBER , 2014 COPY TO: - MR. KANTI V SHAH ITA 3519 /MUM/ 2012 13 1) THE APPLICANT . 2) THE RESPONDENT. 3) THE CIT (A) - CENTRAL - VI , MUMBAI. 4) CENTRAL CONCERN_____ , MUMBAI THE CIT - CENTRAL/CONCERN _______ , MUMBAI. 5) D , THE D.R. D BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER [ , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI CHAVAN, SR. PS