Dr. Gulabchand Jagannath Kasliwal., Solapur V. Dy CIT, Solapur

ITA 361/PUN/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66990 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Capital asset; Business income; Rule of consistency
• Section: 45(2); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 361/PN/2013 :ASSTT. YEAR : 2008-09 DR. GULABCHAND J. KASLIWAL 196 BUDHWAR PETH, SOLAPUR PAN ABIPK 1337 K ... APPELLANT VS. DY. CIT CIR. 1, SOLAPUR RESPONDENT APPELLANT BY : SHRI S.N. PURANIK RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 08-4-2013 DATE OF PRONOUN CEMENT : 31-05-2013 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE OR DER OF THE LD. CIT(A)-III PUNE DATED 16-2-2012 FOR A.Y. 2008-09. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1. CIT(A) HAS ERRED IN CONFIRMING AOS VIEW THAT S URPLUS ON SALE OF SHARES AS BUSINESS INCOME AGAINST SHORT TERM CAPITAL GAIN AS RETURNED BY THE APPELLANT AND SO CONSISTENTLY ACCEPTED BY DEPARTMEN T FOR YEARS TOGETHER INCLUDING FOR A.Y. 2007-08. APPELLANT PRAYS TO CONFIRM THE SAME AS SALE OF INVE STMENT, ASSESSABLE AS SHORT TERM CAPITAL GAINS. 2. HONBLE ICIT(A) HAS ERRED IN CONFIRMING THE CHAR GEABILITY OF INTEREST U/S 234B, INTEREST CHARGED BECAUSE OF ABRUPT CHANGE OF HEAD OF INCOME MAY PLEASE BE DELETED. 3. THE ASSESSEE IS A DOCTOR BY PROFESSION FOR LAST 40 YEARS. IT IS STATED THAT HE HAS INVESTMENTS PORTFOLIO IN SHARES AND SECURITIES. IT IS ALSO STATED THAT THE PORTFOLIO DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE I NCOME-TAX DEPARTMENT AS INVESTMENT IN THE SCRUTINY ASSESSMENT FROM TIME TO TIME, INCLUDING THE ASSESSMENT YEAR 2007-08. THE ASSESSEE FILED RETURN OF INCOME FOR A.Y. 2008-09 DECLARING TOTAL INCOME OF RS. 91,48,630/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT IS COMPLETED U/S 143(3) OF THE ACT. THE A.O HAS OBSERVED THAT THE MAIN ACTIVITY OF THE ASSESSEE IS A TRADING IN SHARES RAT HER THAN MEDICAL PROFESSION. THE A.O ALSO NOTED THAT THE ASSESSEE HAS ENTERED INTO H UGE FREQUENCY OF THE ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 2 TRANSACTIONS OF SHARES WHICH HAS RESULTED INTO SHOR T TERM CAPITAL GAIN. THE A.O THEREFORE, PROCEEDED TO TREAT THE SHORT TERM CAPITA L GAIN DECLARED BY THE ASSESSEE AS INCOME FROM ADVENTURE IN THE NATURE OF TRADE. THE AO HAS ALSO OBSERVED THAT AS PER P & L A/C AND BALANCE SHEET THE ASSESSEE HAS DE BITED THE FOLLOWING EXPENDITURE TO THE CAPITAL ACCOUNT:- INTEREST ON OD OF RS. 6 LAKHS FROM BANK OF INDIA R S. 9,961/- DMAT ACCOUNT FEES RS. 25,000/- BANK COMMISSION RS. 4,000/- BROKERS COMMISSION RS. 51,703/- 4. HE HAS OBSERVED THAT ASSESSEE HAS TAKEN OD FACIL ITIES FROM BANK OF INDIA, SOLAPUR FOR THE PURPOSE OF PURCHASING THE SHARES IN THE MONTH OF MARCH 2008 AND HE HAS PAID INTEREST ON THE SAID OD. THE AO HAS GIVEN SCRIPT WISE DETAILS OF SALE AND PURCHASES AS UNDER:- SR. NO. NAME OF CO. NO.OF SALE DATE PURCHASE SHARES DATE 1 ISPAT 10000 04 - APR - 07 ' 19.07.2006 2 KIRLOSKAR FEROUS 16000 04-APR-07 25.6.2006 3 NEYVELI LIGNITE 5000 0 4 - APR - 07 13.11.2006 4 PUNJLLYOD 1000 10 - APR - 07 8.04.2007 5 GAIL 500 16 - APR - 07 15.06.2006 6 GE SHIPPING 200 16 - APR - 07 09.06.2006 7 NALCO 1000 16 - APR - 07 14.08.2006 8 NFOTEX 100 20 - APR - 07 16.01.2007 9 BHEL 50 20 - APR - 07 31.0 7.2006 10 FUJITSU - ICIM 100 20 - APR - 07 27.01.2006 11 HNDUSTAN ZINC 100 20 - APR - 07 30.03.2007 12 PUNG LTD 200 20 - APR - 07 22.08.2006 13 TULIP 100 20 - APR - 07 27.01.2007 14 FUJITSU - ICIM 100 26 - APR - 07 27.01.2007 15 ASHOK LEYLAND 250 0 30 - APR - 07 19.07.2006 16 CROMPTON 100 04 - MAY - 07 30.03.2007 17 PUNJLLYOD 100 04 - MAY - 07 22.08.2006 18 TATA SPONG 200 04 - MAY - 07 14.02.2006 19 IFCI 2500 15 - MAY - 07 21.02.2007 20 CROMPTON 300 16 - MAY - 07 30.03.2007 21 STERLITE I ND 600 16 - MAY - 07 15.06.2006 22 IFCI 2500 17 - MAY - 07 21.02.2007 23 TATA SPONG 200 17 - MAY - 07 30.04.2007 24 BOI 1000 25 - MAY - 07 14.02.2007 25 DIGVIJAY CEMENT 2000 25 - MAY - 07 28.07.2006 26 ASHOK LEYLAND 1000 31 - MAY - 07 31.10.2006 27 BOI 5000 31 - MAY - 07 12.03.2007 28 BHARAT FORGE 3000 31 - MAY - 07 09.06.2006 29 JK CEMENT 1000 31 - MAY - 07 01.03.2007 30 PUNJLLYOD 1200 31 - MAY - 07 21.01.2007 31 SBI 200 31 - MAY - 07 14.03.2007 32 GMR INFRA 100 05 - JUN - 07 16.02.2007 33 PATNI 100 05 - JUN - 07 13.02.2007 34 PUNJLLYOD 500 05 - JUN - 07 25.11.2006 35 SBI 100 06 - JUN - 07 06.05.2007 ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 3 36 CROMPTON 1000 14 - JUN - 07 30.04.2007 37 STERLITE IND 200 14 - JUN - 07 18.09.2006 38 BOI 500 22 - JUN - 07 14.02.2007 39 SBI 100 28 - JUN - 07 01.02.2007 40 INDRA GAS 1000 02 - JUL - 07 14.11.2006 41 VOLTAG 700 02 - JUL - 07 12.03.2007 42 EIH LTD 5000 03 - JUL - 07 17.06.2006 43 ESSAR OIL 500 03 - JUL - 07 13.02.2007 44 IFCI 2000 03 - JUL - 07 3 0.03.2007 45 JSW STEEL 200 03 - JUL - 07 20.04.2007 46 ANDHRA BANK 2000 04 - JUL - 07 28.08.2006 47 JSW STEEL 200 04 - JUL - 07 11.04.2007 48 ASHOK LEYLAND 1500 09 - JUI - 07 19.07.2006 49 IDEA CELL 1000 09 - JUL - 07 12.03.2007 50 GAMON INDIA 100 12 - JUL - 07 16.02.2007 51 KOTHARI PRODUCT 100 12 - JUL - 07 16.07.2006 52 GREAT OFFSH 100 12 - JUL - 07 27.01.2007 53 PRISEM 1000 12 - JUI - 07 15.06.2007 54 TATA ENG 100 12 - JUL - 07 22.06.2007 55 RNRL 1000 12 - JUL - 07 22.09. 2006 56 MOSERBEAR 100 13-JUL-07 06.02.2007 57 RELIANCE ENERGY 100 13 - JUL - 07 3.07.2006 58 TULIP 100 13 - JUL - 07 27.01.2007 59 MOSERBEAR 400 17-JUL-07 11.04.2007 60 RELIANCE ENERGY 400 17-JUL-07 23.11.2006 61 ULTRATECH 50 19 - JUL - 07 16.02.2007 62 EMCO TRAN 50 20 - JUL - 07 16.02.2007 63 JK LAXMI 2000 26 - JUL - 07 01.02.2007 64 BHEL 100 27 - JUL - 07 17.07.2007 65 GRASIM IND 100 27 - JUL - 07 17.07.2007 66 LT 100 27 - JUI - 07 17.07.2007 67 TATA IRON 1000 27 - JUL - 07 17.07.2007 68 TATA POWER 500 27 - JUL - 07 17.07.2007 69 RELIANCE IND 200 27 - JUL - 07 17.07.2007 70 JK LAXMI 1000 06 - AUG - 07 21.05.2007 71 MADRAS CEMENT 150 06 - AUG - 07 25.11.2006 72 PRISEM 1000 06 - AUG - 07 13.03.2007 73 RANBAXY 30 0 06 - AUG - 07 03.07.2007 74 TANLA LTD 100 08 - AUG - 07 22.06.2007 75 TATA SPONG 1000 06 - AUG - 07 27.01.2007 76 ERA CONS 100 07 - AUG - 07 28.02.2007 77 GAMAN INDIA 100 07 - AUG - 07 16.02.2007 78 EMCO TRAN 50 09 - AUG - 07 16.02.2007 79 HCL 200 09 - AUG - 07 25.01.2007 80 NAGARJUN FERTI 5000 21 - AUG - 07 30.05.2007 81 POWER FINANCE 1000 21 - AUG - 07 02.07.2007 82 RELIANCE NATURAL 2000 21 - AUG - 07 17.07.2007 83 IFCI 8000 21 - AUG - 07 07.08.2007 84 GMR INFRA 200 30 - AUG - 07 22.08. 2007 85 HINDALCO 1000 30 - AUG - 07 31.07.2007 86 INDIA CEMENT 700 30 - AUG - 07 15.02.2007 87 ISPAT 3000 30 - AUG - 07 30.05.2007 88 MIC ELE 200 30 - AUG - 07 25.06.2007 89 RELIANCE ENERGY 200 30 - AUG - 07 22.08.2007 90 CHAMBEL FERTI 2000 03 - SEP - 07 27.07.2007 9 VIKASWSP 4000 03 - SEP - 07 21.04.2006 92 GUJRAT NRI 500 04 - SEP - 07 22.06.2007 93 GUJRAT NRI 500 05 - SEP - 07 22.06.2007 94 ISPAT 7000 06 - SEP - 07 29.08.2007 95 INFOTECH 600 11 - SEP - 07 01.01.2007 96 MPHASI S BLFSOFT 300 11 - SEP - 07 21.02.2007 97 IDBI 500 19 - SEP - 07 23.02.2007 ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 4 98 UCO 1000 19 - SEP - 07 17.07.2007 99 ISPAT 5000 21 - SEP - 07 13.09.2007 100 RELIANCE NATURAL 5000 21 - SEP - 07 13.10.2006 101 IFCI 5000 24 - SEP - 07 13.09.2007 102 IFCI 2000 25 - SEP - 07 24.08.2007 103 NAGARJUN FERTI 2000 25 - SEP - 07 11.09.2007 104 NAGARJUN FERTI 1000 26 - SEP - 07 27.08,2007 105 NAGARJUN FERTI 2000 28 - SEP - 07 27.08.2007 106 NAGARJUN FERTI 2000 02 - OCT - 07 11.09.2007 107 DLF 200 03 - OCT - 07 20.07.2007 108 IFCI 1000 03 - OCT - 07 22.08.2007 109 TATA POWER 200 03 - OCT - 07 03.09.2007 110 BHARAT PETRO 300 09 - OCT - 07 13.11.2006 111 AMBUJA CEMENT 1000 11 - OCT - 07 28.06.2007 112 IDEA CELL 1000 11 - OCT - 07 01.06.2007 113 IVRCL 200 11 - OCT - 07 27.07.2007 114 AMBUJA CEMENT 1000 15 - 0CT - 07 04.07.2007 115 BOI 1500 15 - 0CT - 07 22.08.2007 116 BHEL 100 15 - 0CT - 07 28.02.2007 117 GREAT OFFSH 400 15-OCT-07 01.12.2006 & 16.01.2007 118 DBI 1000 24 - OCT - 07 20.07.2007 119 INDIAN BANK 1000 24 - OCT - 07 17.07.2007 120 NEYLVEL LINGTE 1000 24 - OCT - 07 20.08.2007 121 BAJAJ AUTO 100 26 - OCT - 07 17.05.2007 122 BAJAJ AUTO 100 29 - OCT - 07 18.05.2007 123 ONGC 100 29 - OCT - 07 03.07.2007 124 BO I 500 30 - OCT - 07 17.07.2007 125 BOI 1000 01 - NOV - 07 26.07.2007 126 IDEA CELL 1000 01 - NOV - 07 01.06.2007 127 IVRCL 200 01 - NOV - 07 12.01.2007 128 JK LAXMI 1000 01 - NOV - 07 28.06.2007 129 IVRCL 200 05 - NOV - 07 12.01.2007 130 PTC 3 000 13 - NOV - 07 01.11.2007 131 BAJAJ AUTO 100 14 - NOV - 07 31.07.2007 132 DENA BANK 1000 14 - NOV - 07 06.06.2007 133 IDBI 200 14 - NOV - 07 21.02.2007 134 JK LAXMI 1000 14 - NOV - 07 24.04.2007 135 MASTAK 200 14 - NOV - 07 01.01.2007 136 NEVYLL INGTE 1000 14 - NOV - 07 01.11.2007 137 PTERONET 1000 14 - NOV - 07 03.07.2007 138 UCO 1000 14 - NOV - 07 17.07.2007 139 VIJAYA BANK 2000 14 - NOV - 07 21.09.2007 140 PETRONET 1000 15 - NOV - 07 25.07.2007 141 JK LAXMI 1000 16 - NOV - 07 14.05.2007 142 PETRONET 1000 16 - NOV - 07 21.09.2007 143 DENA BANK 1000 20 - NOV - 07 09.07.2007 144 ANDHRA BANK 2000 26 - NOV - 07 30.08.2007 145 DENA BANK 5000 26 - NOV - 07 10.10.2007 146 INDIA CEMENT 500 26 - NOV - 07 28.06.2007 147 JK CE MENT 1000 26 - NOV - 07 28.06.2007 148 JK LAXMI 1000 26 - NOV - 07 15.03.2007 149 RELIANCE CAPITAL 100 26 - NOV - 07 01.10.2007 150 RELIANCE ENERGY 100 26-NOV-07 26.11.2006 151 TELCO 100 26-NOV-07 22.06.2007 152 UCO 1000 26 - NOV - 0 7 30.08.2007 153 AMBUJA CEMENT 30 28 - NOV - 07 28.11.2007 154 ANDHRA BANK 5000 30 - NOV - 07 24.10.2007 ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 5 155 ESSAR OIL 500 03 - DEC - 07 19.11.2007 156 PRISEM 3000 03 - DEC - 07 07.08.2007 157 ESSAR OIL 500 04 - DEC - 07 20.11.2007 158 I SPAT 2000 05 - DEC - 07 13.09.2007 159 BHARTI AIRTEL 100 07 - DEC - 07 25.07.2007 160 ESSAR OIL 500 07 - DEC - 07 20.11.2007 161 IDEA CELL 500 07 - DEC - 07 24.06.2007 162 ISPAT 2000 07 - DEC - 07 14.09.2007 163 JAYSHREE TEA 500 07 - DEC - 07 25.11 .2006 164 INDIA SEIMENS 2000 11 -DEC-07 11.07.2006 165 INDIAN BANK 1000 11 -DEC-07 1.12.2007 166 JK LAXMI 500 11 - DEC - 07 28.09.2007 167 JK LAXMI 500 11 -DEC-07 28.06.2007 168 ISPAT 1000 13-DEC-07 30.08.2007 169 JK LAXMI 500 14 - D6C - 07 28,06.2007 170 JK CEMENT 500 14-DEC-07 16.10.2007 171 BHARAT FORGE 500 24-DEC-07 24.07.2007 172 BHARTI AIRTEL 100 24-DEC-07 11.09.2007 173 RELIANCE ENERGY 300 24-D6C-07 01.10.2007 174 JK CEMENT 900 27 - D6C - 07 17.12.2007 175 JK CEMENT 500 27 - D6C - 07 16.10.2007 176 RELIANCE ENERGY 100 27 - DEC - 07 25.10.2007 177 APTECH 500 01 - JAN - 08 06.02.2007 178 TATA COFFEE 100 01 - JAN - 08 03.07.2007 179 TATA COFFEE 100 02 - JAN - 08 03.07.2007 180 BHEL 500 03 - JAN - 08 20.07.2007 181 APTECH 500 07 - JAN - 08 06.02.2007 182 MANGAL 3000 07 - JAN - 08 12.07.2007 183 POWER GRID 1000 07 - JAN - 08 01.10.2007 184 BOI 400 09 - JAN - 08 17.07.2007 185 RELIANCE COMM. 400 09 - JAN - 08 06.02.2007 186 RELIANCE COMM. 200 10 - JAN - 08 13.03.2007 187 RELIANCE ENERGY 100 15 - JAN - 08 28.12.2007 188 BOI 400 16 - JAN - 08 26.07.2007 189 AXIS BANK 100 08 - FEB - 08 12.07.2007 190 BOI 1000 08 - FEB - 08 27.07.2007 191 F UTUR CAP 8 08 - FEB - 08 04.02.2007 192 RELIANCE NATURAL 3000 08 - FEB - 08 16.10.2007 193 SBI 100 08 - FEB - 08 08.02.2008 194 TATA POWER 500 08 - FEB - 08 08.02.2008 195 YES BANK 500 08 - FEB - 08 08.02.2008 196 YES BANK 1000 15 - FEB - 08 01.11 .2007 197 IVRCL 1300 18 - FEB - 08 06.02.2007 198 JINDAL STEEL 50 18 - FEB - 08 18.02.2008 199 HINDALCO 845 28 - FEB - 08 01.05.2007 200 SAIL 1000 28 - FEB - 08 28.05.2007 201 SAIL 2000 29 - FEB - 08 25.07.2007 202 BOI 2500 10 - MAR - 08 10.03 .2008 203 POWERGRID 2000 10 - MAR - 08 10.03.2008 204 TATA POWER 1500 10 - MAR - 08 10.03.2008 205 AXIS BANK 400 12 - MAR - 08 12.07.2007 5. THE A.O, THEREFORE, CONCLUDED THAT THE ASSESSEE IS TRADING INTO THE SHARES IN A SYSTEMATIC WAY. HE HAS UTILIZED THE BANK LOAN FO R PURCHASING THE SHARES AND ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 6 FREQUENCY OF TRANSACTIONS IS REASONABLY HIGH. THE A.O FINALLY HELD THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF SHARES AND SHORT TERM CAPITAL GAIN ON THE SHARE TRADING DECLARED BY THE ASSESSEE TO THE EXTENT OF RS. 73,00 ,952/- IS TO BE TREATED AS INCOME FROM TRADING OF THE SHARES AND THE SAME IS TO BE AS SESSED AS BUSINESS INCOME. 6. THE ASSESSEE CARRIED THE ISSUE BEFORE LD. CIT(A) BUT WITHOUT SUCCESS. THE LD. CIT(A) WAS MUCH MORE INFLUENCE BY THE FREQUENC Y OF TRANSACTION AND HE PUT HIS STAMP OF APPROVAL IN THE ACTION OF THE AO FOR TREAT ING THE GAIN/PROFIT AS BUSINESS INCOME DERIVED FROM TRADING ACTIVITY AND NOT AS AN INVESTMENT. THE CONCLUSION AND FINDING OF THE LD. CIT(A) ARE AS UNDER:- 5.11 TO SUM UP, IN THE CASE OF APPELLANT, IT IS AMP LY DEMONSTRATED FROM THE MOTIVE, FREQUENCY AND MAGNITUDE OF THE TRA NSACTIONS UNDERTAKEN DURING THE YEAR AND PERIOD OF HOLDING OF THE SHARES THAT THE SAID ACTIVITY CONSTITUTES AN ADVENTURE IN THE N ATURE OF TRADE AND THE APPELLANT WAS TRADER IN RESPECT OF THESE SHARES. THE ACTIVITY OF THE APPELLANT IN ACQUIRING AND SELLING SHARES IN A SHORT SPAN OF TIME IS A PROFIT/LOSS MAKING ACTIVITY OF A TRADER AND NOT PRO FIT SEEKING ACTIVITY OF AN INVESTOR. THERE IS AN ACTIVE INVOLVEME NT OF THE APPELLANT AS A TRADER RATHER THAN A PASSIVE INVESTOR IN SHARES,, THEREFORE, THE SHARES IN QUESTION CONSTITUTE STOCK-I N-TRADE OF THE APPELLANT AND NOT CAPITAL ASSETS OR INVESTMENTS. IN S UCH A SITUATION, WHERE THE APPELLANT WAS CARRYING ON BUSINESS 'OF PURCHASE AND SALE OF SUCH SHARES, EVEN IF THE TRANSACTIONS ARE RECORD ED IN THE STATEMENTS OF ACCOUNT OF THE APPELLANT AS INVESTMENT, THE ASSE SSING OFFICER IS JUSTIFIED IN LAW IN COMPUTING INCOME ON SALE OF SUC H SHARES UNDER THE HEAD 'BUSINESS'. 5.12 THE OTHER CONTENTION RAISED BY THE APPELLANT I N GROUND OF APPEAL NO.2 IS THAT AS SHARES PURCHASED BEFORE 31.03.2007 WERE ACC EPTED AS INVESTMENT BY THE ASSESSING OFFICER FOR THE A.Y. 2007-08, THE PROFIT FROM SALE OF THESE SHARES IS UNDOUBTEDLY SHORT TERM CAPITAL GAIN, WHICH WORKS OUT TO RS.20,60,168/-. THIS CONTENTION ALSO CANNOT BE ACCEPTED. AS DISCUSSED ABOVE, IN THE CASE OF APPELLANT, IT IS AMPLY DEMONSTRATED FROM THE FREQUENCY AND MAGNITUDE OF TH E PURCHASES AND SALES IN SHARES IN A SHORT SPAN OF TIME DURING THE YEAR THAT THERE WAS A SYSTEMATIC, CONTINUOUS AND ORGANIZED CARRYING ON OF BUSINESS ACTIVITY OF PURCHASE AND SALE OF SHARES AND SUCH ACTIVITY CONST ITUTES AN ADVENTURE IN THE NATURE OF TRADE. IN SUCH A SITUAT ION, WHERE THE ASSESSES WAS CARRYING ON BUSINESS OF PURCHASE AND SALE OF SHARES WITH A MOTI VE TO EARN PROFIT, EVEN IF THE CLOSING STOCK AS ON 31.03.2007 WAS HELD AND ACCEPTED AS INVESTMENT IN THE PRECEDING YEAR, THE A SSESSING OFFICER IS JUSTIFIED IN LAW IN COMPUTING INCOME ON SALE OF SUC H SHARES ALSO UNDER THE HEAD 'BUSINESS' IN THE CURRENT YEAR AS THE ACTIVITY WAS HELD TO BE AN ADVENTURE IN THE NATURE OF TRADE. AS MENTIONED EARL IER, THE DESCRIPTION OF SHARES IN THE BALANCE SHEET AS INVESTMENT WAS NOT DECISIVE. THE PROVISIONS OF SECTION 45(2) ARE NOT APPLICABLE TO T HE TRANSACTIONS AS THERE WAS NO CONVERSION OF A CAPITAL ASSET INTO STOCK-IN-TR ADE AND THE INTENTION HAD ALWAYS BEEN TO DEAL IN THESE SECURITI ES AS AN ADVENTURE IN THE NATURE OF TRADE. IN FACT, THE ASSESSING OFFICER IS MQRE THAN CONSIDERATE IN NOT TREATING THE LONG TERM CAPITAL G AINS OF RS. 84,99,979/- ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 7 ALSO AS BUSINESS PROFITS. T HE ASSESSING OFFICER OUGHT TO HAVE TREATED THE LONG TERM CAPITAL GAINS ALSO AS BUSINESS PROFITS WH EN IT WAS HELD THAT THE ACTIVITY OF PURCHASE AND SALE OF SHARES CONSTITUTES ADVENTURER IN. THE NATURE OF TRADE IN THE CASE OF THE APPELLANT. 5.13 THUS, ON THE FACTS OF THE CASE, THE A,O, IS LE GALLY JUSTIFIED IN HOLDING THAT THE TRANSACTIONS IN SHARES IN QUESTION ARE AN ADVENTURE IN THE NATURE OF TRADE AND THE PROFIT/LOSS ARISING F ROM THESE TRANSACTIONS HAS TO BE COMPUTED UNDER THE HEAD 'PRO FITS & GAINS FROM BUSINESS'. GROUNDS OF APPEAL NO. 1 AND NO. 2 FA IL. NOW, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT IS TRUE THAT IN THIS CASE, THE FREQUENCY OF TRANSACTION IS MORE. TH E CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS HOLDING TWO PORTFOLIOS WHICH H AVE BEEN ACCEPTED BY THE DEPARTMENT CONSISTENTLY IN THE PAST BUT THERE IS DE VIATION FROM THE APPROACH OF THE A.O IN REJECTING THE PORTFOLIO MAINTAINED BY THE AS SESSEE IN THE A.Y. 2008-09. HE HAS FILED DETAILS IN RESPECT OF SCRIPTS. HE HAS AL SO FILED COPIES OF ASSESSMENT ORDERS FOR A.Y. 2001-02, 2004-05 AND 2007-08 IN THE COMPIL ATION. WE FIND THAT THE PORTFOLIO DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED IN THE P AST IN SCRUTINY ASSESSMENT. THE MAIN RESERVATION OF THE A.O IN THIS ASSESSMENT YEAR IS THAT THE ASSESSEE HAS HUGE FREQUENCY OF TRANSACTIONS AND ASSESSEE HAS TAK EN A SMALL OD FACILITIES OF RS. 6,00,000/- AT THE FAG END OF MARCH 2008 AND PAID IN TEREST TO THE EXTENT OF RS. 9,961/- ON THE SAME. IN OUR OPINION, LAW IS WELL SETTLED B Y THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT 336 ITR 287 (BOM) THAT THERE SHOULD BE CONSISTENCY IN THE APPROACH OF THE A.O. ADMITTEDLY, THE ASSESSEE HAS REGULARLY ENTERED INTO THE SHARE TRANSACTIONS IN PA ST. THERE IS NO MUCH MORE DEVIATION OF THE FACTS AS COMPARED TO THE PRECEDING YEARS. WE FURTHER FIND THAT IN THE IMMEDIATE PRECEDING YEAR, THE REVENUE HAS ACCEPTED THE PORTFOLIO DECLARED BY THE ASSESSEE. 8. THE COMPARATIVE SHARE TRANSACTIONS BY THE ASSESS EE FOR A.Y. 2006-07 TO 2008-09 ARE AS UNDER:- ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 8 A.Y. NO. OF COMPANIES NO. OF TRANSACTIONS SALE PURCHASES SHORT TERM GAIN DIVIDEND 2006-07 99 206 12,756,654/- 11,117,362/- 1,639,291/- 300,926/- 2007-08 71 125 12,982,263 11,111,475/- 1,870,788/- 443,482/- 2008-09 93 203 36,354,207/- 29,053,356/- 7,300,851/- 761,877/- 9. IT IS PERTINENT TO NOTE HERE THAT THE DECISION I N THE CASE OF GOPAL PUROHIT (SUPRA) HAS REACHED THE FINALITY AS THE SLP FILED B Y THE DEPARTMENT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. WE THEREFO RE, ON THE RULE OF CONSISTENCY, DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE ASSESSEE IS NOT A TRADER TO THE EXTENT OF SHORT TERM CAPITAL GAIN DECLARED B Y HIM BUT IS AN INVESTOR. 10. IT IS SEEN THAT THE ASSESSEE HAS ENTERED INTO H UGE SHARE TRANSACTIONS FOR A.Y. 006-0 AND 2007-09 AND INSPITE OF THAT NO QUESTION I S RAISED BY THE AO AND THE GAIN/PROFIT FROM THE SHARE TRANSACTION IS TREATED A S CAPITA GAIN. IN THE RESULT, GROUND NO. 1 IS ALLOWED. 11. SO FAR AS THE GROUND NO. 2 IS CONCERNED, IT IS IN RESPECT OF INTEREST CHARGED U/S 234B. WE THEREFORE, DIRECT TO CHARGE, THE INTE REST AFTER GIVING EFFECT TO THIS ORDER AS PER PROVISIONS OF LAW. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2013. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 31 ST MAY 2013 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT , V PUNE 4. THE CIT(A)- V, PUNE 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ITA NOS. 361//PN/2013 DR. GULABCHAND KASLIWAL A.Y.2008-09 PAGE OF 9 9 SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE