ACIT, Cir-10(1), Hyderabad V. Smt. Veena Ostwal, S'bad, Secunderabad

ITA 358/HYD/2011

• Counselvise Citation: 35822514 RSA 2011
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JEEVANLAL LAVID YA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Business income; Rule of consistency
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.358/HYD/2011 ASSESSMENT YEAR 2007-2008 ACIT, CIRCLE 10(1) HYDERABAD VS. SMT. VEENA OSTWAL SECUNDERABAD PAN AAAPO 6361N (APPELLANT) (RESPONDENT) FOR REVENUE : MR. JEEVAN LAL LAVIDYA FOR ASSESSEE : MR. A.V. RAGHURAM DATE OF HEARING : 20.02.2014 DATE OF PRONOUNCEMENT : 21.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS REVENUES APPEAL AGAINST THE ORDERS OF TH E CIT(A)-VI, HYDERABAD DATED 15.11.2010. THE ISSUE IN THIS APPEAL IS WHETHER THE INCOME DECLARED BY THE ASSESS EE UNDER THE HEAD CAPITAL GAINS IS TO BE ASSESSED AS SUCH OR AS BUSINESS INCOME. 2. THE A.O. NOTICED THAT ASSESSEE HAS SOLD SHARES TO AN EXTENT OF RS.1.30 CRORES AND OFFERED SHORT TERM CAPITAL GAINS OF RS.42,69,108/-. ON ANALYZING THE ASSESSEES TRAN SACTIONS AND GIVING OPPORTUNITY TO THE ASSESSEE, HE CAME TO A CONCLUSION THAT ASSESSEE HAS INDULGED IN TRADING IN SHARES AND ACCORDINGLY, HE PREPARED A TRADING ACCOUNT, THEREBY , THE PROFIT WAS ARRIVED AT RS.42,76,674/-. THIS AMOUNT WAS TREA TED AS BUSINESS INCOME. THE A.O. CONSIDERED THAT THERE WAS VERY HIGH 2 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD FREQUENCY OF TRADING AND VOLUMES AND THERE WAS NO O PENING STOCK AND EVEN THOUGH THERE IS CLOSING STOCK, IT WA S VERY NOMINAL WHEN COMPARED TO THE TURNOVER AND FURTHER E NTIRE AMOUNT EARNED WAS IN THE NATURE OF SHORT TERM GAIN ONLY AND DIVIDEND EARNED WAS VERY NOMINAL (OF RS.1,19,948/-) . FURTHER, A.O. ALSO NOTICED THAT ASSESSEE HAS BORROWED FUNDS AND WAS ALSO PAYING INTEREST. HE PREPARED TABLES-I AND II I N ANALYZING THE SHARE TRANSACTIONS AND NUMBER OF DAYS ASSESSEE HAS HELD SHARES AND NUMBER OF TRANSACTIONS UNDERTAKEN IN A D AY AND ULTIMATELY CONCLUDED THAT THE SHORT TERM CAPITAL GA IN HAS TO BE CONSIDERED AS INCOME FROM BUSINESS AS THE ASSESSE E INDULGED IN TRADING OF SHARES. 3. ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE CIT(A) AND COUNTERED ALL THE ISSUES CONSIDERED BY T HE A.O. THE LEARNED CIT(A) EXTRACTED THE ENTIRE SUBMISSIONS IN PARA 4 OF THE ORDER, INCLUDING THE REVISED TABLE OF TRANSACTI ONS FURNISHED BY THE ASSESSEE. ON THAT BASIS, LEARNED CIT(A) CAME TO THE CONCLUSION THAT ASSESSEE IS NOT A TRADER AND HELD T HAT ASSESSEE HAS ONLY EARNED SHORT TERM CAPITAL GAIN. ULTIMATELY , HER CONCLUSIONS ON THE ISSUE IN PARA 8 ARE AS UNDER : FROM THE AFORESAID DISCUSSION, IT IS CONCLUDED THA T FREQUENT SALE PURCHASE OF SHARES IN HIGH VOLUMES SHOULD NOT BE CONSTRUED OR ASSUMED AS BUSINESS TRANSACTION BECAUS E ANY ASSET WOULD BE PURCHASED WITH AN INTENTION TO EARN PROFIT AT A LATER DATE. THE APPELLANT IS HAVING HER OWN BUSIN ESS WHERE SHE IS INVOLVED IN ADMINISTRATIVE AND DAY TO DAY ACTIVITIES OF M/S. ROHINI POLY FILMS AS PARTNER AND PROFITS FROM THE SALE PURCHASE OF SHARES IS NOT HIS LIVELIH OOD. IN THE RETURN OF INCOME, THE APPELLANT DECLARED THE SHARES PURCHASED ONLY AS INVESTMENT AND THE A.O. DID NOT B RING OUT ANY MATERIAL ON RECORD BY MAKING ENQUIRIES OR INVES TIGATIONS TO PROVE THAT THE APPELLANT CONDUCTED HERSELF IN AN Y MANNER CONTRARY TO HER INTENTION TO BE AN INVESTOR. THE ON LY REASON FOR EFFECTING FREQUENT SHORT TERM SALES WAS TO BE A BLE TO DERIVE BENEFIT OF TAX AT A CONCESSIONAL RATE OF 10% . IT ALSO 3 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD SEEN THAT THE APPELLANT PAID SECURITIES TRANSACTION TAX ON THE SHARES I ALSO RELY ON THE JUDICIAL PRONOUNCEMEN T IN THE CASE OF CIT VS. DHARMA REDDY (1969) 73 ITR 751 (SC) WHERE THE TERM BUSINESS HAS BEEN DEFINED TO BE CONTINUOUS EXERCISE OF AN ACTIVITY. IN THE PRESENT CASE THE AP PELLANT HELD THE SHARES FOR CERTAIN TIME BEFORE SELLING THE SAME WITHIN 12 MONTHS. THE I.T. ACT DOES NOT SPECIFY THAT AN ASSET /SHARE HAS TO BE HELD FOR N NUMBER OF DAYS, WITHIN A YEA R FOR CLAIMING SHORT TERM CAPITAL GAINS. ON THESE FACTS A ND CIRCUMSTANCES, IT IS NOT POSSIBLE TO HOLD THAT THE APPELLANT CARRIED ON TRADING IN SHARES AS A CONTINUOUS AND RE GULAR ACTIVITY. THERE IS NO BASIS FOR TREATING THE APPELL ANT AS TRADER, WHEN HER INTENTION WAS TO HOLD SHARES IN IN DIAN COMPANIES AS AN INVESTMENT AND NOT AS STOCK IN TRAD E. IT IS NOT A CASE WHERE THE APPELLANT IS HOLDING HIMSELF A S AN INVESTOR IN SOME CASE AND A TRADER IN SOME CASE AND THERE IS A SHIFTING STAND. AFTER A CUMULATIVE CONSIDERATION OF ALL THE FACTS, I AM OF THE OPINION THAT THE PROFIT FROM SAL E OF SHARES SHOULD BE CONSIDERED AS INCOME FROM SHORT TERM CAP ITAL GAINS. IN VIEW OF THE ABOVE DISCUSSION, IT IS THER EFORE, DIRECTED THAT THE A.O. MAY RECALCULATE THE PROFIT F ROM SALE PURCHASE OF SHARES AS INCOME FROM SHORT TERM CAPITA L GAINS ACCORDINGLY. 4. LEARNED D.R. OBJECTED TO SOME OF THE OBSERVATIO NS OF THE LEARNED CIT(A) IN CONCLUDING THAT ASSESSEE I S NOT INDULGING IN TRADING OF SHARES. HIS ARGUMENT WAS TH AT THERE IS NO LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE. THERE IS VERY HIGH FREQUENCY AND VOLUME OF SHARES. IT WAS PO INTED OUT THAT ASSESSEE HAS NOT INDULGED IN TRANSACTING IN MA NY NUMBER OF SHARES. ONLY IN THREE COMPANY SHARES ASSESSEE HA D TRANSACTED THROUGHOUT THE YEAR AND THERE WERE REPE ATED TRANSACTIONS IN THE CASE OF BHAGYANAGAR METALS AS L ISTED BY THE A.O. IN THE TABLE-I. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS BORROWED FUNDS FROM THE OTHER FIRM AS GIVEN BY THE A.O. IN PENULTIMATE PAGE OF THE ASSESSMENT ORDER, WHICH ASP ECT LEARNED CIT(A) REJECTED VIDE PARA 7.3 STATING THAT A.O. HAS NOT MADE OUT ANY CASE WITH REGARD TO THE BORROWED FUNDS . IT WAS POINTED OUT THAT ASSESSEE NOT ONLY BORROWED FUNDS F ROM THE 4 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD SISTER CONCERN VIZ., M/S. SPM TELECOM WHOSE LEDGER EXTRACT WAS ANALYSED BY AO AND THERE IS NO DENIAL THAT ASSE SSEE MADE HUGE WITHDRAWALS AT FREQUENT INTERVALS FROM THAT AC COUNT. THERE IS ALSO NO DENIAL THAT ASSESSEE HAS PAID INTE REST WHICH WAS SET OFF IN INCOME FROM OTHER SOURCES FROM REC EIPTS OF INTEREST INCOME AND REFERRED TO THE COMPUTATION OF INCOME. IT WAS FURTHER SUBMITTED THAT LEARNED CIT(A) WRONGLY R ELIED ON THE STATEMENT PREPARED BY THE ASSESSEE TO COME TO T HE CONCLUSION THAT THERE WAS NO DAY TO DAY TRADING. AC TUALLY THERE WERE PURCHASES AND SALES ON THE SAME DAY AND THERE WERE REPEATED PURCHASES IN THE SAME SCRIPS THEREBY, INDI CATING THAT ASSESSEE IS NOT INVESTING FUNDS BUT TRADING IN SHAR ES. LEARNED D.R. RELIED ON THE COORDINATE BENCH DECISIONS ON TH E ISSUE INCLUDING DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF PVS RAJU VS. ADDL. CIT 340 ITR 75. 5. LD. COUNSEL, HOWEVER, RELIED ON THE ORDERS OF T HE CIT(A) TO SUBMIT THAT ASSESSEE HAS INVESTED IN SHAR ES AND THERE IS NO TRADING ACTIVITY AND RELIED ON THE ORDE RS OF THE HONBLE A.P. HIGH COURT IN THE CASE OF SPECTRA SHAR ES AND SCRIPS PVT. LTD. 354 ITR 35. 6. ON A QUERY BY THE BENCH WHETHER THE STATEMENT PREPARED BY THE A.O. IS CORRECT OR THE STATEMENT PR EPARED BY THE ASSESSEE IN THE ORDER OF THE CIT(A) IS CORRECT, AS IT WAS NOTICED THAT SOME OF THE SHARES SOLD ON A PARTICULA R DAY HAS NOT BEEN REFLECTED IN THE STATEMENT SUBMITTED BY TH E ASSESSEE BEFORE THE LD. CIT(A), LD. COUNSEL FAIRLY ADMITTED THAT THE STATEMENT PREPARED BY THE A.O. IN THE ASSESSMENT OR DER IS CORRECT. FURTHER, IT WAS ALSO FAIRLY ADMITTED THAT ASSESSEE HAS BORROWED FUNDS FROM THE SISTER CONCERN AND THERE WA S CLAIM OF INTEREST ALSO PAID IN THAT ACCOUNT. LD. COUNSEL PLA CED ON 5 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD RECORD A PAPER BOOK, ON THE DIRECTIONS GIVEN ON 18. 02.2014, DATED 14 TH FEBRUARY, 2014 BUT FILED ON 20 TH FEBRUARY, 2014 IN THE COURSE OF HEARING. 7. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FACTS ON RECORD. PRIMA FACIE, AS SEEN FROM THE ORDE R OF THE CIT(A), THE CIT(A) DID NOT EXAMINE THE FACTS CORREC TLY IN ARRIVING AT THE CONCLUSIONS DRAWN BY HER. AS ADMITT ED, ASSESSEE STATEMENT FILED BEFORE THE CIT(A) TO SUPPO RT THAT THERE ARE NO DAY TRANSACTIONS IS NOT CORRECT AND THE STAT EMENT AS PREPARED BY THE A.O. AND EXTRACTED IN THE ASSESSMEN T ORDER IS CORRECT. EVEN THOUGH THE STATEMENT INDICATES THAT A SSESSEE WENT ON BUYING SHARES FROM 07.07.2006 TO 26.07.2006 IN THE CASE OF M/S BHAGYANAGAR METALS LTD AND ACCUMULATED A LARGE AMOUNT OF SHARES, SUBSEQUENTLY, FROM 27.07.2006 THE RE ARE BOTH SALES AND PURCHASES IN THE SAME SHARES REPEATE DLY IN THE NEXT TWO MONTHS. THE MAJOR HOLDING PERIOD OF THE SH ARES IN THE CASE OF BHAGYANAGAR METALS WAS BETWEEN 07.07.2006 T O 26.09.2006. EVEN THOUGH THE TRANSACTIONS WERE THROU GH THE DEMAT ACCOUNT AND ASSESSEE HAS RECEIVED BONUS SHARE S ON 26.09.2006 WHICH WAS SUBSEQUENTLY SOLD FROM 29.09.2 006 TO 31.03.2007, THIS SHOWS THAT FROM THE MONTH OF JULY TO SEPTEMBER, ASSESSEE HAS FREQUENTLY PURCHASED AND SO LD SHARES IN THE CASE OF BHAGYANAGAR METALS, WHERE LARGE AMOU NT OF GAIN HAS BEEN EARNED. SIMILARLY, IN THE CASE OF SURANA T ELECOM ALSO THERE ARE FREQUENT TRANSACTIONS. EVEN THOUGH, ASSES SEES CONTENTION WAS THAT ASSESSEE HAS NOT INVOLVED IN DA Y TRADING WHICH IS IN THE NATURE OF SPECULATION, THE ISSUE IS WHETHER IT IS A DAY TRADING AND FREQUENCY OF TRANSACTIONS. AS NOT ED BY THE A.O. ASSESSEE INDULGED IN PURCHASE ON 27.07.2006 OF 1655 SHARES AND SOLD SCRIPS ON SAME DAY TO THE EXTENT OF 4000. EVEN THOUGH PURCHASES CAME INTO DEMAT ACCOUNT BUT, ALREA DY 6 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD ACQUIRED SHARES EARLIER WERE SOLD ON THAT DAY. THIS WAS CONSIDERED AS A DAY TRANSACTION BY THE A.O. WHICH I N OUR VIEW REFERS TO THE PURCHASE AND SALE ON THE SAME DAY, EV EN THOUGH NOT ASPECULATIVE TRANSACTION. LIKEWISE, ON 28.07.20 06 ALSO ASSESSEE HAS PURCHASED 4825 SHARES AND SOLD 1334 SH ARES ON THE SAME DAY. ON 02.08.2006, ASSESSEE PURCHASED 123 89 SHARES AND SOLD 850 SHARES ON THE SAME DAY. ON 03.0 8.2006 ASSESSEE PURCHASED 9846 SHARES AND SOLD 1446 SHARES ON THE SAME DAY. ON 07.08.2006 THE PURCHASE WAS OF 200 SHA RES AND SALE WAS OF 150 SHARES. ON 08.08.2006 THERE IS PURC HASE OF 1772 SHARES AND SALE OF 29231 SHARES. LIKE THAT, AS SESSEE HAS BEEN PURCHASING AND SELLING SHARES ON THE SAME DAY WHICH HAS LEFT THE A.O. TO CONSIDER THAT ASSESSEE HAS IND ULGED IN VERY HIGH VOLUME AND FREQUENCY OF TRANSACTIONS AND THIS NATURE OF ACTIVITY IS NOTHING BUT TRADING ACTIVITY. THERE IS ALSO NO DISPUTE THAT ASSESSEE HAS UTILIZED BORROWED FUNDS FROM M/S. SPM TELECOM AND HAS PAID INTEREST ON THE BORROWED FUNDS . THIS INDICATES THAT BORROWED FUNDS WERE UTILIZED BY THE ASSESSEE IN MAKING PURCHASE IN THE SHARES AND CIT(A) OBSERVATIO N VIDE PARA 7.3 THAT A.O. DID NOT BRING OUT THE DETAILS OF THE AMOUNT BORROWED IS NOT CORRECT. 7.1 SINCE THE CIT(A) ORDER IS BASED ON CERTAI N WRONG FACTS WHICH ARE ADMITTEDLY NOT CORRECT, WE HAVE NO OPTION THAN TO RE- EXAMINE THE ISSUE ON THE BASIS OF THE FINDINGS OF T HE A.O. AS SEEN FROM THE COMPUTATION OF INCOME, ASSESSEE HAS R ECEIVED INTEREST TO AN EXTENT OF RS.3,76,700/- AND PAID INT EREST TO AN EXTENT OF RS.2,15,990/-. THE LEDGER ACCOUNT PLACED ON RECORD ALSO INDICATES THAT ASSESSEE DID BORROW FUNDS FROM THE SAID FIRM. THE FINDING OF A.O. ON THIS ACCOUNT IS TO BE APPROVED. AS SEEN FROM THE LEDGER ACCOUNT COPY PLACED IN PAPER B OOK AT PAGE 16, THE INTEREST CLAIMED IN THE COMPUTATION IN COME OF 7 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD RS.2,15,980/- WAS ON THE DEBITS IN THE ACCOUNT AT 1 2% ON THE BORROWALS MADE BY THE ASSESSEE. THEREFORE, THE OBSE RVATIONS OF CIT(A) ARE NOT CORRECT. SINCE THE CIT(A) ORDER IS N OT ON THE BASIS OF THE FACTS, WE CANNOT APPROVE THE FINDINGS OF THE CIT(A). 8. LD. COUNSEL IN THE COURSE OF ARGUMENTS SUBMITTE D THAT ASSESSEE WAS HAVING SIMILAR INCOMES IN EARLIER YEARS ALSO AND FILED COPIES OF THE RETURNS FROM EARLIER ASSESS MENT ORDERS IN THE PAPER BOOK. AS SEEN FROM THE COMPUTATION FOR THE A.Y. 2000-2001 THERE WAS LONG TERM CAPITAL LOSS OF RS.1 ,28,861/- ( ON WHAT TRANSACTION WAS NOT AVAILABLE) BUT THERE IS NO SUCH INCOME OR LOSS CLAIMED IN A.Y. 2001-2002. IN A.Y. 2 002-03 THERE WAS ONLY LONG TERM CAPITAL GAIN ON SALE OF LA ND. ASSESSEE WAS NOT DOING ANY SHARE ACTIVITY. SIMILAR IS THE PO SITION FOR A.Y. 2003-2004 ALSO WHERE THERE IS NO INCOME FROM C APITAL GAINS AT ALL. IN ASSESSMENT YEARS 2004-05 AND 2005- 06 ALSO ASSESSEE WAS HAVING ONLY SOME SHARES IN BALANCE SHE ET. THERE ARE NO TRANSACTIONS PERTAINING TO SHARES IN THESE T WO ASSESSMENT YEARS. SIMILAR IS THE POSITION IN A.Y. 2006-07 WHERE THE SHARES PURCHASED EARLIER AND SHOWN IN THE SHARE INVESTMENT ACCOUNT WAS STILL SHOWN AS SUCH. THE INV ESTMENT WAS TO THE TUNE OF RS.21,31,468/-. ONLY IN A.Y. 200 7-08, THE ASSESSEE HAS STARTED THE TRANSACTIONS AND AS NOTICE D BY THE A.O. THERE WAS NO OPENING BALANCE OF SHARES. WHATEV ER SHARES ASSESSEE WAS HAVING IN EARLIER YEARS, CONTINUOUS TO BE SHOWN IN THE BALANCE SHEET AS SUCH. THEREFORE, THESE FACT S ARE SIMILAR TO THE FACTS IN THE CASE OF SMT. SADHANA NABERA VS. ACIT, MUMBAI IN ITA.NO.2586/MUM/2009 DATED 26.03.2010. 17. PURCHASE OF SHARES DURING THE YEAR AND SELLING THEM FREQUENTLY IN SHORT PERIOD DO INDICATE THAT THE ASS ESSEE HAS PURCHASED THE SHARES WITH A MOTIVE TO EARN PROFIT I N SHORT PERIOD. AN INTERESTING ASPECT NOTICED FROM THE DETA ILS OF SHORT 8 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD TERM CAPITAL GAINS STATEMENT FILED IN THIS REGARD ( PAGE 73) IS THAT THE ASSESSEE HAS TRANSACTED IN ONE SHARE OF HI RAN ORGO CHEM FREQUENTLY. ONE ARGUMENT WHICH WAS RAISED BEFO RE THE CIT(A) EXPLAINING DAILY TRANSACTIONS WITHOUT DELIVE RY WAS THAT THE ASSESSEE BY MISTAKE HAS MADE SOME INVESTME NT AND REALISING THAT THE TRANSACTIONS WERE NOT GAINFU L IMMEDIATELY SOLD FOR A LOSS ON THE SAME DAY. THIS A RGUMENT IS TO BE CONSIDERED IN THE LIGHT OF THE TRANSACTION S ENTERED BY THE ASSESSEE IN HIRAN ORGO CHEMS CASE. THERE ARE PURCHASES AND SALES OF SHARES ON 06.12.2004 TO 21.1 2.2004 ON A DAILY BASIS AND THE MAXIMUM PURCHASE IN A DAY WAS OF ABOUT 1910 SHARES AND INVESTMENT IN A PARTICULAR DA Y WAS ABOUT RS.67,472/-. IF ASSESSEE HAS BY MISTAKE INVES TED IN THAT SCRIP ON A PARTICULAR DAY, IT IS NOT EXPLAINED HOW ONLY THIS SCRIP WAS TRANSACTED FROM 16.12.2004 TO 21.12. 2004 FREQUENTLY 19 TIMES. NOT ONLY THAT IN THE SAME PERI OD, THE ASSESSEE ALSO INVESTED IN THE SAME SCRIP ON VARIOUS DATES TO EARN PROFIT OF RS.1,21,913/- ON 10500 SHARES THE CO ST OF WHICH WAS ABOUT RS.3,63,000/- AND SOLD FOR A GAIN. IT SHOWS THAT THE EXPLANATION GIVEN FOR THE DAY-TO-DAY TRANSACTIONS IS NOT CORRECT AND THE ASSESSEE HAS IN VESTED FREQUENTLY IN THE PARTICULAR SCRIP FROM 01.12.2004 TO 28.01.2005 AND SOLD THE SHARES FROM 16.12.2004 TO 11.03.2005 REGULARLY EARNING BOTH LOSS AS WELL AS G AINS IN THE SAME SCRIP. ANOTHER SCRIP WHICH WAS TRANSACTED IN HIGH VOLUME WAS THE TASC PHARMA LTD. IN THIS CASE THE AS SESSEE HAS PURCHASED 1 LAKH SHARES TO AN EXTENT OF RS.1,14,25,000/- ON 06.10.2004 AND THESE SHARES WER E SOLD ON 18.11.2004, 17.12.2004, 31.12.2004, 17.01.2005 A ND 18.01.2005 I.E. WITHIN A PERIOD OF 3 MONTHS GAINING AN AMOUNT OF RS.68,62,041/- IN THIS TRANSACTIONS. AS C AN BE SEEN THESE 2 SCRIPS HAVE GIVEN LARGE AMOUNT OF GAIN . IN ADDITION, THERE WAS GAIN OF RS.9,02,552/- ON THE SC RIPS OF MICRO TECHNOLOGY PURCHASED ON 18.11.2004 AND SOLD ENTIRELY ON 08.02.2005. THERE IS ALSO GAIN OF RS.4, 11,873/- ON PURCHASE OF STERLING TOOLS LTD. OF 10000 SHARES AND SELLING THEM ENTIRELY ON 04.03.2005. THUS THE ASSES SEE HAS EARNED MOST OF THE PROFITS AFTER 01.10.2004 TO 31.0 3.2005 IN ONLY 5 SCRIPS WHEREAS THERE IS LOSS OF RS.1,21,380/ - IN PURCHASE OF TRICOM SHARES ON 06.01.2005 AND SELLING THEM ON 31.01.2005. THESE INDICATE THAT THE ASSESSEE HAS PURCHASED THE SHARES WITH AN INTENTION TO MAKE PROF IT IN THE SHARE MARKET. THIS FACT CAN ALSO BE COMPARED WITH T HE GAIN SHOWN FROM 01.04.2004 TO 30.01.2005. IN THE FIRST 6 MONTHS OF THE YEAR THE ASSESSEE HAS TRANSACTED IN 25 SCRIP S AND GAINED RS.45,659/- AND THE INVESTMENT IN THOSE SHAR ES IS 9 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD NOT MUCH WHEN COMPARED TO THE LARGE TRANSACTIONS AS DISCUSSED ABOVE AFTER 01.10.2004. MOST OF THESE SHA RES WERE ALSO PURCHASED AND SOLD IMMEDIATELY AND THERE ARE NO SHARES WHICH ARE ACQUIRED PRIOR TO 01.04.2004 HELD AFTER 31.01.2005. ALL THESE FACTS INDICATE THAT THE INTEN TION OF THE ASSESSEE IS TO GAIN PROFITS BY DEALING IN SHORT TER M PERIOD ONLY. NOT ONLY THE ABOVE, THE AO ALSO DISCUSSED ABO UT BORROWING OF FUNDS, SMALL AMOUNT OF DIVIDEND WHEN COMPARED TO THE GAIN IN SALES AND ALSO THE FACT THA T ASSESSEE GROUP COMPANIES ARE INVOLVED IN SHARE TRAD ING. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES CONSIDERED ABOVE, WE ARE OF THE VIEW THAT THE CONCLUSION OF THE REVEN UE AUTHORITIES THAT THE INCOME FROM SALE OF SHARES DEC LARED BY THE ASSESSEE DURING THE YEAR AS SHORT TERM GAIN IS INCOME FROM BUSINESS ACTIVITY IS CORRECT AND CALLS FOR NO INTERFERENCE. 18. NOW WE WILL DEAL WITH THE SPECIFIC DECISION REL IED UPON BY THE LEARNED COUNSEL. I.E. DECISION OF THE MUMBAI BENCH OF THE ITAT IN THE CASE OF GOPAL PUROHIT 122 TTJ 97 WH ERE IN RESPECT OF SHARE TRANSACTIONS THE ITAT ACCEPTED AS INVESTMENT AND ALSO ON THE PRINCIPLE OF CONSISTENCY IN THE MATTER OF ASSESSMENT. THE TRIBUNAL FOUND THAT THE S AID ASSESSEE HAS CONSISTENTLY BEEN INVESTING IN SHARES AND RATIO OF SALES TO INVESTMENT WAS VERY LESS. IN THE ABOVE REFERRED CASE THERE WAS LONG TERM CAPITAL GAIN OF RS.1.12 CR ORES WHICH WAS CLAIMED EXEMPT AND LONG TERM CAPITAL GAIN TAXABLE AT 10% TO THE TUNE OF RS.60 LAKHS IN ADDITI ON TO PROFIT FROM TRADING IN SHARES TAXABLE AT 10% AND SHORT TER M CAPITAL GAIN AT 10% OF RS.57.31 LAKHS. IN THAT CASE THE ASS ESSEE WAS INVESTING FOR A LONG PERIOD AND OFFERING THE LO NG TERM CAPITAL GAIN WHICH IS MORE THAN SHORT TERM CAPITAL GAIN AND SHARE HOLDINGS VARIED FROM ONE YEAR TO 5 YEARS. NO SUCH FACTS EXIST IN THE PRESENT CASE. IN FACT THERE ARE NO LONG TERM GAINS IN ASSESSEES CASE EXCEPT IN SMALL AMOUNTS IN A.Y. 2001-02 AND IN THE LATER YEAR ONLY ON ONE GROUP WHI CH WAS DISCUSSED ABOVE WHICH ARE FROM INVESTMENTS DISCUSSE D ABOVE OF FEW COMPANY SHARES. IN VIEW OF THE FACTS O F THE CASE, WE ARE OF THE OPINION THAT THE DECISION IN TH E CASE OF GOPAL PUROHIT, UPHELD BY THE HON'BLE BOMBAY HIGH CO URT DO NOT APPLY AT ALL. SIMILARLY THE DECISION OF THE ITA T IN THE CASE OF JANAK S.RANGWALLA VS. ACIT 11 SOT 627 (MUM) GIVE N IN THAT SET OF FACTS IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. FOR THE REASONS GIVEN ABOVE, WE CONCUR WITH T HE FINDINGS OF AO AND CIT(A) AND UPHOLD THE ORDER OF T HE CIT(A). 10 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD 9. THE HONBLE HIGH COURT IN THE CASE OF PVS RAJU AND OTHERS VS. ADDL. CIT 340 ITR 75 HELD AS UNDER : 16. THE CHARACTER OF A TRANSACTION CANNOT BE DETERMINED SOLELY ON THE APPLICATION OF ANY ABSTRA CT RULE, PRINCIPLE OR TEST BUT MUST DEPEND UPON ALL THE FACT S AND CIRCUMSTANCES OF THE CASE. ULTIMATELY, IT IS A MATT ER OF FIRST IMPRESSION WITH THE COURT WHETHER A PARTICULAR TRAN SACTION IS IN THE NATURE OF TRADE OR NOT. [SUTLEJ COTTON MI LLS SUPPLY AGENCY LTD. (SUPRA). IF, ON THE MATERIAL ON RECORD, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE APPELL ANT WAS DEALING IN SHARES AS A BUSINESS, IT CANNOT BE INTER FERED WITH BY THE HIGH COURT. [RAJA BAHADUR VISHESHWARA SINGH VS. CIT (SUPRA)]. THE TRIBUNAL IS THE FINAL FACT-FINDIN G BODY. ITS FINDINGS ON QUESTIONS OF FACT ARE NOT LIABLE TO BE INTERFERED WITH UNLESS IT HAS TAKEN INTO CONSIDERATION IRRELEV ANT MATERIAL OR HAS FAILED TO TAKE INTO CONSIDERATION R ELEVANT MATERIAL OR THE CONCLUSION ARRIVED AT BY IT IS PERV ERSE IN THE SENSE THAT NO REASONABLE PERSON, ON THE BASIS OF TH E FACTS BEFORE THE TRIBUNAL, COULD HAVE COME TO THE CONCLUS ION TO WHICH THE TRIBUNAL HAS COME. THE DECISION OF THE TR IBUNAL HAS NOT TO BE SCRUTINISED SENTENCE BY SENTENCE MERE LY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN DETAIL B Y THE TRIBUNAL OR WHETHER SOME INCIDENTAL FACT WHICH APPE ARS ON RECORD HAS NOT BEEN NOTICED BY THE TRIBUNAL IN ITS JUDGMENT. IF THE COURT, ON A FAIR READING OF THE JUDGMENT OF THE TRIBUNAL, FINDS THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL, AND HAS NOT TAKEN INTO ACCOUNT IRRELEVANT MATERIAL IN BASING ITS CONCLUSIONS, THE DECISION OF THE TRIB UNAL IS NOT LIABLE TO BE INTERFERED WITH UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. [CIT VS. K ARAM CHAND THAPAR & BROS. (P) LTD. (1989) 76 CTR (SC) 36 : (1989) 2 SCC 31]. 17. THE ORDER OF THE TRIBUNAL OUGHT NOT TO BE MICROSCOPICALLY SCRUTINIZED ONLY TO LOCATE SOME INS IGNIFICANT ERRORS. WHEN VIEWED IN THE LIGHT OF THE SEVERAL FIN DINGS RECORDED BY THEM IN COMING TO THE CONCLUSION THAT T HE SHARES WERE HELD BY THE APPELLANTS AS STOCK-IN-TRADE AND N OT AN INVESTMENT, THE ERRONEOUS FINDING OF THE TRIBUNAL T HAT THE APPELLANTS HAD HELD ALL THE SHARES FOR LESS THAN TW O MONTHS PALES INTO INSIGNIFICANCE. EVEN OTHERWISE, IT IS NO T EVEN THE APPELLANTS CASE THAT THEY HAD HELD ALL THE SHARES FOR A LONG DURATION. IT IS EVIDENT FROM THE ORDER OF THE TRIBU NAL THAT THE VOLUMINOUS SHARE TRANSACTIONS WERE IN THE ORDINARY LINE OF 11 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD THE APPELLANTS BUSINESS; PURCHASE OF SHARES BY THE M WAS NOT FOR THE PURPOSE OF EARNING DIVIDEND, BUT WITH T HE DOMINANT INTENTION OF RESALE IN ORDER TO EARN PROFI TS; THE PROFIT MADE BY THEM IS NOT OF MERE ENHANCEMENT OF V ALUE OF THE SHARES, BUT IS A PROFIT MADE IN THE CARRYING ON OF A BUSINESS SCHEME OF PROFIT MAKING; HUGE VOLUME OF SH ARE TRANSACTIONS, THE REPETITION AND CONTINUITY OF THE TRANSACTIONS, GIVE THEM A FLAVOUR OF 'TRADE'; THE M AGNITUDE, FREQUENCY AND THE RATIO OF SALES TO PURCHASES ON TH E TOTAL HOLDINGS ARE EVIDENCES THAT THE APPELLANTS HAD NOT PURCHASED THE SHARES AS AN INVESTMENT, BUT WITH THE INTENTION TO TRADE IN SUCH SCRIPS. 18. THE ORDERS OF THE TRIBUNAL, THE CIT(A) AND THE ASSESSING AUTHORITY ARE ALL WELL CONSIDERED AND REA SONED ORDERS. WE SEE NO REASON, THEREFORE, TO INTERFERE W ITH THE ORDER OF THE TRIBUNAL OR TO ENTERTAIN THE APPEALS U NDER S. 260A OF THE ACT. THE APPEALS FAIL AND ARE, ACCORDIN GLY, DISMISSED. 10. THEREFORE THE PRINCIPLES LAID DOWN IN THE ABOV E CASES SQUARELY APPLY TO THIS CASE. AS FACTS IN THIS CASE ARE DIFFERENT FROM THE FACTS IN THE CASE OF SPECTRA SHA RES (SUPRA) RELIED ON BY THE LD. COUNSEL, THE SAME CAN NOT BE A PPLIED HERE. THEREFORE, SINCE THE FACTS ARE SIMILAR TO THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAD HANA NABERA (SUPRA) AND ALSO THE JUDGMENT OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF PVS RAJU (SUPRA), WE APPR OVE THE FINDINGS OF THE A.O. THAT ASSESSEE HAS INDULGED IN SHARE TRADING DURING THE YEAR. ACCORDINGLY, FINDINGS OF T HE CIT(A) ARE SET ASIDE AND ORDERS OF THE A.O. IS RESTORED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21.03. 2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 21 ST MARCH, 2014 VBP/- 12 ITA.NO.358/HYD/2011 SMT. VEENA OSTWAL, SECUNDERABAD COPY TO : 1. ACIT, CIRCLE 10(1), ROOM NO. 515, A.C. GUARDS, I .T. TOWERS, HYDERABAD. 2. SMT. VEENA OSTWAL, PLOT NO. 31, PAIGAH COLONY, S ECUNDERABAD. C/O. MR. A.V. RAGHURAM, ADVOCATE, FLAT NO.610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 001. 3. CIT(A)-VI, 6A, I.T. TOWERS, A.C. GUARDS, HYDERA BAD 500 004. 4. CIT-V, HYDERABAD 5. D.R. ITAT, B BENCH, HYDERABAD.