RAJESH C. SHAH, MUMBAI V. ADDL CIT RG 17(2), MUMBAI

ITA 4135/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75719 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIYA
• Assessee Lawyers: DR K SHIVARAM; PARAB S SAVIA
• Keywords: Capital asset; Business income

Judgement Text

ITA 4135/MUM/2012 AND 4558/MUM/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 4135/MUM/2012 ASSESSMENT YEAR. 2008-09 SHRI RAJESH C. SHAH C-14, SHRIRAM INDS. ESTATE, 13, G.D. AMBEDKAR ROAD, WADALA MUMBAI 31. VS. ADDL. CIT RANGE 17(2) MUMBAI. PAN:- AAGPS1060C APPELLANT RESPONDENT ITA NO. 4558/MUM/2012 ASSESSMENT YEAR. 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX -17(2) ROOM NO. 217, PIRAMAL CHAMBERS, MUMBAI 400 012. VS. SHRI RAJESH C. SHAH C-14, SHRIRAM INDS. ESTATE, 13, G.D. AMBEDKAR ROAD, WADALA MUMBAI 31. PAN:- AAGPS1060C APPELLANT RESPONDENT A SSESSEE BY DR. K. SHIVARAM AND SHRI PARAB S. SAVIA. RE VENUE BY SHRI DEEPAK SUTARIYA ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 27.04.2012 FOR A.Y. 2008-09. DATE OF HEARING 06 .02.2014 DATE OF PRONOUNCEMENT 0 7 - 03 - 2014 ITA 4135/MUM/2012 AND 4558/MUM/2012 2 2. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME BY WAY OF SHARES OF PROFIT, INTEREST FROM PARTNERSHIP FIRM AND OTHER IN TERESTS AND DIVIDENDS. FOR THE A.Y. UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 11183590/- INCLUSIVE OF SHORT TERM CA PITAL GAIN OF RS. 97,26,090/-. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SHORT TERM CAPITAL GAIN ON SALE OF SHARES SHOULD NOT BE TREATED AS PROFIT FROM TRADING IN SHARES. IN REPLY THE ASSESSEE EXPLAINED AND SUBMITTED THAT THE SAID INCO ME WAS SHORT TERM CAPITAL GAIN AND NOT TRADING PROFIT. THE AO DID NOT ACCEPT THE EXPLANATION OF HE ASSESSEE AND TREATED THE ENTIRE SHORT TERM CAPITAL GAIN ON S ALE OF SHARES AS PROFIT FROM TRADING IN SHARES. 3. ON APPEAL, CIT(A) HELD THAT THE GAIN ARISING OUT OF PURCHASE AND SALE OF SHARES WITH HOLDING PERIOD OF LESS THAN 10 DAYS HAS TO BE CONSIDERED AS BUSINESS INCOME AND REST OF THE GAIN HAS TO BE TREATED AS SH ORT TERM CAPITAL GAIN. THUS BOTH ASSESSEE AND REVENUE HAVE CHALLENGED HE IMPUGN ED ORDER OF CIT(A) BEFORE US. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN TREATING STCG OF RS. 20, 44,599/- WHERE PERIOD OF HOLDING WAS LESS THAN 10 DAYS AS BUSINESS INCOME WI THOUT APPRECIATING THAT ONCE ASSESSEE IS HELD AS INVESTOR, THE TRANSACTIONS CANN OT BE BIFURCATED ON THE BASIS OF HOLDING PERIOD OF 10 DAYS SO AS TO CLASSIFY A PA RT OF THE GAIN AS STCG AND A PART AS BUSINESS PROFIT AND HENCE THE STCG OF RS. 2 0,94,559/- WRONGLY ASSESSED AS BUSINESS AS BUSINESS INCOME BY THE CIT(A) MAY BE ASSESSED AS STCG. 2 THE LD. CIT(A) ERRED IN TREATING STCG OF RS. 20,9 4,559/- WHERE PERIOD OF HOLDING WAS LESS THAN 10 DAYS AS BUSINESS INCOME WI THOUT APPRECIATING THAT ASSESSEE IS ACTIVE FULL TIME PARTNER IN VARIOUS FIR MS DOING DIFFERENT BUSINESS, ALL BORROWINGS ARE FULL TIME INTEREST FREE AND FROM FAM ILY MEMBERS, DEPARTMENT HAS CONSISTENTLY ACCEPTED ASSESSE AS INVESTOR AND ASSES SED STCG AS STCG IN EARLIER YEARS, LONG TERM CAPITAL GAIN IS TREATED AS INCOME FROM CAPITAL GAIN, ALL TRANSACTIONS ARE DELIVERY BASED AND HENCE THE STCG OF RS. 20,94,559/- ASSESSED AS BUSINESS INCOME BY CIT(A) MAY BE ASSESSED AS STC G. ITA 4135/MUM/2012 AND 4558/MUM/2012 3 REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPE AL:- O1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)HAS ERRED IN TREATING THE INCOME ARISING OUT OSF SALE OF SHARES OF HOLDING PERIOD MORE THAN 10 DAYS AS SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME AND DELETING THE ADDITION MADE BY THE ASSESSING OFF ICER, WITHOUT CONSIDERING THE DETAILED ARGUMENTS GIVEN BY THE ASSESSING OFFICER W HICH CLEARLY ESTABLISH THE MOTIVE OF THE ASSESSEE TO INDULGE IN TRADING ACTIVI TY. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE ASSESSING OFFICER BY TREATING INCOME OF RS. 1,09,952/- ARISING OUT OF SH ARE DEALING IN HDFC MUTUAL FUNDS AS BUSINESS PROFIT INSTEAD OF SHORT TERM CAPI TAL GAIN. 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PARTNER IN THE PARTNERSHIP FIRM AND, THEREFORE, THE MAIN ACTIVITY OF THE ASSESSEE IS DEVOTING TIME TO THE PARTNERSHIP FIRM AND NO DEALING IN SHARES. THE LD. AR HAS FURTHER CONTENDED THAT THE ASSESSEE IS A QUALIFIED ENGINEER AND MAINLY INVOLVED IN HIS BUSINESS CARRIED ON THRO UGH PARTNERSHIP FIRMS AND, THEREFORE, THE ASSESSEE CANNOT DEVOTE TIME LIKE A D EALER IN SHARES AS THE ASSESSEE HAS TO TRAVEL DOMESTIC AS WELL AS FOREIGN IN CONNECTION WITH BUSINESS OF THE PARTNERSHIP FIRM. HE HAS FURTHER SUBMITTED T HT NO INTEREST BEARING FUNDS ARE UTILIZED BY THE ASSESSEE FOR INVESTMENT IN THE SHARES AND SECURITIES. THE TOTAL NO. OF TRANSACTIONS CARRIED OUT DURING THE YE AR ARE ONLY 59 IN 29 SCRIPS. THE ASSESSEE HAS PURCHASED AND SOLD SHARES FOR 27 S CRIPS FOR EARNING THE SHORT TERM CAPITAL GAIN, THEREFORE, THE FREQUENCY O F THE TRANSACTION IS VERY LESS. THE SHARES PURCHASED BY THE ASSESSEE ARE HELD AS INVESTMENT AND THE SAME ARE DELIVERY BASED DULY ENTERED INTO DMAT ACCO UNT, THEREFORE, THE INTENTION OF PURCHASE OF SHARES WAS AS INVESTMENT A ND NOT AS STOCK IN TRADE. SHARES WERE PURCHASED FROM ASSESSEES OWN FUND AND THE FUNDS TAKEN FROM THE FAMILY MEMBERS WHICH ARE LYING UNUTILIZED AND, THEREFORE, NO INTEREST WAS ITA 4135/MUM/2012 AND 4558/MUM/2012 4 PAID ON THE FUNDS USED FOR PURCHASE OF SHARES. HE H AS FURTHER CONTENDED THAT THE ASSESSEE HAS CARRIED OUT ONLY 59 TRASNACTIONS O F PURCHASE AND SALE OF SHARES OF 29 SCRIPS OUT OF WHICH ONLY 14 TRANSACTIO NS RELATE TO THE CASES WHERE SHARES HAVE BEEN HELD FOR LESS THAN 10 DAYS AND REST OF THE TRANSACTIONS WERE HELD BY THE ASSESSEE FOR SIGNIFIC ANTLY LONG PERIOD UP TO 258 DAYS. THERE IS NO REPETITIVE TRANSACTION IN THE SAM E SCRIPS. THEREFORE, MERELY BECAUSE THE HANDFUL OF SHARES HAD BEEN SOLD WITHIN A PERIOD OF LESS THAN 10 DAYS WOULD NOT CHANGE THE CHARACTER OF CAPITAL ASS ET INTO TRADING ASSET. THE LD. AR HAS FURTHER SUBMITTED THAT THE CLAIM OF THE ASSESS OF SHORT TERM CAPITAL GAIN HAS BEEN ACCEPTED BY THE AO IN THE EARLIER ASS ESSMENT YEARS 2006-07 2007-08 AND THERE IS NO CHANGE IN THE FACTS AND CIR CUMSTANCES IN THE YEAR UNDER CONSIDERATION. THE AO CANNOT TAKE THE DIFFERE NT STAND WHEN THE CLAIM OF THE ASSESSEE WAS ACCEPTED IN THE EARLIER YEARS. EVEN IN THE SUBSEQUENT YEAR, CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY TH E AO. THUS THE DEPARTMENT HAS ACCEPTED THE CLAIM IN THE EARLIER YE ARS AS WELL AS IN THE SUBSEQUENT YEAR AND ONLY FOR THE YEAR UNDER CONSIDE RATION THE CLAIM OF THE ASSESSEE HAS BEEN DENIED. HE HAS RELIED UPON THE DE CISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GO PAL PUROHIT (2011) ( 336 ITR 287) AND SUBMITTED THAT THE AO CANNOT TAKE A DIFFERENT V IEW FROM THE VIEW TAKEN IN THE EARLIER YEARS ON THE SAME FACTS AND CI RCUMSTANCES. HE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS:- 1. CIT VS. OM PRAKASH SORI (359 ITR 39)(MP) 2. KORADIA CONSTRUCTION VS. DCIT (146 ITD 251) 3. HITESH SATISCHANDRA DOSHI VS. JCIT (140TTJ 32) ITA 4135/MUM/2012 AND 4558/MUM/2012 5 AND SUBMITTED THAT IN THE SERIES OF DECISIONS, THE TRIBUNAL AS WELL AS HONBLE HIGH COURT HELD THAT WHEN THE SHARES ARE HELD AS IN VESTMENT FROM THE DATE OF PURCHASE THEN THE ASSESSEEE IS AN INVESTOR AND MERE LY BECAUSE THE ASSESSEE HAS SOLD THE CERTAIN SHARES WITHIN A SHORT PERIOD D UE TO VOLATILE CONDITION OF THE MARKET AND TO EARN GAIN DOES NOT CHANGE THE CHA RACTER OF INVESTMENT. HE HAS FURTHER SUBMITTED THAT THE SHORT TERM CAPITAL G AIN CANNOT BE BIFURCATED ON THE BASIS OF HOLDING PERIOD. THE TRANSACTIONS OF SA LE AND PURCHASE AS A WHOLE WHICH IS UNDER ONE PORTFOLIO SHOULD BE CONSIDERED H OLISTICALLY AND NOT BY BIFURCATING THE SAME. THUS THE LD. AR HAS SUBMITTED THAT THE VIEW TAKEN BY THE CIT(A) TO THE EXTENT THAT THE GAIN ARISING FROM THE SALE OF SHARES WITHIN A PERIOD OF 10 DAYS HAS TO BE TREATED AS BUSINESS INC OME IS NOT SUSTAINABLE UNDER LAW AS NO SUCH BIFURCATION HAS BEEN PROVIDED UNDER THE ACT. 5. ON THE OTHER HAND, LD DR HAS SUBMITTED THAT THE ASSESSEE HAS BEEN TRADING IN SHARES FREQUENTLY AND IN SHORT INTERVALS . THE MAJOR INCOME OF THE ASSESSEE IS ONLY FROM SHORT TERM CAPITAL GAIN AND N OT FROM OTHER ACTIVITIES THAT TOO HAS BEEN EARNED FROM THE PURCHASE AND SALE OF S HARES UP TO THE 50 DAYS. HE HAS REFERRED THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSEE HAS UTILIZED BORROWED CAPITAL THOUGH NO INTEREST WAS PA ID. FURTHER THE ASSESSEE HAS NOT UTILIZED HIS OWN FUNDS, THEREFORE, THE INTE NTION OF THE ASSESSEE IN PURCHASING THE SHARES IS NOT A LONG TERM INVESTMENT BUT WITH THE MOTIVE TO EARN PROFIT AT THE SHORTEST PERIOD AND TO RETURN/RE FUND THE BORROWED FUNDS. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE IS A REGULA R SUBSCRIBER OF THE IPOS OF THE COMPANY FOR ALLOCATION OF SHARES WHICH HAVE BEE N INVARIABLY SOLD WITH IN 10 DAYS ACCEPT FOR VERY FEW SHARES WHICH HAVE BEEN RETAINED UP TO 30 DAYS OR PART OF THEM UP TO 90 DAYS. THE ASSESSEE IS FOLLOWI NG A SYSTEMATIC PATTERN OF THE SALE AND PURCHASE OF SHARES AND THE FUND IS KEP T IN THE HDFC CASH ITA 4135/MUM/2012 AND 4558/MUM/2012 6 MANAGEMENT FUND WHICH SHOWS THAT THE ASSESSEE IS MA NAGING THE FUND TO MAINTAIN LIQUIDITY SO AS TO UTILIZE THE SAME AS AND WHEN THE NEED ARISES AT A SHORT NOTICE. THE ASSESSEE HAS BEEN CARRYING ON REG ULAR ACTIVITY OF PURCHASE AND SALE OF SHARES BY MANAGING THE CASH IN THE CASH MANAGEMENT FUND OF HDFC WHICH SHOWS THAT THE SOLE INTENTION OF THE ASS ESSEE WAS TO USE THE FUND FOR THE PURCHASE OF SHARES ONLY FOR A SHORT PERIOD. AS REGARDS THE EARLIER YEARS AND SUBSEQUENT YEAR ORDERS, HE SUBMITTED THAT IN TH E EARLIER YEAR INCOME FROM SALE & PURCHASE OF SHARES HAS BEEN ACCEPTED AS CAPITAL GAIN IS NOT RELEVANT AS IN THE INCOME TAX ASSESSMENTS, THE PRIN CIPLE OF RES JUDICATA IS NOT APPLICABLE AND EVERY ASSESSMENT YEAR HAS TO BE CONSIDERED ON THE BASIS OF ITS OWN FACTS. HE HAS RELIED UPON THE ORDER OF A O AND SUBMITTED THAT THE ENTIRE SURPLUS ARISING FROM PURCHASE AND SALE OF SH ARES BE TREATED AS BUSINESS INCOME. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT IN THE EARLIER ASSESSMENT YEARS THE CLAIM OF THE ASSESSEE REGARDING SHORT TERM CAPI TAL GAIN ON PURCHASE AND SALE OF SHARES HAVE BEEN ACCEPTED BY THE DEPARTMENT . EVEN FOR THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2009-10, THE A O HAS ACCEPTED THE CLAIM OF SHORT TERM CAPITAL GAIN ARISING FROM PURCHASE AN D SALE OF SHARES. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CARRIED O UT ONLY 59 TRANSACTIONS OF PURCHASE AND SALE IN 29 SCRIPS OUT OF WHICH THE CAP ITAL GAIN EARNED BY THE ASSESSEE ON SALE OF 27 SCRIPS. THE DETAILS OF SHARE AND HOLDING PERIOD ARE REPRODUCED BY CIT(A) AT PAGE 4 OF THE IMPUGNED ORDE R AS UNDER:- ITA 4135/MUM/2012 AND 4558/MUM/2012 7 S C R IPS H A V ING LES S T HAN 10 D A YS OF HO L DIN G ' S.NO. NAME OF THE SCRIP PERIOD OF HOLDING NO. OF SHARES BROUGHT/SOLD PROFIT(~.) 1 ICRA 6 1965 584130.00 2 TIME TECHNOPLAST LTD. 6 1410 233570,70 3 VISHAL RETAIL LTD. 8 293 132995.63 4 EVERONN SYSTEMS 8 531 213917.44 5 OMAXE LTD. 7 26 2246.40 6 CENTRAL BANK OF INDIA 9 3671 148314.86 7 RELIGARE SEC. 8 35 13591.90 8 BGR 8 803 344317.44 9 ONMOBILE 8 188 2410.16 - 10 SPICE PUBLIC ISSUE 8 23830 320741.20 11 'BEML 6 2 98328.96 82 20,94,559 . SCRIPS HAVING MORE THAN 10 DAYS OF HOLDING I S.NO. NAME OF THE SCRIP PERIOD NO. DT. OF NO. OF DATE OF SALE PROFIT ON SALE OF OF OF PURCHASE SALE SHARESRT.) , HOLDING BUY TRANSCTION TRA NSA CTIO NS 1 POWER FINANCE 56 3 . 21.2.07 2 2.4.07 242863 CORPORATION 25.4.07 2 GTL 47 3 20.4.07 1 6.6.07 2087783 3 GTL INFRASTRUCTURE 93 5 1 7.6.07 3I6495.16 LTD. 4 SREI INFRASTRUCTURE 78 6 22.5.07 5 31.7.07 1067342.11 2 24.7.07 1.8.07 3.8.07 6.8.07 8.8.07 5 CHEM PLAST 44 7 5.11.07 2 5.12.07 804372 2 10.12.07 1 13.12.07 1 19.12.07 1 24.12.07 6 TUBE INVESTMENT OF 204 4 16.5.07 1 4.12.07 33587 INDIA 1 6.12.07 2 7.12.07 7 GMM 171 3 18.6.07 2 5.12.07 54922.81 1 7.12.07 8 POWERGRID 56 4 28.09.07 2 5.1007 1835865.58 1 29.12.07 1 1.8.07 9 DMC 29 2 13.12.07 2 31.12.07 194191.10 5.1207 14.1.08 10 NAGARGUN FERTILISER 250 15'000 . 403900.00 11 MVTAS INFRA LTD.- 29 1117 223556.38 12 EDELWEISS 25 8 6011.44 13 GUJRAT GLASS 250 1000 39900.61 14 JYOTHY LABS 12 1572 159259.32 15 IDEA CELLUAR 27 4328 56092 16 SOUTHERN IRON 76 25000 54825.10 STEEL 1447 76,40,966.61 ITA 4135/MUM/2012 AND 4558/MUM/2012 8 7. IT IS CLEAR FROM THE DETAILS GIVEN ABOVE THAT OU T OF THE TOTAL 27 SCRIPS FROM WHICH SHORT TERM CAPITAL GAIN EARNED BY THE AS SESSEEE 11 SCRIPS WERE HELD FOR A SHORT PERIOD OF 6 TO 9 DAYS AND REMAINI NG SCRIPS WERE HELD BY THE ASSESSEE FOR AN AVERAGE PERIOD OF 90.44 DAYS R ANGING FROM 1 MONTH TO 8 MONTHS. THERE ARE VARIOUS FACTORS WHICH HAS TO BE TAKEN INTO CONSIDERATION FOR DETERMINING THE NATURE OF TRANSAC TION OF PURCHASE AND SALE OF SHARES. THESE FACTORS INCLUDES, PERIOD OF H OLDING, FREQUENCY OF TRANSACTIONS , NO. OF TRANSACTIONS, MOTIVE OF PURCH ASE, OWN FUNDS OR BORROWED FUNDS USED FOR PURCHASE OF SHARES AND PAY MENT OF INTEREST, TREATEMENT OF SHARES IN THE BOOKS OF ACCOUNTS ETC. THEREFORE, NO SINGLE CRITERIA CAN BE A DECISIVE FACTOR TO DETERMINE THE NATURE OF TRANSACTION BUT A NUMBER OF PARAMETERS AND CRITERIA HAS TO BE TAKEN INTO ACCOUNT. 8. IN THE CASE IN HAND, THE TOTAL NUMBER OF TRANSAC TION CARRIED OUT BY THE ASSESSEE ARE 59 IN 29 SCRIPS OUT OF WHICH SHORT TERM CAPITAL GAIN IS EARNED ONLY FROM 27 TRANSACTIONS. IT IS CLEAR THAT AS FAR AS NUMBER OF TRANSACTIONS AND FREQUENCY OF THE TRANSACTION IS CO NCERNED THESE ARE VERY LESS AND WOULD NOT INDICATE THAT THE ASSESSEE IS IN VOLVED AS A FULL TIME TRADER IN THE PURCHASE AND SALE OF SHARES. FURTHER THERE IS NO DENIAL OF THE FACT THAT ASSESSEE IS A PARTNER IN THE TWO PARTNERS HIP FIRMS AND MANAGING THE AFFAIRS AND BUSINESS OF THE PARTNERSHIP FIRMS. THE ASSESSEE HAS USED HIS OWN FUNDS AND FUNDS OF HIS FAMILY MEMBERS AND, THEREFORE, NO INTEREST WAS PAID ON THE FUNDS USED BY THE ASSESSEE FOR THE PURCHASE OF SHARES AND SECURITIES. THOUGH IN SOME OF THE TRANSACTIONS THE HOLDING PERIOD OF THE SHARES RANGING FROM 6 TO 8 DAYS BUT KEEPING IN VIE W THE TOTAL NUMBER OF ITA 4135/MUM/2012 AND 4558/MUM/2012 9 TRANSACTIONS AND THE NUMBER OF TRANSACTIONS IN WHIC H THE HOLDING PERIOD IS LESS THAN 10 DAYS, WE ARE OF THE VIEW THAT ITSELF W ILL NOT CHANGE THE CHARACTER OF TRANSACTION IF THE ASSESSEE HAS TREATE D THE SHARES AS INVESTMENT IN THE BOOKS OF ACCOUNTS AND HAS NOT CLA IMED THE BENEFIT OF STT PAID ON THE PURCHASE AND SALE OF SHARES OF THE TRANSACTIONS. UNDER THE PROVISION OF THE ACT THE SHORT TERM CAPITAL ASSET A ND LONG TERM CAPITAL ASSET IS DEFINED IN CASE OF SHARES AND SECURITIES ON THE BASIS OF HOLDING PERIOD ON ONE YEAR. IN OTHER WORDS IF THE HOLDING PERIOD IS M ORE THAN 1 YEAR THEN THE ASSET IN THE NATURE OF SHARE AND SECURITIES WOULD B E LONG TERM CAPITAL ASSET OTHERWISE IT WILL BE SHORT TERM CAPITAL ASSET. THE GAIN FROM SALE OF CAPITAL ASSET WOULD BE TREATED DEPENDING UPON THE HOLDING P ERIOD LESS THAN 1 YEAR OR MORE THAN 1 YEAR. THUS IF THE ASSESSEE HAS TREAT ED THE TRANSACTIONS AS INVESTMENT THEN THE ENTIRE TRANSACTIONS HAVING HOLD ING PERIOD LESS THAN 1 YEAR WOULD BE TREATED AS SHORT TERM CAPITAL GAIN AN D THERE IS NO SCOPE OF BIFURCATION OF THE SHORT TERM CAPITAL GAIN ON THE B ASIS OF THE HOLDING PERIOD BECAUSE UNDER THE PROVISIONS OF THE ACT, THE SHORT TERM CAPITAL ASSET IN CASE OF SHARES IS ONE WHICH IS HELD BY THE ASSESSEE FOR LESS THATN 1 YEAR OF TIME PERIOD. IT WILL BE FROM ONE DAY TO 265 DAYS. T HEREFORE, THE HOLDING PERIOD RENGING FROM 1 TO 265 DAYS DOES NOT AFFECT T HE NATURE OF CAPITAL ASSET, ONCE IT IS HELD FOR 1 YEAR OR MORE IT WILL B E TREATED AS LONG TERM CAPITAL ASSET. WHEN THERE IS NO INSTANCE OF REPETIT IVE TRANSACTION IN THE SAME SCRIPS THEN IN THE FACT AND CIRCUMSTANCES OF T HE CASE, WE DO NOT SEE ANY JUSTIFICATION IN TREATING THE INVESTMENT AS TRA DING ACTIVITY. FURTHER WHEN NO CHANGE HAS BEEN POINTED OUT OR BROUGHT ON RECORD IN THE FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER CONSIDERATION IN C OMPARISON TO THE FACTS AND CIRCUMSTANCES OF THE EARLIER YEARS AS WELL AS I N THE SUBSEQUENT YEAR, ITA 4135/MUM/2012 AND 4558/MUM/2012 10 THEREFORE, THE AO IS NOT PERMITTED TO TAKE A DIFFER ENT VIEW ON A PARTICULAR ISSUE IN THE ABSENCE OF ANY CHANGE IN THE FACTS AND CIRCUMSTANCES. THUS WHEN THE CLAIM OF THE ASSESSEE WAS ACCEPTED IN THE EARLIER YEARS AS WELL AS IN THE SUBSEQUENT YEAR THEN TO MAINTAIN THE PRINCIP LE OF CONSISTENCY THE CLAIM OF THE ASSESSEE CANNOT BE DENIED UNTIL AND UN LESS THERE IS A MATERIAL CHANGE IN THE FACTS AND CIRCUMSTANCES IN THE YEAR U NDER CONSIDERATION. IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT T HE SURPLUS ARISING FROM PURCHASE AND SALE OF SHARES IN THE CASE OF THE ASSE SSEE CANNOT BE TREATED AS BUSINESS INCOME. ACCORDINGLY, WE ALLOW THE CLAIM OF THE ASSESSEE, THE ORDER OF CIT(A) TO THE EXTENT OF TREATING THE CAPIT AL GAIN AS BUSINESS INCOME IS SET ASIDE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 /03/20 14 SD/- SD/- (SANJAY ARORA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 7 /03/2014 SKS SR. P.S COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI