AMIT PANDYA, MUMBAI V. ASST CIT 25(3), MUMBAI

ITA 3916/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8966 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T D SINGH
• Assessee Lawyers: PRADEEP SAGAR
• Keywords: Business income; Salary income; Transactions in derivatives
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 AMIT PANDYA, 165, PAREKH NAGAR, S.V. ROAD, KANDIVALI(W), MUMBAI-67 PA NO.AFVPP 0474 K ACIT 25(3), PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI PRADEEP SAGAR RESPONDENT BY: SHRI T.D.SINGH DATE OF HEARING: 23.8.2012 DATE OF PRONOUNCEMENT: 5 .9.2012 ORDER PER B.R.MITTAL, JM: THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST ORDER DATED 11.2.2011 OF LD CIT(A)-XXXV, MUMBAI ON FOLLO WING GROUND: THE LD CI(A) ERRED IN CONFIRMING ASSESSMENT OF INC OME WHEREBY SALE OF INVESTMENT WAS TREATED AS SALE OF STOCK-IN-TRADE AN D THUS INCOME OFFERED BY THE APPELLANT UNDER THE HEAD CAPITAL GAINS WAS TAXED AS BUSINESS INCOME 2. THE RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIV IDUAL ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY AND TRADING IN FUTURES & OPTI ONS. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.46,16,781, WHIC H COMPRISES OF SALARY INCOME, BUSINESS, CAPITAL GAINS AND INCOME FROM OTHER SOURC ES. IT IS RELEVANT TO STATE THAT SHORT TERM CAPITAL GAIN ON SHARES IS SHOWN AT RS.23,31,96 1. 3. THE ASSESSING OFFICER HAS STATED THAT AS PER NOT E BUSINESS ACTIVITY OF THE ASSESSEE, IT IS SHOWN THAT ASSESSEE IS SOLELY ENGAG ED IN THE ACTIVITIES RELATED TO SHARES & SECURITIES. EXCEPT FOR INTEREST INCOME, ASSESSEES RECEIPTS DURING THE YEAR ARE WHOLLY DERIVED FROM ACTIVITIES CONNECTED WITH SHARES & SEC URITIES, BE IT SALARY (WHOLE TIME DIRECTOR OF EASTMAN EQUITIES PARTNERS PRIVATE LIMIT ED-A CONCERN DEALING IN SHARES & ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 2 SECURITIES), CONSULTANCY FEES, COMMISSION, SPECULAT ION PROFIT, F&O PROFIT, CAPITAL GAINS OR DIVIDEND. AO IN PARA 5.2 OF THE ASSESSMENT ORDER H AS STATED THAT ASSESSEES TRANSACTIONS IN SHARES, WHICH HAVE BEEN CATEGORIZED AS SHORT TERM CAPITAL GAINS ARE AS UNDER: STCG NO. OF SCRIPS 93 NO. OF SHARES 11,64,946 PURCHASE AMOUNT RS.4,82,32,868 SALE AMOUNT RS.5,33,52,298 PROFIT/GAIN RS.51,20,430 4. AO HAS STATED THAT AS PER AUDIT REPORT, ASSESSEE HAS BORROWED MONEY TO THE TUNE OF RS.3,63,59,667, AND A PART OF WHICH HAS BE EN UTILIZED FOR THE ABOVE SHARE TRANSACTIONS. ASSESSEE HAS CLAIMED EXPENSES OF RS. 4,17,632.33. THAT ASSESSEE HAS MAINTAINED FULL OFFICE INFRASTRUCTURE FOR THE PURPO SE OF CARRYING OUT BUSINESS OF SHARE TRADING AND HAS DEBITED EXPENSES OF RS.1,95,339 IN THE INCOME AND EXPENDITURE ACCOUNT UNDER VARIOUS HEADS. AO HAS FURTHER STATED THAT IN THE CASES OF DEALING IN SHARES, SHOWN AS BUSINESS INCOME BY THE ASSESSEE DURING THE YEAR, IT IS OBSERVED THAT ALL THE SHARES WERE BOUGHT AND SOLD ON THE SAME DAY. ASSE SSEE HAD DIVIDED THE SHARE TRANSACTIONS DONE INTO TWO CATEGORIES I.E. FIRST WH ERE SHARES WERE TO BE DELIVERED TO THE ASSESSEE AND SECOND WHERE NO DELIVERY WAS REQUIRED TO BE TAKEN. ASSESSEE HAS TREATED THE INCOME ARISING OUT OF THE FIRST CATEGORY AS INC OME FROM CAPITAL GAINS AND THAT ARISING OUT OF SECOND CATEGORY, I.E. TRANSACTIONS WHERE NO DELIVERY IS REQUIRED TO BE TAKEN, AS BUSINESS. AO HAD STATED THAT THE HOLDING PERIOD OF 11,64,946 SHARES BOUGHT & SOLD, THE PROFIT ON WHICH HAS BEEN TREATED BY THE ASSESSEE AS SHORT TERM CAPITAL GAINS IS AS UNDER: NO. OF SHARES HOLDING PERIOD % OF TOTAL 5,11,875 UPTO 1 WEEK 44% 2,23,982 UPTO 1 MONTH 19.2% 2,71,863 UPTO 6 MONTHS 23.3% 1,57,226 MORE THAN 6 MONTHS 13.5% ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 3 5. AO HAS STATED THAT ABOVE TABLE INDICATES THAT 4 4% OF THE TOTAL SHARES HAVE BEEN HELD FOR ONLY UP TO A WEEK, 19% HAVE BEEN HELD FOR ONLY UP TO A MONTH AND ONLY 13% HAVE BEEN HELD FOR OVER SIX MONTHS. THUS, IN MOST O F THE CASES THE SHARES WERE HELD FOR A VERY SHORT PERIOD AND WERE SOLD OF TO BOOK PROFIT S INDICATING THAT THE MAIN INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS AN INVES TMENT BUT RATHER THE PRIMARY AND MAIN INTENT WAS TO BOOK PROFITS. AO HAS FURTHER ST ATED THAT CONSIDERING THE VOLUME OF TRANSACTIONS, FREQUENCY THEREOF, UTILIZATION OF BOR ROWED FUNDS, THE FACT THAT THE ASSESSEE IS CARRYING OUT THE ACTIVITY OF PURCHASE/SALE OF SH ARES IN AN ORGANIZED AND SYSTEMATIC MANNER; THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE INCOME OFFERED UNDER THE HEAD SHORT TERM CAPITAL GAINS SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM BUSINESS. ASSESSEE FILED A LETTER DATED 27.10.200 9, WHICH HAS BEEN STATED BY THE AO IN PARA 5.4 OF THE IMPUGNED ORDER. ON PERUSAL OF THE SAID LETTER, IT IS OBSERVED THAT ASSESSEE CONTENDED, INTER ALIA, THAT ; A) ASSESSEE HAS MADE ONLY 93 TRANSACTION WHILE THE ST OCK EXCHANGE WAS OPEN FOR ALMOST 250 DAYS AND THESE TRANSACTIONS ARE IN T HE NATURE OF INVESTMENT AND NOT IN THE NATURE OF TRADING TRANSACTIONS ENTER ED INTO AS A TRADER IN SHARES. B) ASSESSEE HAS APPLIED HIS KNOWLEDGE BY INVESTING IN THOSE SHARES SECURITIES WHICH HAVE THE HIGH POTENTIAL RETURN AS WELL AS APP RECIATION IN VALUES. C) ALL THE SECURITIES INVESTED WERE BEING PROPERLY DEA LT THROUGH DEMAT ACCOUNT AND DELIVERY OF ALL THE TRANSACTIONS WERE PROPERLY TAKEN/GIVEN TO THE BROKER. ACCORDINGLY, THE AMOUNT IS ALSO GIVEN/TAKEN FROM TH E BROKER FOR MAINLY ALL THE TRANSACTIONS DEALT THROUGH HIM & THE SAME IS REFLEC TED IN THE PHOTOCOPY OF BANK STATEMENTS ATTACHED. THERE WAS NO FRESH LOAN TAKEN DURING THE YEAR. D) THE MAJOR SHORT TERM CAPITAL GAIN WAS EARNED BY TH E ASSESSEE ON THE FOLLOWING FEW SCRIPS : ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 4 E) THAT ASSESSEE HAD CONSIDERED INVESTMENT IN SHARES IN VESTMENT AND NOT AS STOCK IN TRADE. 6. AO DID NOT ACCEPT THE REPLY OF ASSESSEE AND STAT ED THE FOLLOWING REASONS: A) MERE ENTRIES IN THE BOOKS OF ACCOUNT SHOWING SHA RE AS INVESTMENT IS NOT DETERMINATIVE FACTOR TO DECIDE REAL NATURE OF TRANS ACTION. IN THIS REGARD, AO HAS ALSO RELIED ON CERTAIN CASE S WHICH ARE MENTIONED IN PARA 5.5. OF THE IMPUGNED ORDER. B) ASSESSEE IS DEALING IN A LARGE VOLUME OF SHARES TO BE SOLD WITHIN A SHORT PERIOD. WHILE SOME ARE NOT SOLD DUE TO MARKET COND ITIONS AND THEIR HOLDING WITH THE ASSESSEE REMAINS BEYOND FEW DAYS, IT WILL NOT CHANGE THE NATURE OF TRANSACTIONS. ASSESSEE IS VERY WELL ENGAGED IN THE BUSINESS OF TRADING FOR A LONG TIME. C) AO ALSO CONSIDERED CBDT CIRCULAR NO.4/2007 DATED 15.6.2007 TO SUBSTANTIATE HIS REASONS THAT INCOME OF THE ASSESSE E FROM SHARE DEALING IS BUSINESS INCOME AND NOT SHORT TERM CAPITAL GAINS AS CLAIMED BY THE ASSESSEE. D) THAT ASSESSEE IS MAINLY CARRYING ON BUSINESS OF SHARES. 7. AO HAS STATED THAT LOOKING INTO THE VOLUME, FREQ UENCY, CONTINUITY AND REGULARITY OF TRANSACTIONS OF PURCHASE AND SALES IN SHARES, IT CAN BE INFERRED THAT THESE ARE WITH A PROFIT MOTIVE. AO ALSO PLACED RELIANCE ON THE DECI SION OF ITAT AHMEDABAD IN THE CASE OF DCIT VS. DEEPA SHAH, 99 ITD 219(AHD), WHEREIN, IT I S HELD THAT VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTIONS IN SHARES MAKES IT BUSINESS OF SHARES AND IT CANNOT BE ASSESSED UNDER THE HEAD CAPITAL GAINS. 8. IN VIEW OF ABOVE, AO HAS CONSIDERED THE ENTIRE P ROFITS ARISING OUT OF PURCHASE AND SALE OF SHARES AS BUSINESS AND ASSESSED UNDER T HE HEAD INCOME FROM BUSINESS OR PROFESSION. THEREFORE, REBATE U/S.88E ON STT PAID OF RS.9,39,429.45 ON THESE TRANSACTIONS IS ALLOWED. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 9. BEFORE LD CIT(A), ASSESSEE MADE HIS SUBMISSIONS AS MADE ON THE LINES OF SUBMISSIONS BEFORE THE AO. ASSESSEE STATED THAT TH E MAJOR PORTION OF SHORT TERM CAPITAL GAIN WAS MADE BECAUSE OF INVESTMENT IN SHARES OF 5 COMPANIES AND IN FACT 85.62% OF TOTAL GAIN MADE BY THE ASSESSEE WAS ON SALE OF THOS E 5 COMPANIES THOUGH THE ASSESSEE ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 5 MADE INVESTMENT IN SHARES OF 53 COMPANIES. IT WAS CONTENDED THAT ASSESSEE HELD THE SHARES FOR SUFFICIENT PERIOD AND SUBMITTED THE FOLL OWING DETAILS: 10. ASSESSEE ALSO PLACED RELIANCE ON THE DECISION O F ITAT HYDERABAD IN THE CASE OF SHAH-LA INVESTMENTS AND FINANCIAL CONSULTANTS PVT L TD. VS DCIT, 2 SOT 371. LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND O RDER OF AO HAS CONFIRMED THE ACTION OF AO. LD CIT(A) HAS STATED THAT IS SEEN FROM THE BALANCE SHEET THAT INVESTMENT IN SHARES IS RS. 3,32,54,810/- WHEREAS THE BALANCE IN THE CAPITAL ACCOUNT IS ONLY RS. RS. 2,00,00,585/- FROM WHICH IT IS CLEAR THAT BUT FOR T HE BORROWED FUNDS THE ASSESSEE COULD NOT HAVE MADE INVESTMENT IN SHARES. HE HAS FURTHER STATED THAT ASSESSEE HAS CLAIMED THE INTEREST EXPENDITURE WHILE COMPUTING THE SHORT TERM CAPITAL GAIN WHICH ITSELF SHOWS THAT THE INCOME IS TO BE ASSESSED UNDER THE HEAD BU SINESS. LD CIT(A) FURTHER STATED THAT THE SALE VALUE OF SHARES IS RS. 5,33,52,298/- AND AFTER EXCLUDING THE SHARES HELD FOR MORE THAN ONE YEAR THE INVESTMENT AS PER THE BALANC E SHEET IS VERY LESS COMPARED TO THE ABOVE FIGURES. HE HAS FURTHER STATED THAT ASSE SSEE SOLD MORE THAN 44% OF THE SHARES WITHIN ONE WEEK AS PER PAGE 3 OF THE ASSESSM ENT ORDER. CONSIDERING ABOVE FACTS AND ALSO CONSIDERING THE DECISION OF ITAT IN THE CASE OF SHRI GOPAL PUROHIT (29 SOT 170) , LD CIT(A) HAS HELD THAT AO HAS CORRECTLY TAX ED THE SAME UNDER THE HEAD BUSINESS. HENCE, ASSESSEE IS IN FURTHER APPEAL B EFORE THE TRIBUNAL. 11. DURING THE COURSE OF HEARING, LD A.R. REITERATE D THE FACTS AS STATED BEFORE AUTHORITIES BELOW. HE SUBMITTED THAT SHARES WERE P URCHASED AS INVESTMENT AND WERE SHOWN AS INVESTMENT IN THE BOOKS OF ACCOUNT. HE SU BMITTED THAT SHORT TERM CAPITAL GAINS ON SALE OF SHARES ARE RECOGNIZED IN THE INCOM E TAX ACT. THE SHORT TERM CAPITAL ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 6 GAINS MADE BY THE ASSESSEE ON SALE OF SHARES WAS RS .51,20,430 AND ASSESSEE FILED THE STATEMENT SHOWING SCRIP-WISE DETAILS BEFORE THE AUT HORITIES BELOW. HE SUBMITTED THAT ASSESSEE WAS ACTIVE IN THE MARKET AS FAR AS HIS INV ESTMENTS ARE CONCERNED, ONLY FOR 88 DAYS WHEN THE SHARE MARKET WAS OPEN FOR TRANSACTION FOR MORE THAN 250 DAYS. LD A.R. SUBMITTED THAT ASSESSEE INVESTED SHARES IN 53 COMPA NIES WHEN THERE ARE 7000 LISTED COMPANIES. HE FURTHER SUBMITTED THAT EVEN INVESTME NT IN SHARES IN 53 COMPANIES WAS MADE SOLELY WITH A VIEW TO DIVERSIFY INVESTMENT AS INVESTMENT IN EQUITY SHARES CARRIES WITH IT GREATER AMOUNT OF RISK AND HENCE, INSTEAD O F KEEPING AMOUNT INVESTED IN SHARES OF A FEW COMPANIES, ASSESSEE INVESTED IN SHARES OF 53 COMPANIES. LD A.R. ALSO REFERRED PAGES 14-21 OF PB, WHICH IS A COPY OF WRITTEN SUBMI SSION FILED BEFORE LD CIT(A) AND ALSO SUBMITTED THAT THE CASES REFERRED THEREIN SHOULD BE CONSIDERED AS HIS SUBMISSION BEFORE THE TRIBUNAL. LD A.R. ALSO RELIED ON THE DECISION OF ITAT IN THE CASE OF MR NEHAL V SHAH VS ACIT(I.T.A. NO.2733/M/2009 FOR A.Y. 2005-06) ORD ER DATED 15.12.2010, COPY PLACED AT PAGES 46 TO 56 OF PB. 12. ON THE OTHER HAND, LD D.R. RELIED ON ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE HAS FREQUENTLY BEEN BUYING AND SELLIN G SHARES ON DAY TO DAY BASIS. HE FURTHER REFERRED PAGES 27 TO 30 OF PB, WHICH CONTAI N DETAILS OF SHARES FOR WHICH ASSESSEE HAS CLAIMED SHORT TERM CAPITAL GAINS AND SUBMITTED THAT ASSESSEE ENTERED INTO REPETATIVE TRANSACTIONS OF THE SAME SCRIPS. THEREFORE, THE FA CTS SUPPORT THAT ASSESSEE IS A DEALER IN SHARES AND NOT INVESTOR. 13. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTH ORITIES BELOW AND SUBMISSIONS OF LD REPRESENTATIVES OF PARTIES. WE HAVE ALSO GONE T HROUGH RELEVANT PAGES OF PB AND ALSO CONSIDERED THE RATIO OF CASES CITED BEFORE US AND R ELIED BY WAY OF WRITTEN SUBMISSIONS PLACED ON RECORD. 14. THE DISPUTE IS REGARDING NATURE OF INCOME FROM SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE, AS TO WHETHER PROFITS SHOWN BY THE ASSESSEE OUT OF SHARE TRANSACTIONS SHOULD BE TREATED AS INVESTMENT ACTIVITY OR TRADING ACTIVITY. 15. WE OBSERVE THAT IT DEPENDS ON ITS OWN FACTS AND CIRCUMSTANCES. THERE ARE VARIOUS FACTORS SUCH AS FREQUENCY, VOLUME, ENTRY IN THE BOOKS OF ACCOUNT, NATURE OF FUNDS USED, HOLDING PERIOD ETC, WHICH ARE RELEVANT IN DECIDING THE TRUE NATURE OF ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 7 TRANSACTIONS AND NO SINGLE FACTOR IS CONCLUSIVE. TH E IMPORTANT FACTOR IS THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE, WHICH HAS TO BE GATHERED FROM THE ACTUAL CONDUCT OF THE ASSESSEE WHILE DEALING WITH THE SHARES SUBSE QUENTLY AND NOT ONLY ON THE BASIS OF ENTRY IN THE BOOKS OF ACCOUNT. IN THIS VIEW, WE ARE SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MADANG OPAL RADHEY LAL, 73 ITR 652(SC). THE INVESTOR MAKES PURCHASES WITH LONG TERM GOAL OF EARNING INCOME FROM THE INVESTMENT AND HE IS NOT TEMPTED TO SELL THE SHARES ON EVERY RISE AND FALL IN THE MARKET WHICH ARE THE ATTRIBUTES OF A TRADER. THERE MAY BE SITUATIONS WHEN THE INVESTOR MAY ALSO SELL THE SHARES AFTER SHORT HOLDING IN ORDER T O RESHUFFLE PORTFOLIO WHEN PRICES ARE FALLING OR TO ENCASH INVESTMENT IN CASE OF EXCEPTIO NAL GAIN OR FOR SOME OTHER PERSONAL EXIGENCIES. THEREFORE, EACH CASE IS REQUIRED TO B E EXAMINED CAREFULLY TO ASCERTAIN THE TRUE NATURE OF TRANSACTIONS. 16. ON PERUSAL OF THE DETAILS OF SHARE TRANSACTIONS PLACED AT PAGES 27-30 OF PB, WE OBSERVE THAT ASSESSEE HAS ENTERED INTO REPETATIVE TRANSACTION IN RESPECT OF SOME SCRIPS AND THE NUMBER OF SCRIPS ARE ALSO 53 THOUGH IN THE ASSESSMENT ORDER THE FIGURE IS MENTIONED 93 FOR A TOTAL PURCHASE AMOUNT OF RS.4,82 ,32,868. IT IS OBSERVED THAT IN RESPECT OF 44% OF THE TOTAL SHARES, THE HOLDING PER IOD IS UPTO ONE WEEK. NOT ONLY THIS, IT IS ALSO OBSERVED ON PERUSAL OF PAGES 27-30 OF PB TH AT IN NUMBER OF TRANSACTION, THE HOLDING PERIOD IS EVEN ONE DAY. BESIDES ABOVE, ONL Y IN 19.2% THE HOLDING PERIOD IS UPTO ONE MONTH. THUS, IT IS EVIDENT THAT THE HOLDING PE RIOD IN RESPECT OF TOTAL NUMBER OF SHARES OF LESS THAN ONE MONTH IS OF 63%. NOT ONLY THIS, LD CIT(A) HAS STATED THAT IT IS SEEN FROM THE BALANCE SHEET THAT INVESTMENT IN SHAR ES IS RS.3,32,54,810 WHEREAS THE BALANCE IN THE CAPITAL ACCOUNT OF THE ASSESSEE IS O NLY RS.2,05,00,085, FROM WHICH, IT IS CLEAR THAT BUT FOR THE BORROWED FUNDS, ASSESSEE COU LD NOT HAVE MADE INVESTMENT IN SHARES. IT IS ALSO OBSERVED THAT ASSESSEE HAS INCU RRED VARIOUS ADMINISTRATIVE EXPENDITURE WHICH WERE DEBITED TO P&L ACCOUNT WHILE ARRIVING AT SHORT TERM CAPITAL GAINS OF RS.23,31,961. THE ABOVE FACTS, PRIMA FACIE, EST ABLISH THAT THE DEALING OF ASSESSEE IN PURCHASE AND SALE OF SHARES IS IN AN ORGANIZED AND SYSTEMATIC MANNER. THUS, IT IS IN THE NATURE OF TRADING IN SHARES AND NOT AS AN INVESTOR. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAHARA INDIA HOUSING CORPORATION LT D., (2012) 2012 TPL 1265 (DELHI) IN I.T.A. NO.740/2009, 762/2009 AND 847/2010 DATED 27. 4.2012 AFTER CONSIDERING THE TESTS AS LAID DOWN BY HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS REWASHANKER A KOTHARI, 283 ITR 338 HAS, INTER ALIA, STATED THAT T HE MOST IMPORTANT TEST IS VOLUME, ITA NO.3916/MUM/2011 ASSESSMENT YEAR: 2007-08 8 FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTION S OF PURCHASE AND SALE OF GOODS CONCERN, ON THE BASIS OF WHICH, AN INFERENCE CAN BE DRAWN WHETHER THE ACTIVITY IS IN THE NATURE OF BUSINESS OR NOT. WE ARE OF THE CONSIDERE D VIEW THAT ALL THE TESTS AS LAID DOWN IN THE ABOVE CASES CLEARLY APPLY TO THE FACTS OF TH E CASE BEFORE US. THEREFORE, WE HOLD THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, A O IS JUSTIFIED TO COME TO THE CONCLUSION THAT SHARE TRANSACTIONS FROM WHICH ASSE SSEE HAS EARNED SHORT TERM CAPITAL GAINS IS IN THE NATURE OF TRADING ACTIVITY OF THE A SSESSEE. HENCE, WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT GROUND OF APPEAL TAKEN BY ASSE SSEE. 17. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2012 SD/- (B.RAMAKOTAIAH ) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 5 TH SEPTEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),XXXV, MUMB AI 4. COMMISSIONER OF INCOME TAX, CITY-25, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI