ASST CIT RG 13(1), MUMBAI V. PRAVIN JETHALAL MITHANI, MUMBAI

ITA 4037/MUM/2012

• Counselvise Citation: 403719914 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: RAHUL K HAKANI
• Keywords: Capital asset; Business income; Transactions in derivatives; Question of law
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI H. L. KARWA , PRESIDENT & SHRI R.C.SHARMA , A M ( / ITA NO. 4037 /MUM/201 2 ) ( ASSESSMENT YEAR :200 8 - 200 9 ) ACIT, RANGE - 13(1), MUMBAI VS. SHRI PRAVIN JETHALAL MITHANI, 506, RAJGOR CHAMBERS, NEAR MASJID RAILWAY STATION, MUMBAI PAN/GIR NO. : A EJPM 1894 F ( A PPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI PREMANAND J /ASSESSEE BY : SHRI RAHUL K. HAKANI DATE OF HEARING : 9 TH DEC EMBER 201 4 DATE OF PRONOUNCEMENT : 9 TH DEC E MBER 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), DATED 29 - 3 - 2012 FOR ASSESSMENT YEAR 2008 - 09, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2 . THE ONLY GRIEVANCE OF THE REVENUE RELATES TO THE CIT(A)S ACTION FOR DIRECTING THE AO TO TREAT THE PROFIT EARNED ON SHARE AS SHORT TERM CAPITAL GAINS IN PLACE OF AOS TREATMENT AS INCOME FROM BUSINESS. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAINS OF RS. 16,19,798/ - AND LONG TERM CAPITAL GAINS OF RS. 14,89,007/ - IN THE RETURN OF INCOME FILED. BY OBSERVING THAT THERE WAS HIGH FREQUENCY AND ITA NO. 4037 /201 2 2 REPETITION OF PURCHASE AND SALE TRANSACTION, THE AO TREATED THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME. BY THE IMPUGNED ORDER, THE CIT(A) ALLOWED ASSESSEES CLAIM OF SHORT TERM CAPITAL GAIN AFTER HAVING THE FOLLOWING OBSERVATIONS: - 2.4.1 I HAVE CONSIDERED THE FACTS OF THE CASE AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE AND THE REASONS GIVEN BY THE ASSESSING OFFICER TO HOLD THE INCOME DECLARED UNDER THE HEAD 'CAPITAL GAINS' AS 'BUSINESS INCOME'. THE ONLY ISSUE TO BE DECIDED IN THE GROUNDS OF APPEAL IS AS TO WHETHER THE PROFITS ON THE SALE OF SHARES DURING THE YEAR WHICH HAVE BEEN SHOWN BY THE ASSESSEE AS CAPITAL GAINS ARISING OUT OF INVESTMENT IN THE SHARES IN QUESTION AS AN INVESTOR IS TO BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS' OR WHETHER THE SAME IS TO BE ASSESSED UNDER THE HEAD 'CAPITAL GAINS' AS DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. IN CIT VS H. HOLCK LARSEN, 160 ITR 67 (SC), IT HAS BEEN HELD THAT THE QUESTION WHETHER THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES WERE TRADING TRANSACTIONS OR WHETHER THEY WERE IN THE NATURE OF INV ESTMENTS IS A MIXED QUESTION OF LAW AND FACTS. IN THE CASE OF P. M. MOHD. MEERAKHAN 73 ITR 735 (SC), IT HAS BEEN HELD THAT THE ANSWER WHETHER A TRANSACTION IS ADVENTURE IN THE NATURE OF TRADE OR NOT MUST NECESSARILY DEPEND IN EACH CASE ON THE TOTAL IMPRESS ION AND THE EFFECT OF THE RELEVANT FACTORS AND CIRCUMSTANCES. 2.4.2 IT IS WELL SETTLED THAT THE INTENTION AT THE TIME OF PURCHASES IS THE MOST IMPORTANT FACTOR TO DECIDE WHETHER THE PURCHASES WERE MADE AS A TRADER OR WHETHER THE SAME WERE MADE AS AN INVE STOR. THIS INTENTION CAN TO BE GATHERED FROM SUBSEQUENT CONDUCT OF THE ASSESSEE IN DEALING WITH THESE SHARES. AN INVESTOR PURCHASES A SHARE WITH A VIEW TO EARNING INCOME IN THE FORM OF DIVIDEND AND FOR APPRECIATION IN VALUE OVER A PERIOD OF TIME AND IS NOT MOTIVATED TO SELL SHARES ON EACH AND EVERY RISE IN THE VALUE OF SHARES WHICH ARE, IN FACT, THE ATTRIBUTES OF A TRADER. FOR DECIDING THE QUESTION WHETHER THE PROFIT FROM SALE OF SHARE IS CAPITAL GAIN OR BUSINESS INCOME, NO SINGLE THUMB RULE CAN BE APPLIED AS HELD BY THE DIFFERENT HON'BLE COURTS AS WELL AS BY THE CBDT IN CIRCULAR NO.4/2007. VARIOUS HON'BLE COURTS AND BENCHES OF THE HON'BLE TRIBUNAL AND CBDT HAVE LAID DOWN PARAMETERS/CRITERIA FOR JUDGING WHETHER THE ACTIVITY OF THE ASSESSEE WAS IN THE NATURE OF AN INVESTMENT ACTIVITY OR A TRADING ACTIVITY. THESE PARAMETERS INCLUDE INTENTION OF THE APPELLANT AT THE TIME OF PURCHASE OF SHARES, FREQUENCY OF TRANSACTION, CONTINUITY, VOLUME, HOLDING PERIOD, TREATMENT IN THE BOOKS OF ACCOUNT, USE OF BORROWED/OWN FU NDS AND DEVOTION OF TIME TO THE ACTIVITY, ETC. HOWEVER, THE COURTS/TRIBUNALS HAVE ALSO HELD THAT INDIVIDUAL PARAMETERS WOULD NOT BE DECISIVE AND IT IS ONLY THE CUMULATIVE EFFECT OF ALL THESE CRITERIA WHICH WOULD BE IMPORTANT TO DECIDE WHETHER THE ASSESSEE WAS AN INVESTOR OR A TRADER. KEEPING THE ABOVE PARAMETERS IN MIND, IT HAS TO BE DECIDED WHETHER THE ASSESSEE CAN BE TREATED AS AN INVESTOR OR HE IS TO BE TREATED AS A TRADER AND WHETHER THE INCOME IN QUESTION IS TO BE TAXED UNDER THE HEAD ITA NO. 4037 /201 2 3 CAPITAL GAINS OR UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. IT IS ALSO PERTINENT TO MENTION THAT THE VARIOUS COURTS AND TRIBUNALS AS WELL AS THE CBDT HAVE LAID DOWN THAT AN ASSESSEE CAN HAVE TWO PORTFOLIOS OF SHARES - ONE FOR TRADING AND ONE FOR INVESTMENT PURPOSES. THEREFORE, THE ASSESSEE CAN BE BOTH A DEALER IN SHARES AS WELL AS AN INVESTOR IN SHARES AT THE SAME TIME. 2.4.3 ADVERTING TO THE FACTS OF THE CASE, THE ASSESSEE HAS DISCLOSED AN INCOME OF RS. 16,19,798/ - AS SHORT TERM CAPITAL GAINS. FROM .THE DETAILS FU RNISHED, IT IS SEEN THAT THE ASSESSEE HAS MADE 46 SALES TRANSACTIONS DURING THE YEAR IN WHICH HE HAS EARNED PROFITS/GAINS OF RS. 16,19,798/ - . IN 18 SALES TRANSACTIONS, THE SHARES WERE SOLD AFTER HOLDING THEM FOR A PERIOD OF 30 DAYS OR LESS. THIS TRANSLATES INTO 39% OF THE TOTAL SALES TRANSACTIONS DURING THE YEAR. IN 28 SALES TRANSACTIONS, WHICH TRANSLATES INTO 61% OF THE TOTAL SALES TRANSACTIONS DURING THE YEAR, THE SHARES WERE HELD FOR PERIOD OF 31 DAYS AND ABOVE. IN 50% OF THE TOTAL NUMBER OF SALES TRANSA CTIONS, THE SHARES WERE HELD FOR MORE THAN 60 DAYS. SHARES OF RELIANCE CAPITAL LTD. WERE PURCHASED ON DIFFERENT DAYS AND SOLD ON DIFFERENT DAYS AFTER HOLDING THEM FOR PERIODS RANGING BETWEEN 90 DAYS TO 140 DAYS GIVING SUBSTANTIAL CAPITAL APPRECIATION AND G AINS TO THE ASSESSEE. THERE WAS NO REPETITIVE TRA NSACTIONS AND THE ASSESSEE DID NOT PURCHASE, SELL AND AGAIN RE - ENTER THE SAME SCRIP.' SHARES WERE PURCHASED FIRST ON DIFFERENT DAYS AND AFTER HOLDING THESE FOR A SUBSTANTIAL PERIOD OF TIME, THE SAME WERE SOL D ON DIFFERENT DAYS. SIMILARLY, SHARES OF HIND CONSTRUCTION LTD. WERE SOLD AFTER HOLDING THEM FOR 279, 266 AND 265 DAYS. SHARES OF INFOSYS TECHNOLOGIES WERE SOLD AFTER HOLDING THEM FOR 214 DAYS. SHARES OF CENTURY TEXTILES WERE SOLD AFTER HOLDING THEM FOR 1 81 DAYS. OF COURSE, THERE ARE SHARES WHICH HAVE BEEN SOLD AFTER HOLDING THEM FOR ONLY A FEW DAYS AND FOR LESS THAN A MONTH, HOWEVER; IT IS THE TOTAL NATURE OF TRANSACTIONS AND IMPRESSION WHICH WILL HAVE TO BE SEEN TO DECIDE WHETHER THE ASSESSEE HAS ACTED A S A TRADER OR AN INVESTOR. IT IS SEEN THAT MAJORITY OF THE SALES TRANSACTIONS OF THE ASSESSEE HAVE BEEN EFFECTED AFTER HOLDING THE SHARES FOR A SUBSTANTIALLY LONG PERIOD OF TIME. 2.4.4 I FIND THAT THE ASSESSEE HAD BEEN CONSISTENTLY DISCLOSING HIMSELF TO BE AN INVESTOR IN SHARES IN RESPECT OF WHICH HE WAS SHOWING INCOME UNDER THE HEAD 'CAPITAL GAINS'. THE SHARES ON WHICH CAPITAL GAINS HAS BEEN DISCLOSED IS BEING REFLECTED IN THE BOOKS AS INVESTMENTS. IN THE BALANCE SHEETS FILED, THE ASSESSEE IS DISCLOSING HIS SHARES UNDER THE HEAD 'INVESTMENT'. AS REGARDS THE INTENTION OF THE ASSESSEE, THE TOTALITY OF THE CONDUCT OF THE ASSESSEE IN DEALING WITH THESE SHARES SHOWS THAT HIS INTENTION WAS TO HOLD THE SHARES AS INVESTMENTS AND NOT AS TRADING ASSETS. A TRADER BU YS FOR THE PURPOSE OF RESELLING AT A PROFIT. HE DOES NOT WAIT FOR CAPITAL APPRECIATION. HE INDULGES IN THE SALE AND PURCHASE OF THE SAME SHARE SEVERAL TIMES FOR THE PURPOSE OF EARNING QUICK PROFIT AND IT IS NOT HIS INTENTION TO HOLD ON TO THE PURCHASES OVE R A PERIOD OF TIME TO ENJOY THE APPRECIATION IN ITS VALUE. IN THE CASE OF THE ASSESSEE, IT IS EVIDENT FROM THE DETAILS THAT MAJORITY OF THE SALES TRANSACTIONS RELATE TO SHARES WHICH WERE SOLD AFTER HOLDING THE SAME FOR MORE THAN 30 DAYS AND FOR A REASONABL E PERIOD OF TIME. ITA NO. 4037 /201 2 4 2.4.5 LARGE MAJORITY OF THE SHARES WERE BOUGHT AND THEN SOLD NOT IMMEDIATELY OR ALMOST IMMEDIATELY AS A TRADER WOULD DO SINCE HE WOULD WANT A QUICK ROTATION OF HIS CAPITAL. IN THE PRESENT CASE, THE SHARES HAVE BEEN HELD FOR A SUFFICIENT PERIOD OF TIME BEFORE THEY HAVE BEEN SOLD, THEREBY GIVING APPRECIATION IN THEIR VALUE OVER A PERIOD OF TIME IN A LARGE NUMBER OF CASES. AS STATED EARLIER, TO PURCHASE SHARES AND THEN WAIT FOR APPRECIATION IN THEIR VALUE IS THE CLASSIC EXAMPLE OF AN INVEST OR. OF COURSE, THERE ARE INSTANCES WHERE THE ASSESSEE HAS MADE A LOSS BUT BEING AN INVESTOR DOES NOT MEAN THAT HE WOULD ALWAYS MAKE A PROFIT. 2.4.6 IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS TAKEN ANY LOAN FOR MAKING INVESTMENTS IN THE SHARES. THE SHARES HAVE BEEN BOUGHT FROM THE FUNDS AVAILABLE WITH THE ASSESSEE. IT IS TRUE THAT THE TAKING OF OR NOT TAKING OF LOANS IS NOT THE SOLE DETERMINING FACTOR FOR COMING TO THE CONCLUSION WHETHER THE ASSESSEE IS A TRADER OR AN INVESTOR IN SHA RES. HOWEVER, THIS IS AN IMPORTANT PARAMETER TO BE TAKEN INTO CONSIDERATION FOR DECIDING THE QUESTION AS TO WHETHER A PERSON IS AN INVESTOR OR TRADER. TOTALITY OF FACTS AND PARAMETERS, AS LAID DOWN BY THE HON'BLE COURTS AS WELL AS CBDT HAVE TO BE TAKEN INT O CONSIDERATION IN DECIDING THE QUESTION. THE FACT THAT THE ASSESSEE HAS NOT TAKEN LOAN TO BUY SHARES IS AN IMPORTANT FACT IN HIS FAVOUR. 2.4.7 AS REGARDS THE FREQUENCY AND CONTINUITY OF TRANSACTIONS, THIS IS NOT THE SOLE DETERMINING FACTOR TO CONCLUDE W HETHER THE SHARES WERE TO BE TREATED AS STOCK - IN - TRADE OR INVESTMENT. THIS IS ONLY ONE OF THE FACTORS WHICH HAS TO BE LOOKED INTO FOR ARRIVING AT THE FINAL CONCLUSION, WHICH IS TO BE ARRIVED AT AFTER CONSIDERING THE TOTALITY OF THE FACTS. IT IS NOT THAT AN INVESTOR CANNOT BUY SHARES AT SHORT INTERVALS. WHAT IS REQUIRED TO BE SEEN IS WHETHER THE SHARES WERE BOUGHT WITH THE INTENTION OF HOLDING ON TO THEM FOR A PERIOD OF TIME IN ORDER TO REAP THE BENEFITS OF CAPITAL APPRECIATION. IF THE CONDUCT OF THE ASSESSE E SHOWS THAT HE HAS HELD THE SHARES AND NOT DISPOSED THEM OFF IMMEDIATELY, THE ASSESSEE CAN BE SAID TO HAVE ACTED AS AN INVESTOR. THE ASSESSEE IS NOT PURCHASING, SELLING AND REPURCHASING THE SAME SCRIPS ON A REGULAR BASIS. NORMALLY, THERE ARE NO REPETITIV E TRANSACTIONS. THIS SHOWS HIS INTENTION OF BEING AN INVESTOR. NORMALLY, A TRADER PURCHASES, SELLS AND REPURCHASES THE SAME SCRIPS VERY FREQUENTLY WHERE HIS INTENTION IS TO DO A QUICK TURNOVER AND BUILD VOLUMES AND BENEFIT FROM EVERY INCREASE IN THE PRICE OF THE SHARES. FROM THE DETAILS, IT IS EVIDENT THAT THE FREQUENCY OF TRANSACTION IN THE CASE OF THE ASSESSEE IS NOT SUBSTANTIAL. THERE ARE ONLY 47 SALES TRANSACTIONS LEADING TO GAINS WHICH HAVE BEEN TREATED BY THE ASSESSEE AS SHORT TERM CAPITAL GAINS WHILE THERE ARE 11 SALES TRANSACTIONS ONLY DURING THE YEAR IN WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAINS WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HENCE, IT CANNOT BE SAID THAT THE FREQUENCY OF TRANSACTIONS IN THE CASE OF THE ASSESSEE DURING THE YEAR IS HIGH. OF COURSE, THERE ARE PURCHASES DURING THE YEAR WHICH HAVE NOT BEEN SOLD. THE ASSESSEE HAS DISCLOSED THESE AS INVESTMENTS IN HIS BALANCE SHEET AS AT 31/03/2008. ITA NO. 4037 /201 2 5 2.4.8 THE ASSESSEE HAS SOME TRANSACTIONS IN THE F&O SEGMENT DURING THE YEAR. IT IS NOW WELL SETTLED AND A PRINCIPLE RECOGNIZED BY THE CBDT IN ITS CIRCULAR ON THIS ISSUE THAT THE ASSESSEE CAN MAINTAIN DIFFERENT PORTFOLIOS - A TRADING PORTFOLIO AS WELL AS AN INVESTMENT PORTFOLIO. IN ANY CASE, AS LAID DOWN BY THE VARIOUS HON'BLE COURT S, IT IS THE TOTALITY OF THE FACTORS WHICH WOULD BE RELEVANT TO DECIDE WHETHER THE ASSESSEE HAD ENTERED INTO A PARTICULAR SET OF TRANSACTIONS AS AN INVESTOR OR A TRADER. ONLY BECAUSE THE ASSESSEE WAS ALSO ENGAGED IN F&O TRANSACTIONS WOULD NOT BE DETERMINAT IVE OF THE QUESTION. FURTHER, TRANSACTIONS IN F&O SEGMENT WOULD ALWAYS BE ASSESSED AS BUSINESS INCOME IN VIEW OF THE PROVISO (D) TO SEC. 43(5). HOWEVER, SAME IS NOT TRUE IN CASE OF TRANSACTIONS IN DELIVERY BASED SHARES. THESE MAY BE INVESTMENT OR TRADING T RANSACTION DEPENDING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.4.9 AS REGARDS THE ISSUE RELATING TO DEVOTION OF SUBSTANTIAL TIME TO THE ACTIVITIES RELATING TO PURCHASE AND SALE OF SHARES, IT IS SEEN THAT THE ASSESSEE IS ACTIVELY INVOLVED IN THE BUSIN ESSES OTHER THAN THE ACTIVITY OF DEALING IN SHARES ALSO. HENCE, IT CANNOT BE SAID THAT THE ONLY AND SUBSTANTIAL SOURCE OF INCOME OF THE ASSESSEE WAS FROM HIS SHARE ACTIVITIES OR THAT HE WAS DEVOTING SUBSTANTIAL TIME TO HIS ACTIVITIES RELATING TO SHARES. 2.4.10 THE CONTENTION OF THE ASSESSING OFFICER IN PARA 4(G) THAT THERE WAS HIGH FREQUENCY AND REPETITION OF PURCHASE AND SALE TRANSACTIONS DURING THE YEAR IS NOT BORNE OUT BY THE FACTS ON RECORD. THE AO'S CONTENTION THAT THE ASSESSEE HAD EARNED MAJOR GAIN OF RS. 19,70,938/ - BY TRADING INTO 19,240 SHARES OF BALAJI TELEFILMS LTD. AND GAIN OF RS. 708,100/ - BY TRADING INTO 10,000 SHARES OF RPL WHICH CLEARLY INDICATED THE SYSTEMATIC NATURE OF THE ACTIVITY OF THE ASSESSEE IS ALSO NOT BORNE OUT BY THE FACTS ON REC ORDS. THE ASSESSEE HAS, IN HIS SUBMISSIONS STATED THAT THERE WERE NO TRANSACTIONS RELATING TO BALAJI TELEFILMS OR RPL AND THAT THE AO HAD MIXED UP THE FACT OF SOME OTHER CASE WITH THAT OF THE ASSESSEE. FROM THE DETAILS FURNISHED BY THE ASSESSEE, IT IS SEEN THAT, IN FACT, THERE ARE NO TRANSACTIONS IN THESE SCRIPS. THIS WOULD ALSO BE EVIDENT FROM THE FACT THAT THE TOTAL SHORT TERM CAPITAL GAINS EARNED BY THE ASSESSEE IS ONLY RS.16,19,798/ - WHILE THE GAINS IN BALAJI TELEFILMS AND RPL ITSELF, AS NOTED BY THE AO , WORKS OUT TO RS.26,79,038/ - . THERE ARE ALSO NO FREQUENT DEALINGS IN THE SAME SHARE MANY TIMES IN THE YEAR AS NOTED BY THE AO. 2.4.11 THE AO'S OBSERVATION THAT THE ASSESSEE WAS HAVING A SYSTEMATIC AND REGULAR COURSE OF SHARE TRANSACTION ACTIVITY WHICH W AS EVIDENT FROM THE FACT THAT REGULAR BOOKS OF ACCOUNTS AND ALL THE RECORDS RELATING TO THE SAME WERE BEING MAINTAINED AND, HENCE, THIS SHOWED THAT THE ASSESSEE WAS A TRADER IN SHARES CANNOT BE ACCEPTED FOR THE REASON THAT EVEN IN INVESTMENT ACTIVITIES REC ORDS WOULD BE REQUIRED TO BE MAINTAINED IN A SYSTEMATIC MANNER. ONLY BECAUSE RECORDS ARE MAINTAINED IN A SYSTEMATIC MANNER WOULD NOT BE A CRITERIA FOR DECIDING WHETHER THE ASSESSEE WAS AN INVESTOR OR A TRADER IN SHARES. THE OTHER OBSERVATION OF THE ASSESSI NG OFFICER THAT THERE WAS CLEAR PROFIT MOTIVE IN THE TRANSACTIONS TAKEN UP BY THE ASSESSEE WHICH WAS EVIDENT FROM THE FACT THAT IN NONE OF THE YEARS, ITA NO. 4037 /201 2 6 THE ASSESSEE HAD EVER SUFFERED A LOSS WOULD ALSO NOT BE RELEVANT FOR DECIDING THE ISSUE IN APPEAL. EVEN IN INVESTMENT ACTIVITIES, PROFIT IN THE FORM OF CAPITAL APPRECIATION IS A MOTIVE OF THE INVESTOR. THE INVESTOR WOULD NEVER WANT TO SUFFER A LOSS O IS INVESTMEN TS. EVEN A TRADER WOULD NEVER WANT TO SUFFER A LOSS. HOWEVER, THIS IS NOT TO SAY THAT A INVESTOR WO ULD NEVER SUFFER A LOSS. IN FACT, DURING THE YEAR ITSELF, THE ASSESSEE HAS SUFFE R ED LOSSES IN SOME OF HIS TRANSACTIONS. 2 .4.12 T OTALITY OF THE FACTS AND EXAMINATION OF THE VARIOUS PARAMETERS LAID DOWN POINTS OUT TO THE FACT AT THE ASSESSEE HAS DEALT WITH THE SHARES IN QUESTION AS AN INVESTOR AND NOT AS A TRADER, AND, THESE REPRESENTED HIS CAPITAL ASSET. HENCE, THE ACTIVITIES OF THE ASSESSEE IN RESPECT OF THE SHARES ARE IN THE NATURE OF INVESTMENT ACTIVITIES AND NOT TRADING OR BUSINESS ACTIVITIES. IN VIEW OF THE AFORESAID REASONS, THE ASSESSEE IS HELD TO BE AN INVESTOR IN THE SHARES IN QUESTION AND WHICH ARE SUBJECT MATTER OF THIS GROUND OF APPEAL. THE PROFITS ON THE SALE OF SHARES IN QUESTION ON WHICH THE ASSESSEE HAS DECLARED SHORT TERM CAPITAL GAINS OF R S. 16,19,798/ - WOULD, THEREFORE, BE ASSESSABLE IN THE HANDS OF THE ASSESSEE UNDER THE HEAD 'CAPITAL GAINS' AS SHORT TERM CAPITAL GAINS AND NOT AS BUSINESS INCOME. THE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALL OWED. 4 . AGAINST THE ABOVE ORDER OF CIT(A) , REVENUE IS IN FURTHER APPEAL BEFORE US. 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE CIT(A) HAS DEALT WITH EACH AND EVERY SHARES TRANSACTED BY THE ASSESSEE THREADBARE AND FOUND TH AT ASSESSEE HAS MADE ONLY 46 SALE TRANSACTIONS. IN 18 SALES TRANSACTIONS, THE SHARES WERE SOLD AFTER HOLDING THEM FOR A PERIOD OF 30 DAYS OR LESS, IN RESPECT OF 28 SALES TRANSACTIONS, WHICH TRANSLATES INTO 61% OF THE TOTAL SALES TRANSACTIONS DURING THE YEA R, THE SHARES WERE HELD FOR PERIOD OF 31DAYS AND ABOVE. IN RESPECT OF 50% OF THE TOTAL NUMBER OF SALES TRANSACTIONS, THE SHARES WERE HELD FOR MORE THAN 60 DAYS. THE CIT(A) ALSO RECORDED A FINDING TO THE EFFECT THAT THESE SHARES WERE PURCHASED BY ASSESSEE A S AN INVESTOR AND ALSO DISCLOSED IN THE BALANCE SHEET AS INVESTMENT. AFTER CONSIDERING THE TOTALITY OF FACTS AND ITA NO. 4037 /201 2 7 CIRCUMSTANCES OF THE CASE, THE CIT(A) FOUND THAT VARIOUS PARAMETERS LAID DOWN POINTS OUT TO THE FACT TH AT THE ASSESSEE HAS DEALT WITH THE SHARE S IN QUESTION AS AN INVESTOR AND NOT AS A TRADER, AND, THESE REPRESENTED HIS CAPITAL ASSET. HENCE, THE ACTIVITIES OF THE ASSESSEE IN RESPECT OF THE SHARES ARE IN THE NATURE OF INVESTMENT ACTIVITIES AND NOT TRADING OR BUSINESS ACTIVITIES. MERELY BECAUSE THE ASSESSEE LIQUIDATES ITS INVESTMENT WITHIN A SHORT SPAN OF TIME, WHICH HAD GIVEN BETTER OVERALL EARNING TO THE ASSESSEE, WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAD NO INTENTION TO KEEP ON THE FUNDS AS INVESTOR IN EQUITY SHARES, BUT WAS ACTUALLY INTENDED TO TRADE IN SHARES. THE DETAILED FINDINGS RECORDED BY THE CIT(A) AT PARAS 2.4.1 TO 2.4.12 HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY CIT(A) FOR REACHING TO THE CONCLUSION THAT PROFIT EARNED ON SALE OF SHARES IS LIABLE TO BE TAXED AS CAPITAL GAIN INSTEAD OF BUSINESS PROFITS. 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THI S 9 TH DEC. 201 4 . 9 TH DEC. ,2014 SD/ - SD/ - ( ) ( H.L.KARWA ) ( ) ( R.C.SHARMA ) / PRESIDENT / ACCOUNTANT MEMBER MUMB AI ; DATED 09/12 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : ITA NO. 4037 /201 2 8 / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//