VIMAL PARWAL, Jaipur V. ACIT, Jaipur

ITA 367/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5219 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ROSHANTA MEENA JCIT DHK
• Keywords: Business income; Salary income; Opportunity of being heard; Cost of acquisition
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 367/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 VIMAL PARWAL, 919, PARWAL BHAWAN, P.O. NARAINA, JAIPUR. CUKE VS. A.C.I.T. CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AEAPP 3726 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : MRS. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/05/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/06/2016 VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12/03/2014 OF THE LEARNED CIT(A)-III, JAIPUR FOR A. Y. 2009-10. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN HOLDING THE FINDING OF ASSES SING OFFICER THAT THE SHORT TERM GAIN DECLARED BY THE ASSESSEE IN RETURN OF INCOME OF RS. 29,21,048/- EAR NED ON SALE OF EQUITY SHARES AS BUSINESS INCOME. LOOKIN G TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE TREATIN G THE 2 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT SHORT TERM GAIN ON SALE OF EQUITY SHARES AS BUSINES S INCOME IS UNJUSTIFIED AND BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF LD CIT(A) HAS ERRED IN HOLDING THE FINDING OF ASSESSMENT PROCEEDINGS THAT THE INVESTMENT IN EQUITY SHARES IN THE ASSESSMENT YEAR 2008-09 AS BUSINESS ASSETS AND PROF IT EARNED ON SALE OF EQUITY SHARES IN ASSESSMENT PROCEEDINGS 2009-10 OF RS. 29,21,048/- AS BUSINESS INCOME AND NOT AS SHORT TERM CAPITAL GAIN. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE ASSESSING OFFICER IS UNJUSTIFIED AND BAD IN LAW. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF LD CIT(A) HAS ERRED IN HOLDING THE FINDING OF ASSESSING OFFIC ER THAT THE INVESTMENT IN EQUITY SHARES OF RS. 12,20,000/- OF 400000 NOS. EQUITY SHARES MADE IN EARLIER YEAR AS BUSINESS ASSETS AS AGAINST SHOWN AS INVESTMENT ASSET S. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE ASSESSING OFFICER IS UNJUSTIFIED AND BAD IN LAW. 2. THE ASSESSEE IS HAVING INCOME FROM SALARY, HOUSE PROPERTY, BUSINESS, CAPITAL GAINS AND OTHER SOURCES. RETURN F OR A.Y. 2009-10 WAS FILED ON 31/3/2010 DECLARING TOTAL INCOME OF RS. 31 ,29,370/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN OF RS. 29,21,048. THE LD ASSESSING OFFI CER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE ASSESS EE ALSO REPLIED VIDE LETTER DATED 09/9/2011 ALONGWITH LIST OF SHORT TERM AND LONG TERM CAPITAL 3 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT GAIN FOR THE F.Y. 2008-09. THE LD ASSESSING OFFICER EXAMINED THIS ISSUE WITH THE ANGLE THAT WHETHER IT IS SHORT TERM CAPITAL GAIN OR BUSINESS INCOME, THEREFORE, HE CONSIDERED THE HOLDING PERIOD , FREQUENCY OF TRANSACTION, INTENTION OF THE ASSESSEE, DIVIDEND IN COME ETC. AND FOUND THAT THE ASSESSEE HAD SHARES AS ON 31/3/2008 AT RS. 4.00 LACS. THEREAFTER THE ASSESSEE MADE TRANSACTION THROUGHOUT THE YEAR IN TH E DEMAT ACCOUNT WHEREIN TOTAL PURCHASE VALUE CAME AT RS. 13,80,972/- AND THE TOTAL VALUE FOR THE FINANCIAL YEAR WAS AT RS. 72,79,970/-. THESE TRANSACTIONS LED TO A GAIN OF RS. 58,98,998/-. THE TRANSACTIONS, WHICH WERE CARRIED THROUGH A SHARE BROKER HAD A TOTAL PURCHASE VALUE OF RS. 1,01 ,03,377/- AND TOTAL SALES VALUE OF RS. 1,28,21,809/- WITH A DECLARED SHO RT TERM CAPITAL LOSS OF RS. 30,13,224/-. THE LD ASSESSING OFFICER AGAIN GAVE SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY SHORT TERM CAPITAL GAIN OF RS . 29,21,048/- SHOULD NOT BE TREATED AS BUSINESS INCOME. THE ASSESSEE FILE D REPLY VIDE LETTER DATED 28/10/2011 AND 04/11/2011. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER ANALYSED THE INCOME UNDER THE VARIOUS HEADS EARNED DURING THE YEAR UNDER CONSIDERATION AND FOUN D THAT MAJOR INCOME FROM SHORT TERM CAPITAL GAIN. THE ACTIVITY OF THE SH ARE BUYING AND SELLING WAS DONE AND THE AMOUNT FETCHED BY THE SAME IS A CL EAR PROOF OF THE INTENTIONS OF THE ASSESSEE AND LENDS SUPPORT TO THE PRESUMPTION THAT THE 4 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT ASSESSEE HAD NO INTENTION OF HOLDING THE SHARES SO BOUGHT AND WAS SOLELY DRIVEN BY THE MARKET SENTIMENTS. HE FOUND THAT HOLD ING PERIOD AND QUANTITY OF PURCHASE AND SALE OF SHARES WAS NOT INVE STMENT BUT WERE MADE FOR THE PURPOSE OF BUSINESS TO EARN PROFIT. THE TAKING DELIVERY AND MAKING FULL PAYMENT, PAID SECURITY TRANSACTION TAX CANNOT ABSOLVE THE TRANSACTION FROM BEING BUSINESS IN NATURE. THE SHARE BUSINESS CAN BE DONE WITHOUT ANY HELP OF THE STOCK EXCHANGE OR SHARE BROK ER. THE ASSESSEES ARGUMENT THAT THE ASSESSEE HAD DISCLOSED BUYING AND SELLING OF THE SHARES IN INVESTMENT AND REGULARLY SHOWING IN RETURN WHICH H AS BEEN ACCEPTED BY THE DEPARTMENT, WHICH WERE ALSO NOT FOUND CONVINCING TO THE ASSESSING OFFICER BY CONSIDERING THE CIRCULAR NO. 1827 AND HO N'BLE SUPREME COURT DECISION IN THE CASE OF KARAN CHAND THAPAR AND BROTH ERS (P) LTD. VS. CIT (1971) 83 ITR 899 WHEREIN IT HAS BEEN HELD THAT CERTA IN SHARES HAS BEEN SHOWN IN THE BOOKS AS WELL AS BALANCE SHEET AS INVEST MENT BY ITSELF NOT A CONCLUSIVE CIRCUMSTANCE THOUGH IT WAS RELEVANT CIRCU MSTANCES. HE FURTHER RELIED ON THE FOLLOWING CASE LAWS:- (I) TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD . VS CIT (SC) 227 ITR 172 (II) CHOWRINGHEE SALES BUREAU P LTD. 87 ITR 548 (SC ) (III) CIT VS PROVINCIAL FARMERS (P) LTD. 35 ITR 22 3. 5 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT THE ASSESSEES SUBMISSION THAT DELIVERY BASED TRANSA CTION OF SHARES SHOULD BE TREATED AS OF NATURE OF INVESTMENT TRANSACTION A ND PROFIT THERE FROM SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN OR LON G TERM CAPITAL GAIN DEPENDING UPON THE PERIOD OF HOLDING AS HELD BY THE COURTS, WHICH WAS ALSO NOT FOUND CONVINCING TO THE LD ASSESSING OFFIC ER BY CONSIDERING THE HON'BLE SUPREME COURT DECISION IN THE CASE OF G. VE NKATASWAMI NAIDU & CO VS. CIT 35 ITR 594 WHEREIN THE HONBLE APEX COURT HAS LAID DOWN GENERAL PRINCIPLES FOR THE PURPOSES OF SHARE BUSINE SS. THE ASSESSING OFFICER HAS TO EXAMINE PURCHASER WAS A TRADER OR PUR CHASE FOR COMMODITY, QUANTITY OF PURCHASE AND REPETITION OF THE TRANSACT ION. THE LD ASSESSING OFFICER ANALYSED THE SALE AND PURCHASE ON WHICH SHOR T TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE THROUGH A CHART REPRODUCED ON PAGE NO. 8 AND 9 OF THE ASSESSMENT ORDER AND HELD THAT THE ASSESSEE IS A SALARIED PERSON AND TRANSACTION IN SALE PURCHASE OF SHARES IS NOT A N INCIDENTAL TO THE ASSESSEES USUAL TRADE FOR BUSINESS. THE QUANTUM OF TRANSACTION HOLDING PERIOD, FREQUENCY OF TRANSACTION, SUPPORT THAT THE ASSESSEE WAS IN SHARE BUSINESS. EARLIER THE ASSESSEE HAD SHOWN SHARE TRAN SACTION AS INVESTMENT BUT THE ASSESSEES CASE HAS NOT BEEN SCRUTINIZED BY THE DEPARTMENT BY SHOWING THE CAPITAL GAIN U/S 111A OF THE ACT, IT HAS NOT EMPOWERED THE ASSESSEE TO CLAIM SHORT TERM CAPITAL GAIN. HE HAS A LSO CONSIDERED VARIOUS 6 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT CASE LAWS RELIED UPON BY THE ASSESSEE, WHICH WAS NOT FOUND APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. HE AGAIN C ONSIDERED CBDT CIRCULAR NO. 1857 DATED 31/8/1989, NO. 04/2007 DATE D 16/06/2007 ON SALE OF SHARES. ON THAT BASIS HE CAME TO CONCLUSION THAT THE ASSESSEE WAS IN SHARE TRADING BUSINESS. HE FURTHER RELIED VARIOUS D ECISIONS ON THIS ISSUE AND HELD THAT SHORT TERM CAPITAL GAIN INCOME CLAIME D BY THE ASSESSEE AT RS. 29,21,048/- IS A BUSINESS INCOME. 3. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDE R:- 4.3 I HAVE CAREFULLY CONSIDERED THE RELEVANT FACT S RELATED TO THIS ISSUE AS STATED BY THE AO AS BY THE APPELLANT. IT IS NOTED THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN ON THE LISTED SECURITIES (STT PAID) FOR RS. 292 1048/- AS PER DETAIL BELOW: NAME OF THE COMPANY/SC RIPT SALE PRICE DATE OF SALE PURCHASE COST DATE OF PURCHASE CAPITAL GAIN PERIOD OF HOLDING M/S CONFI SHARES 10130/- 25.3.09 6172/- 1.3.09 3958/- 25 DAYS M/S CONFI SHARES 7236022/- 25.3.09 1220000/- 31.3.08 6016022/- 11 MONTHS 25 DAYS M/S CONFI SHARES 39990/- 31.3.09 90820/- 1.3.09 -50830/- 30 DAYS M/S CONFI SHARES 1/- 31.3.09 3048103/- 1.3.09 -3048102/- 30 DAYS 7 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT SIMILARLY THE ASSESSEE HAS ALSO SHOWN LONG TERM CAPI TAL LOSS OF RS. 38340/-. AS PER AO THE TRANSACTIONS IN RESPECT OF DEALING IN SHARES AND ACCORDINGLY SHOWING OF SHOR T TERM CAPITAL GAIN WERE OF ADVENTURE IN THE NATURE OF TRADE / BUSINESS NATURE AND ACCORDINGLY THE AO TAXED SUCH AMOUNT AS BUSINESS INCOME AS AGAINST THE CLAIM OF T HE ASSESSES OF SHORT TERM CAPITAL GAIN. THE APPELLANT C ASE IS THAT SUCH INVESTMENT IN SHARES WAS EARLIER SHOWN AS INVESTMENT IN THE BOOKS OF ACCOUNTS ARID NOT AS STO CK IN TRADE. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS TAK EN DELIVERY OF SUCH SHARES BY MAKING OF FULL PAYMENT A ND BY PAYING STT. THE APPELLANT ALSO CONTENDED THAT THE INVESTMENT IN SHARES WAS MADE BY WAY OF OWN SAVINGS AND NOT FROM ANY BORROWED MONEY. IT IS ALSO CLAIMED THAT SUCH SHARES WERE KEPT IN D-MAT ACCOUNT AND ALSO SOLD THROUGH D-MAT ACCOUNT. IT WAS FURTHER STATED THAT SO ME OF THE SHARES WERE KEPT EVEN FOR MORE THAN VI YEARS. IT IS ALSO CLAIMED THAT INTENTION OF THE APPELLANT WAS ALWA YS TO TREAT SUCH TRANSACTION AS INVESTMENT AND NOT A STOC K IN TRADE. IN SUPPORT OF SUCH SUBMISSION THE APPELLANT HAS ALSO PLACED RELIANCE ON VARIOUS CASE LAWS. ON THE OT HER HAND THE AOS CASE IS THAT THAT THE APPELLANT IS A SALARIED EMPLOYEE AND THE COMPONENT OF SALARY INCOME VIS A V IS INCOME FROM A CAPITAL GAIN INDICATED THAT THE TRANS ACTIONS IN SHARES ETC. WERE IN THE NATURE OF BUSINESS IN AS MUCH AS THE INCOME FROM SALARY IS SHOWN AT RS. 315400/- 8 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT WHEREAS THE INCOME FROM SHORT TERM CAPITAL GAIN IS SHOWN AT RS. 2921048/-. THE AO ALSO NOTED THAT THE PARTICULAR TREATMENT OF BOOKS OF ACCOUNTS OF CERTAI N TRANSACTION MAY NOT ALTER THE REAL POSITION OF THE TRANSACTIONS AND THAT THE ENTRIES OF THE BOOKS OF A CCOUNTS ARE ALONE NOT CONCLUSIVE PROOF TO DECIDE THE REAL N ATURE OF TRANSACTION. FOR SUCH FINDING THE AO HAS PLACED RELIANCE ON VARIOUS CASE LAWS INCLUDING DECISION OF THE HONBLE APEX COURT (REFER PAGE 4 OF THIS ORDER). AS PER THE AO THE REAL INTENTION OF THE APPELLANT WAS NOT T O HOLD SUCH SHARES FOR INVESTMENT PURPOSES AND TO DERIVE DIVIDEND INCOME BUT TO EARN THE PROFIT AT THE EARLI EST POSSIBLE. THE AO FURTHER OBSERVED THAT THE ASSESSEE IS A SALARIED PERSON AND PURCHASING OF SHARES AND IS SUBSEQUENT SALES WAS NOT INCIDENTAL TO THE REGULAR T RADE OR BUSINESS AS ALSO THAT THE MAGNITUDE OF DEALINGS OF SHARES WAS ALSO VERY LARGE AND SOME OF THE SHARES WER E HELD FOR LESS THAN 30 DAYS WHEREAS IN SOME OF THE SH ARES THE HOLDING PERIOD WAS LESS THAN 6 MONTH. THE AO ALSO REFERRED TO CBDT CIRCULAR NO. 1857 DATED 31.08.2009 AND INSTRUCTION NO. 4/2007 DATED 16.06.2007 WHEREIN CERT AIN GUIDELINES LINES ARE LAID DOWN FOR DETERMINATION OF THE FACT AS TO WHETHER SUCH TRANSACTION SHOULD BE TREATE D TO BE OF BUSINESS NATURE OR OF CAPITAL GAIN NATURE AND AS PER AO THE FACT OF SUBSTANTIAL QUANTUM OF TRANSACTION, MAGNITUDE OF PURCHASE AND SALES AND THE RATIO BETWEE N 9 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT PURCHASE AND SALE HOLDING ESSENTIALLY INDICATED THA T OR SUCH TRANSACTION WERE IN THE NATURE OF BUSINESS ACTI VITY. ON CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCE DISCUSSED ABOVE IT IS NOTED THAT ALL THE OBJECTIONS RAISED BY THE ASSESSEE HAS BEEN PROPERLY DEALT WITH BY THE AO. IT IS UNDISPUTED FACT THAT THE ASSESSEE IS A SALARI ED PERSON AND CARRYING ON SUCH DEALING IN SHARES WAS NO T AT ALL RELATED WITH THE REGULAR SOURCE OF INCOME / SALA RY INCOME. THE MAGNITUDE OF DEALING IN SHARES IS ALSO O F LARGE LEVEL AS STATED BY THE AO. IT IS ALSO NOTED T HAT THE APPELLANT HAS SHOWN SHORT TERM CAPITAL GAIN FROM PURCHASE AND SALE OF SHARES PF ONE COMPANY NAMELY M /S CONFI SHARES AND THE HOLDING OF THE SOME OF THE SHA RES WAS NOT MORE THAN 30 DAYS AS EVIDENCED FROM THE CHAR T GIVEN AT PAGE NO.8. THE APPELLANT IS DEALING IN SHAR ES ON FREQUENT BASIS AND SUCH TRANSACTIONS WERE DONE BY WAY OF OWN D-MAT A/C AS ALSO THROUGH THE REGULAR SHARE BROKER. THE HOLDING OF THE SHARES IS NOT FOR SUBSTAN TIAL PERIOD INDICATING THAT THERE WAS NO INTENTION TO KEE P THE SHARES FOR A LONG PERIOD TO DERIVE DIVIDEND INCOME/ APPRECIATION OF CAPITAL. THE SALE AND PURCHASE OF TH E SAME SCRIPTS AT DIFFERENT TIMES ALSO INDICATE THAT THE APPELLANT WAS ALWAYS PROFIT/LOSS CONSCIOUS IN RESPECT OF SUCH SHARES AND NOT DIVIDEND CONSCIOUS. THE APPELLAN T CASE IS BROADLY COVERED UNDER THE GUIDELINES AND CIRCUMSTANCES LAID DOWN BY THE CBDT VIDE INSTRUCTION NO. 10 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT 1827 AND 1857 DATED 31.08.1989. SUCH GUIDELINES WERE ISSUED IN CONSEQUENCE TO DECISION OF HONBLE SUPREM E COURT IN THE CASE OF G. VENKATASWAMI NAIDU AND CO. V S. CIT, 35 ITR 594. THE ABOVE FACTS WILL INDICATE THAT TH E REAL INTENTION OF THE APPELLANT WAS NOT TO DERIVE IN COME BY WAY OF DIVIDEND BUT TO EARN PROFIT AT THE EARLIES T POSSIBLE. IT IS ALSO NOTED THAT IN RESPECT OF SHARE S OF COMPANY NAMELY M/S CONFI SHARES THE ASSESSEE APPEAR TO HAVE NOT DERIVED ANY DIVIDEND. THE FACTS AND CIRCUMSTANCE DISCUSSED ABOVE SUGGEST THAT THE ASSESSEES ACTIVITY IN RELATION TO SHARE TRANSACTIO NS AND SHOWING OF SHORT TERM CAPITAL GAIN WAS A CLEAR CUT BUSINESS ACTIVITY. ACCORDINGLY THE AO HAS RIGHTLY T AXED SUCH AMOUNT BUSINESS INCOME. THE GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT WHETHER AN ASSESSEE IS A TRADER I N SHARES OR IS AN INVESTOR PRIMARILY DEPENDS UPON HIS INTENTION. THE I NTENTION IS TO BE GATHERED BY CONSIDERING ALL THE SURROUNDING FACTS A ND CIRCUMSTANCES. ONLY ONE OR TWO FACTOR CANNOT BE A BASIS FOR TAKING A VIE W IN THE MATTER BUT THE OVERALL VIEW IS REQUIRED TO BE CONSIDERED BY TAKING ALL THE FACTS INTO CONSIDERATION FOR DECIDING THIS ISSUE. THE CBDT IN TH E RECENT CIRCULAR NO. 6/2016 DATED 29.02.2016 HAS LAID DOWN THE FOLLOWING GUIDELINES TO THE AO 11 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT IN HOLDING WHETHER THE SURPLUS GENERATED FROM SALE O F LISTED SHARES OR OTHER SECURITIES WOULD BE TREATED AS CAPITAL GAIN OR BUSINESS INCOME. (A) WHERE THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PERIOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO T REAT THEM AS STOCK-IN-TRADE, THE INCOME ARISING FROM TRANSFER OF SUCH SHARES/SECURITIES WOULD BE TREATED AS ITS BUSINESS I NCOME, (B) IN RESPECT OF LISTED SHARES AND SECURITIES HEL D FOR A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER, IF THE ASSESSEE DESIRES TO TREAT THE INCO ME ARISING FROM THE TRANSFER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PUT TO DISPUTE BY THE ASSESSING OFFICER. HOWEVER, THIS STAND, ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR A SSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSM ENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED TO ADOPT A DIFFERENT/CONTRARY STAND IN THIS REGARD IN SUBSEQUE NT YEARS; C) IN ALL OTHER CASES, THE NATURE OF TRANSACTION (I .E. WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS I NCOME) SHALL CONTINUE TO BE DECIDED KEEPING IN VIEW THE AFORESAID CIRCULARS ISSUED BY THE CBDT (I.E. CIRCULAR NO.4/20 07 DATED 15TH JUNE, 2007 AND INSTRUCTION NO. 1827 DATED 31.0 8.1989). HE HAS ALSO DRAWN OUR ATTENTION ON CIRCULAR NO. 4/20 07 DATED 15/6/2007 AND INSTRUCTION NO. 1827 DATED 31/8/1989 AND ARGUED THAT RECENT CIRCULAR ISSUED BY THE CBDT IN FILE NO. 225/12/2016/ITA.II D ATED 02/5/2016 HAS 12 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT DECIDED THAT THE INCOME ARISING FROM TRANSFER OF UN LISTED SHARES WOULD BE CONSIDERED UNDER THE HEAD CAPITAL GAIN IRRESPECTI VE OF THE PERIOD OF HOLDING, WITH A VIEW TO AVOID DISPUTES/LITIGATION AND TO MAINTAIN A UNIFORM APPROACH. THE CBDT HAS BY AN LARGE ACCEPTED THAT INC OME FROM SHARES SHOULD BE CONSIDERED AS BUSINESS INCOME/CAPITAL GAI N ACCORDING TO THE TREATMENT ACCORDED BY THE ASSESSEE BUT ONCE HE HAS ACCEPTED THE TAXABILITY UNDER THE PARTICULAR HEAD, HE WILL NOT BE ALLOWED TO ADOPT A DIFFERENT HEAD IN SUBSEQUENT YEARS. FURTHER, IN CAS E OF UNLISTED SHARES, THE TAXABILITY WOULD ALWAYS BE UNDER THE HEAD CAPITAL GA IN, IRRESPECTIVE OF THE PERIOD OF HOLDING. THE ASSESSEE IS A SALARIED EMPLO YEE, HAS INCOME FROM INTEREST, EPF AND DIVIDEND. HE HAS DRAWN OUR ATTENTI ON ON COMPUTATION OF INCOME AND ARGUED THAT IN A.Y. 2007-08 THE DIVIDEND INCOME WAS RS. 21,451/- AND IN A.Y. 2008-09 RS. 23,080/-. THE DIVID END DURING THE YEAR IS RS. 1,03,675/-. THE ASSESSEE IS A REGULAR INVESTOR AND CARRIED OUT THE SHARE TRANSACTION THROUGH SHARE BROKER MEHTA EQUITI ES LTD. THE ASSESSEE HAD USED OWN FUND NOT MAINTAINED ANY OFFICE, EMPLOY ED ANY STAFF OR MAINTAINED ANY BOOKS OF ACCOUNT. THE VALUE OF THE TR ANSACTION IN SHARES IS ALSO MEAGRE WHEN COMPARED WITH THE VOLUME OF TRANSACT ION OF A DEALER IN SHARES. ALL THESE FACTS INDICATE THAT THE ASSESSEE IS ONLY AN INVESTOR IN SHARES AND NOT A TRADER IN SHARES. AS PER LATEST CI RCULAR, IF ASSESSEE TREATS 13 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT TO DISCLOSE THE SHARES AS STOCK IN TRADE, THEN THE INCOME WOULD BE TREATED AS BUSINESS INCOME.. CONVERSELY, WHERE SHARES ARE H ELD AS INVESTMENT, THE INCOME WOULD BE CAPITAL GAIN. IT IS FURTHER CLARIFIE D THROUGH CIRCULAR THAT WHERE LISTED SHARES ARE HELD MORE THAN 12 MONTHS AND THE ASSESSEE TREATED THIS TRANSACTION AS INVESTMENT AND SHOWN CAP ITAL GAIN ON IT. THE LD ASSESSING OFFICER SHALL NOT DISPUTE AND HAS TO ACCE PT THE DISCLOSURE MADE BY THE ASSESSEE. THE ASSESSEE HAS SHOWN SHARES AS IN VESTMENT AND EARNED THE DIVIDEND NOT AS BUSINESS IN THE RETURN. THE LATEST CIRCULAR ISSUED BY THE CBDT IS SQUARELY APPLICABLE. HE FURTHE R RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS DEVASAN INVESTMENT PVT. LTD. (2015) 229 TA XMAN 496 (SC) (II) CIT VS SMT. RENUKA AJAY MAROO 217 TAXMAN 208 (RA J) (III) SMT. KAVITA DEVI AGARWAL ITA NO. 1103/JP/2010. (IV) TARUJYOT INVESTMENT LTD. VS. ACIT (2016) 46 CCH 0478 (AHM)(TRIB) (V) CIT VS. SMT. DATTA MAHENDRA SHAH (2015) 235 TAXMA N 1 (BOM) (HC) (VI) RADIALS INTERNATIONAL VS ACIT (2014) 103 DTR 316 (DEL)(HC) (VII) KORADIA CONSTRUCTION (P) LTD. VS. DCIT (2014) 146 ITD 251 (MUM) (TRIB) (VIII) CIT VS ROHIT ANAND 327 ITR 0445 (DEL)(HC). 14 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT THEREFORE, HE PRAYED TO TREAT THE SHORT TERM CAPITAL GAIN AS SUCH. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISP UTED FACT THAT THE ASSESSEE HAD DISCLOSED THESE TRANSACTIONS AS INVEST MENT IN THE RETURN DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO A F ACT THAT THE ASSESSEE WAS IN INVESTMENT IN SHARES FROM 2000-01 TO TILL DATE AND IN ALL THE YEARS, HE HAS DISCLOSED SHORT TERM/LONG TERM CAPITAL GAIN ON ACCOUNT OF INVESTMENT IN SHARES WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. THE LD ASSESSING OFFICER AS WELL AS LD CIT(A) HAS CONSIDERED THE VARIO US DECISIONS ON WHICH THEY CAME TO CONCLUSION THAT THESE TRANSACTIONS ARE BUSINESS TRANSACTIONS BUT LATEST CIRCULAR ISSUED BY THE CBDT NO. 6/2016 DA TED 29/2/2016 AND F.NO. 225/12/2016/ITA.II DATED 02/5/2016 HAVE SET A GUIDELINES TO ASSESS THE SHARE TRADING INCOME UNDER THE HEAD INVESTMENT OR TRADING. THE ASSESSEE IS A SALARIED PERSON. HE HAS INCOME FROM I NTEREST AND INCOME FROM OTHER SOURCES. THE SHARE TRADING IS NOT A MAIN BUSINESS OF THE ASSESSEE BUT HE MADE INVESTMENT IN PART TIME INDIVI DUALLY WITH HIS OWN FUND WITHOUT ANY ASSISTANCE OF THE MAN POWER OR OFFIC E, WHICH ITSELF SHOWS 15 ITA NO. 367/JP/2014 VIMAL PARWAL VS ACIT THAT THE INTENTION OF THE ASSESSEE WAS TO INVEST IN SHARES TO GET GAIN FROM IT ON THE BASIS OF PERIOD OF HOLDING. ACCORDINGLY, HE HAS DISCLOSED SHORT TERM CAPITAL GAIN IN THE RETURN. AFTER CONSIDERING BOTH SIDES, WE HAVE CONSIDERED VIEW THAT THE ASSESSEE WAS IN INVESTMENT O F SHARES NOT SHARE TRADING. THEREFORE, WE REVERSE THE ORDER OF THE LD C IT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/06/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06 TH JUNE, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI VIMAL PARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-7, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 367/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR