Deputy Commissioner of Income tax, Pune V. M/s. Tanmarg Investment and Trading co Pvt Ltd, Pune

ITA 428/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4320 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGALIA
• Keywords: Business income; Capital Gains
• Section: 143(3); 11

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.428/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 7, PUNE. . / APPELLANT V/S M/S. TANMARG INVESTMENT AND TRADING CO., PVT. LTD., 1 ST FLOOR, SHANGRILLA GARDEN, OPP. BUND GARDEN, PUNE 411 001. PAN : AAACT7585L. . / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR. REVENUE BY : SHRI SANJAY PUNGALIA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY REVENUE IS EMANATING OUT OF ORDE R OF COMMISSIONER OF INCOME-TAX (A) PUNE 5, PUNE DATED 14.10.2016 FOR A.Y. 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF INVESTMENT AND TRADING IN SHARES OF COMPANIES AND UNITS OF MUTUAL FUNDS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2012- 13 ON 29.09.2012 DECLARING TOTAL INCOME AT RS.26,85, 524/-. THE / DATE OF HEARING : 27.02.2019 / DATE OF PRONOUNCEMENT: 13.03.2019 2 CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSME NT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.20.03.2015 AND THE TOTAL INCOM E WAS DETERMINED AT RS.91,29,910/-. AGGRIEVED BY THE ORDER O F AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.14.1 0.2016 (IN APPEAL NO.PN/CIT(A)-5/DY.CIT, CIR-7/9/2015-16) GRANTED SU BSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A ), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(APPEALS) ERRED TREATING OF INCOME OF RS.82,24,6 37/- AS CAPITAL GAINS AGAINST THE CLAIM OF THE ASSESSING OFFICER TO TREAT THE SAME AS INCOME FROM BUSINESS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(APPEALS) ERRED HOLDING THE ACTIVITY OF TRANSACT ION IN SHARES / MUTUAL FUND BY ENGAGING PMS WAS AN INVESTMENT ACTIVITY AND RESULTANT GAIN WAS ASSESSABLE UNDER THE HEAD CAPITAL GAINS. 3. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGET HER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT DURING THE YEAR ASSESSEE HAD TRANSACTED HEAVILY IN SHA RES THROUGH DSP MERRILL LYNCH FUND MANAGERS, PORTFOLIO MANAGEMENT SERVICE PROVIDER (PMS) AND THE INCOME EARNED THROUGH PMS WAS SHOWN AS I NCOME FROM CAPITAL GAINS. ASSESSEE ALSO EARNED INCOME FROM INVESTMENTS IN MUTUAL FUNDS. ON PERUSING THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND DSP MERRILL LYNCH FUND MANAGERS, AO NOTED THAT PORTFOLIO MANAGER ACTS IN FIDUCIARY CAPACITY AS TRUSTEE AND AGENT OF THE A SSESSEE. HE WAS OF THE VIEW THAT THE ORGANIZED ACTIVITY THAT WAS CA RRIED OUT BY THE ASSESSEE THROUGH PORTFOLIO SERVICES OF INVESTING IN SHARES WAS A BUSINESS ACTIVITY. THE SUBMISSIONS OF THE ASSESSEE AS TO WHY THE TRANSACTIONS THROUGH PMS PROVIDERS BE TREATED AS CAP ITAL GAINS WAS NOT FOUND ACCEPTABLE TO THE AO. HE THEREFORE HELD THAT THE PROFITS EARNED BY THE ASSESSEE ON INVESTMENTS MADE THROUGH P MS PROVIDERS AMOUNTS TO INCOME FROM BUSINESS AND PROFESSION. HE AC CORDINGLY 3 TREATED THE CAPITAL GAINS ON SHARE TRANSACTIONS OF RS.82 ,24,361/- AS INCOME FROM BUSINESS. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO FOLLOWING HIS PREDECESSORS ORDER IN ASSESSEES OWN CASE IN A.Y. 2010-11 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ACTIVITY OF THE SHARE TRANS ACTIONS THROUGH PMS TO BE AN INVESTMENT AND THE RESULTANT GAIN BEING AS SESSABLE AS CAPITAL GAINS. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENU E IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND FURTHER SUBMITTED THAT LD.CIT(A) WHILE DECIDING THE APPE AL IN ASSESSEES FAVOUR HAD RELIED UPON THE ORDER OF HIS PREDE CESSOR FOR A.Y. 2010-11. HE SUBMITTED THAT AGAINST THE ORDER OF LD.CIT (A), REVENUE IN A.Y. 2010-11 HAD CARRIED THE MATTER BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DT.18.04.2018 IN ITA NO.378/PUN/2016 HAS DISMIS SED THE APPEAL OF REVENUE. HE PLACED ON RECORD THE COPY OF AFORE SAID ORDER AND POINTED TO THE RELEVANT FINDINGS. HE FURTHER SUBMITTED THA T SINCE THERE ARE NO CHANGE IN THE FACTUAL POSITION IN THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEAR AND T HEREFORE NO INTERFERENCE TO THE ORDER OF LD.CIT(A), IS CALLED FOR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS ABOUT THE TREATMENT OF CAPITAL GAINS EARNED FROM SHARE TRANSACTIONS BY ENGAGING PMS TO BE AN INVESTMENT ACTIVITY OR CAPITAL GAINS. WE FIND THAT IDENTICA L ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2010-11. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 4 5. BEFORE US, AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EARNING OF PROFITS ON PURCHASE AND SALE OF SHA RES EMPLOYING THE SERVICES OF PORTFOLIO MANAGEMENT SERVICES IS TAXABL E UNDER THE HEAD CAPITAL GAINS. FURTHER, LD. COUNSEL SUBMITTED THAT, ON SIMILAR FACTS, THE PUNE BENCH OF THE TRIBUNAL HAS DECIDED NUMBER OF CA SES TREATING THE SAID INCOME AS CAPITAL GAINS ONLY. BEFORE US, LD. C OUNSEL FOR THE ASSESSEE FILED THE ORDER OF PUNE BENCH OF THE TRIBU NAL IN THE CASE OF YUGMARG INVESTMENT & TRADING PVT. LTD. VS. DCIT I TA NO.310/PUN/2015, DATED 12-05-2017 FOR THE A.Y. 2008 -09. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECISION IS REL EVANT FOR THE SIMILAR PROPOSITION. THE SAID DECISION WAS DELIVERED RELYIN G ON THE DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KRA HOLDI NG & TRADING PVT. LTD. VS. DCIT DATED 31-05-2011 AND SHRI APOORVA PAT NI VS. ACIT, DATED 21-06-2012. 6. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF TH E AO DUTIFULLY. 7. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE ON THIS ISSUE AND THE DECISIONS RELIED ON BY THE ASSES SEE. WE PROCEED TO EXTRACT THE FINDING OF TRIBUNAL IN THE CASE OF YUSM ARG INVESTMENT & TRADING PVT. LTD. (SUPRA) AND THE SAME READS AS UND ER : 8. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE TH E CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI APOORVA P ATNI VS. ADDL. COMMISSIONER OF INCOME TAX (SUPRA). THE TRIBUNAL IN THE SAID CASE AFTER CONSIDERING THE DECISIONS RENDERED IN THE CAS ES OF KRA HOLDING & TRADING P. LTD. VS. DY. COMMISSIONER OF I NCOME TAX (SUPRA) AND ARA TRADING & INVESTMENTS P. LTD. VS. D Y. COMMISSIONER OF INCOME TAX (SUPRA) HELD THAT THE PRO FIT ARISING ON INVESTMENT CARRIED OUT BY THE ASSESSEE THROUGH PMS DOES NOT RESULT IN GAIN ASSESSABLE UNDER THE HEAD BUSINESS I NCOME. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ARE AS UNDER : '10. IN ANY CASE, IN SO FAR AS THE VERY NATURE OF DISCRETIONARY PORTFOLIO MANAGEMENT SCHEME IS CONCER NED, THE SAME HAS ALREADY BEEN CONSIDERED BY OUR CO-ORDI NATE BENCH IN THE CASE OF ARA TRADING & INVESTMENTS (P.) LTD. (SUPRA) AND KRA HOLDING & TRADING (P.) LTD (SUPRA). ACCORDING TO THE TRIBUNAL, THE SCHEME IS FOR AN ACT IVITY OF WEALTH MAXIMIZATION RATHER THAN A PROFIT MAXIMIZATIO N AND ACCORDINGLY, IT HAS BEEN HELD THAT GAIN FROM SUCH A CTIVITY WAS LIABLE TO BE CONSIDERED AS DERIVED FROM AN ACTI VITY OF INVESTMENTS AND NOT TRADING. THEREFORE, ON THIS ASP ECT OF THE CONTROVERSY, WE FIND THAT THE COMMISSIONER OF I NCOME- TAX (APPEALS) MADE NO MISTAKE IN FOLLOWING THE ORDE R OF THE TRIBUNAL IN THE CASE OF ARA TRADING & INVESTMENTS ( P.) LTD. (SUPRA) AND KRA HOLDING & TRADING (P.) LTD (SUPRA) AND IN HOLDING THAT THE ASSESSEE WAS INDEED ENGAGED IN AN INVESTMENT ACTIVITY WHILE APPOINTING THE PMS PROVID ER WITH REGARD TO THE STATED TRANSACTIONS. 11. IN SO FAR AS OTHER OBJECTIONS OF THE ASSESSING OFFICER THAT THERE WAS VOLUME AND FREQUENCY OF TRANSACTIONS WAS LARGE SO AS TO CO NSTITUTE BUSINESS ACTIVITY, WE FIND THAT THE FACTUAL MATRIX HAS BEEN APPROPRIATELY ANALYZED BY THE COMMISSIONER OF INCOM E-TAX (APPEALS) IN PARA 4.20 OF THE IMPUGNED ORDER, WHICH IS AS UNDER: 'SO FAR AS VOLUME AND FREQUENCY OF TRANSACTI ONS ARE CONCERNED, IT HAS BEEN EXPLAINED THAT ACTUALLY THE NUMBER OF SCRIP TRADED WAS NOT VERY LARGE BEING 62 ACROSS ALL THE 3 PMSS, ENGAGED DURING THE YEAR, WHICH WAS NOT MUCH CONSIDERING THAT ABOUT 2000 COMPANIES' SHARES WERE ACTIVELY TRADED IN THE STOCK EXCHANGES. IT WAS ALSO CLARIFIED THAT THE FREQUENCIES OF TRANSACTIONS WAS NOT MUCH. SOMETIMES SEVERAL TRANSACTIONS MAY HAVE TO BE MADE IN 5 THE SAME SCRIP, WHICH INCREASES THE FREQUENCY. IT W AS EMPHASISED THAT THE TOTAL SALES TURNOVER IN THE INV ESTMENTS MADE THROUGH PMS DURING THE YEAR WAS 19.06 CRORES INVOLVING 62 SCRIPS, WHEREAS, IN THE SHARE TRADING BUSINESS SEPARATELY SHOWN BY THE APPELLANT, THE SALES TURNOV ER WAS 73.21 CRORES INVOLVING 76 SCRIPS. THIS SHOWS THAT I N THE SHARE TRADING BUSINESS ACTIVITY, THE TURNOVER WAS A LMOST 4 TIMES HIGHER EVEN THOUGH THE NUMBER OF SCRIPS WERE ONLY MARGINALLY HIGH. IT WAS EMPHASIZED THAT IN THE TRAD ING ACTIVITY EVEN THOUGH THE SHARES INVOLVED WERE PROPORTIONATELY MUCH LESS AS COMPARED TO THE TURNOV ER, SINCE THE INTENTION WAS TO CARRY ON BUSINESS ACTIVI TY, THE SAME WAS SHOWN UNDER THE HEAD BUSINESS INCOME'. IT ALSO INCLUDED SPECULATIVE TRANSACTION AND DAY TRADING, W HEREAS NO SUCH TRANSACTIONS WERE ENTERED INTO BY THE PMS. THE APPELLANT HAS ALSO EMPHASIZED THAT I WAS PRUDENT INVESTMENT ACTIVITY OF THE PMS TO BUY A TARGET QUAN TITY OF A PARTICULAR SCRIP IN SMALL LOTS FOR AVERAGING PURPOS E; AND IT SHOULD NOT BE TREATED AS FREQUENT AND REPETITIVE TRANSACTIONS. THE APPELLANT THEN GOES ON TO CITE TH E DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF JANAK S. RANGWALA, 11 SOT 627 IN WHICH IT WAS OBSERVED THAT MERE VOLUME AND MAGNITUDE OF TRANSACTION WILL NOT ALTER THE NATURE OF TRANSACTION IF THE INTENTION WAS TO HOLD THE SHARES AS INVESTMENT AND NOT AS STOCK IN TRADE. SIMILAR EXPLANATION HAS BEEN GIVEN ONCE AGAIN BY THE LETTER DT 14.6.2010 BY THE APPELLANT IN RESPONSE TO THE AO 'S REPORT. 'WE HAVE EXAMINED THE POSITION, IN PARTICULAR THE A NALYSIS MADE OUT BY THE COMMISSIONER OF INCOME-TAX (APPEALS ) IN THE EXTRACTED PORTION WITH REFERENCE TO THE STATEME NT AND TRANSACTIONS WHICH HAVE BEEN PLACED N THE PAPER BOO K FILED BEFORE US. IN OUR CONSIDERED OPINION, THE INF ERENCE DRAWN OUT BY THE COMMISSIONER OF INCOME-TAX (APPEALS ) CLEARLY ESTABLISHES THAT THE VOLUME AND FREQUENCY O F TRANSACTIONS SOUGHT TO BE MADE OUT BY THE ASSESSING OFFICER WITH REGARD TO THE IMPUGNED ACTIVITY STANDS ON AN ENTIRELY DIFFERENT FOOTING AND IS QUITE DISTINCT FR OM THE ACTIVITY OF TRADING IN SHARES CARRIED OUT BY THE AS SESSEE. IN FACT, IT IS NOTABLE THAT IN THE SHARE TRADING BUSIN ESS CARRIED ON BY THE ASSESSEE, HE HAS CARRIED OUT CERTAIN SPEC ULATIVE AND TRADING ACTIVITIES AND THAT IN THE CASE OF A PM S PROVIDER, SUCH ACTIVITIES ARE PROHIBITED IN LAW. HA VING REGARD TO THE AFORESAID DISCUSSION BY THE COMMISSIO NER OF INCOMETAX (APPEALS), WHICH IS BORNE OUT OF THE RECO RD, WE, THEREFORE, FIND NO REASONS TO UPHOLD THE PLEA OF TH E ASSESSING OFFICER ON THE BASIS OF THE VOLUME AND FR EQUENCY OF TRANSACTIONS. 12. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT EARNING OF DIVIDENDS WAS NOT AT ALL THE MOTIVE OF SUCH TRAN SACTIONS, BECAUSE THE SHARES HAVE BEEN SOLD JUST BEFORE THE S AME BECAME EXDIVIDEND ON THE STOCK EXCHANGES. IN THIS R EGARD, WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEAL S) HAS FACTUALLY FOUND THE SAME TO BE CONTRARY TO MATERIAL ON RECORD AS PER THE DISCUSSION IN PARA 4.15 OF THE OR DER, WHICH IS AS UNDER: '4.15 FOR THE PROPOSITION THAT EARNING OF DIVIDEND WAS NOT THE MOTIVE, THE AO HAS CITED INSTANCES WHEN THE APPELLANT HAS SOLD SOME SHARES JUST BEFORE 6 THE DATES OF THE SHARES BECOMING EX-DIVIDEND ON THE STOCK EXCHANGES. HOWEVER, A PERUSAL OF THE CHART GIVEN IN THE ASSESSMENT ORDER SHOWED THAT THE INFORMATION REGARDING DATE OF DECLARATION OF DIVIDE ND HAS NOT BEEN GIVEN. FOR EXAMPLE, IN THE CASE OF SCR IP OF AMTEK AUTO, THE SALE WAS MADE ON 19.9.2005 WHEREAS THE EX-DIVIDEND DATE WAS 22.12.2005; I.E. THE SALE WAS MADE MORE THAN 3 MONTHS BEFORE THE SHARES BECAME EXDIVIDEND. IT DOES NOT NECESSARILY FOLLOW THAT THE DIVIDEND WAS ALREADY DECLARED IN THIS CASE AND STILL THE APPELLANT SOLD THE SAME BEFO RE THE SHARES BECOMING EX-DIVIDEND. SIMILARLY, IN THE CASE OF ACC, TWO PARTICULAR SALE DATES MENTIONED WHEN THE SCRIP WAS TRANSACTED BY DSPML, WERE 24.3.2005 AND 16.11.05, WHEREAS THE EX- DIVIDEND DATE HAS BEEN MENTIONED AS 29.3.2006. IT CANNOT THEREFORE BE SAID THAT THE APPELLANT HAD KNOWINGLY SOLD THE SHARES AFTER DECLARATION OF THE DIVIDEND BEFORE IT BECAME EX-DIVIDEND. AGAIN IN RESPECT OF SHARES OF JET AIRWAYS, THE EXDIVIDEND DATE HAS BEEN MENTIONED AS 14.9.2005 BY THE AO, AND THE DATE OF SALE HAS BEEN MENTIONED AS 17.10.2005 AND 23.1.2006 IN THE CASE OF TWO DIFFERENT PMS'S. THIS INSTANCE POINTS OUT TO A WRONG CONCLUSION BY THE AO AS HERE THE SHARES HAVE BEEN SOLD AFTER THOSE HAVE BECOME EXDIVIDEND. COMING TO TWO MORE INSTANCES POINTED OUT BY THE AO IN THIS CHART, SHARES OF NALC O HAVE BEEN SOLD ON 30.3.2006 WHICH WAS AFTER THE EX-DIVIDEND DATE OF 23.9.2005; AND THE SALE OF ONGC SHARES BY DSPML WAS MADE ON 30.12.2005, WHICH ALSO IS AFTER THE EX-DIVIDEND DATE OF 1.9.200 5. IT IS, THEREFORE, CLEAR THAT THE INSTANCES POINTED OUT BY THE AO DID NOT SUPPORT THIS ARGUMENT, EXCEPT IN THE CASE OF TWO OR THREE INSTANCES, WHERE THE SALE HAS BEEN MADE JUST BEFORE THE SHARES BECOMING EX- DIVIDEND; AND THERE WAS A POSSIBILITY THAT THE DIVIDEND WOULD HAVE BEEN DECLARED AND KNOWN TO THE PMS. HOWEVER, SUCH INSTANCES ARE FEW AND FAR BETWEEN; AND IT CANNOT LEAD TO A CONCLUSION OF INDULGING IN A BUSINESS ACTIVITY. MOREOVER, AS HAS BEEN EXPLAINED ELSEWHERE BY THE APPELLANT, SUCH DAY TO DAY DECISIONS REGARDING PURCHASE AND SALE OF PARTICULAR SCRIPS ARE NOT THAT OF THE APPELLANT, BU T OF THE PORTFOLIO MANAGER SINCE THE APPELLANT'S CASE WA S THAT OF ENGAGEMENT OF DISCRETIONARY PORTFOLIO MANAGEMENT SERVICES. IT WAS EXPLAINED THAT AS PER SEBI REGULATIONS, THERE WERE TWO TYPES OF PMSS I.E. DISCRETIONARY AND NON- DISCRETIONARY. IT WAS EXPLAINED THAT IN CASE OF DISCRETIONARY PMS AS AVAILED BY THE APPELLANT, HE APPELLANT DID NOT HAVE CONTROL ON THE DAY TO DAY ACTIVITIES AND DID NOT GI VE ANY DIRECTIONS, EXCEPT FOR THE BROAD GUIDELINE FOR NOT PURCHASING THE SHARES OF PATNI COMPUTERS SYSTEMS LTD. SINCE IT WAS PROMOTED BY THE APPELLANT AND HIS FAMILY MEMBERS. IT WAS ALSO EXPLAINED DURING THE APPELLATE PROCEEDINGS THAT IN ACCORDANCE WITH THE ACCOUNTING STANDARD AND CBDT CIRCULAR, DIVIDEND EARNING WAS NOT THE ONLY CRITERION AND IN ANY CASE SUBSTANTIAL AMOUNT OF DIVIDEND OF RS 16,31,796/- WAS ALSO EARNED DURING THE YEAR IN THE INVESTMENTS THROUGH THE PMS. THUS, THIS POINT IS ADEQUATELY EXPLAINED.' 7 ON THIS ASPECT ALSO, WE FIND NO MATERIAL TO DIFFER WITH THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS ), WHICH WE HEREBY AFFIRM. 13. ANOTHER ASPECT MADE OUT BY THE ASSESSING OFFICE R WAS TO THE EFFECT THAT BY ITS VERY NATURE, SALES AND PU RCHASES CARRIED OUT BY THE PMS PROVIDER WAS OF SHORT-TERM N ATURE AND, THEREFORE, IT WAS TO BE REGARDED AS A BUSINESS ACTIVITY. FACTUALLY SPEAKING, ON THIS ASPECT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DEALT WITH THE SAME IN PAR A 4.17 OF HIS ORDER, WHICH IS AS UNDER: '4.17 THE AO ALSO POINTED OUT TO SOME INSTANCES WHEN SHARES OF THE SAME COMPANY HAVE BEEN REPURCHASED SOMETIMES AFTER THE SALE. IN THIS CONNECTION, IT IS EXPLAINED THAT SUCH INSTANCES WER E NOT MUCH AND THERE WERE REASONS FOR CHURNING OF THE INVESTMENTS BY THE PORTFOLIO MANAGER AT DIFFERENT INSTANCES DURING THE YEAR. IT IS RELEVANT TO NOTICE THAT THE APPELLANT ALSO POINTED OUT THAT THERE WERE MANY SHARES HELD FOR A LONG TIME, EVEN UPTO 18 MONTHS, B Y THE PMS, AND SUBSTANTIAL AMOUNT OF LONG TERM CAPITAL GAIN OF RS 83,09,187/- WAS ALSO SHOWN. IN FACT, THE AO HAS TREATED EVEN THIS LTCG OF RS 83,09,187/- AS BUSINESS INCOME, WHICH CANNOT BE JUSTIFIED. ON THE OTHER HAND, DEPENDING ON THE MARKET CONDITIONS, VIS-A-VIS THE ANALYSIS OF THE FUNDAMENTALS OF PARTICULAR SCRIP, DECISION MAY HAVE TO BE TAKEN TO EXIT AT A PARTICULAR POINT OF TIME, AND TO RE-ENTER AFTER A FEW MONTHS ON CHANGE OF FUNDAMENTALS. THIS DOES NOT MEAN THAT IT WAS IN THE NATURE OF REPEATED TRADING ACTIVITIES IN THE SAME COMMODITY; IN WHICH CASE THERE COULD BE MULTIPLE REPETITIONS WITHIN A FEW DAYS; OR EVEN DURING THE SAME DAY.' 14. IN THIS CONTEXT, WE FIND THAT THE ASSESSING OFFICER HAS TREATED EVEN THE GAIN ON INVESTMENTS HELD FOR MORE THAN 12 MONTHS ALSO AS BUSINESS INCOME. QUITE CLEARLY AS PER THE STATEMENT IN RESPE CT OF GAINS AND INVESTMENT IN SHARES THROUGH PMS PROVIDER PLACED AT PAGE 73 OF THE PAPER BOOK, THE HOLDING PERIOD GOES UPTO EVEN 18 MONTHS BEFORE THE INVESTMENT WAS LIQUIDATED. BE THAT AS IT MAY, THE FACTOR OF PERIOD OF HOLDING CANNOT BE ASCRIBED TO T HE ASSESSEE, INASMUCH AS IT HAS NO CONTROL ON SUCH DECISION MAKING IN A DISCRETIONARY PMS ARRANGEMENT, BECAUSE SUCH DECISIONS ARE TAKEN BY THE PMS PROVIDER AS WE HAVE OBSERVED EARLIER. IN ANY CASE, IN SO FAR AS THE PRESENT CASE IS CONCERNE D, THE INVESTMENT OBJECTIVE OF THE ASSESSEE MANDATED TO THE PMS PROVIDER WAS TO ACHIEVE GROWTH PROSPECTS AND THE ACTUALITY OF TRANSACTIONS CARRIED OUT BY TH E PMS PROVIDER IN ORDER TO ACHIEVE THE STATED INVESTMENT OBJECTIVE OF THE ASSESSEE CANNOT BE MADE A BASIS TO CHARGE THE ASSESSEE OF HAVING A DIFFEREN T OBJECTIVE. CONSIDERING THE AFORESAID MATTERS, WE, THEREFORE, ARE OF THE VIEW THAT THE OBJECTIONS MADE OUT BY THE ASSESSING OFFICER HAVE BEEN ADEQUATELY ADDRESSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN COMING TO HIS FINDINGS THAT THE INVESTMENTS CARRIED OUT BY THE ASSESSEE THROUGH THE 8 PMS PROVIDER DO NOT RESULT IN A GAIN ASSESSABLE AS BUSINESS INCOME. 15. IN VIEW OF THE AFORESAID DISCUSSION, AND HAVING REGARD TO THE REASONINGS EXTENDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) WITH WHICH WE HEREBY AFFIRM, WE FIND THAT THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS MISDIRECTED AND ACCORDINGLY THE CONCLUSION ARRIVED AT BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT IS HEREBY AFFIRMED. THUS, ON THIS GROUND, REVENUE FAILS. ' 9. THE LD. DR HAS NEITHER BEEN ABLE TO DISTINGUIS H THE ABOVE DECISION OF THE TRIBUNAL, NOR HAS HE BROUGHT ON REC ORD ANY CONTRARY DECISION. THUS, IN VIEW OF THE FACTS OF TH E CASE AND THE DECISIONS OF CO-ORDINATE BENCH, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE DEPARTMENT. ACCORDINGLY, THE SAME IS DISMISSED. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE CON FIRM THE ORDER OF CIT(A) HOLDING THE ACTIVITY OF PURCHASE AND SALE OF SHARES BY ENGAGING PMS CONSTITUTES AN INVESTMENT ACTIVITY AND THE RESULTAN T GAIN/LOSS IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. THE AFORESAID DECISION OF THE TRIBUNAL HAS NOT BEEN SE T ASIDE, STAYED OR OVER-RULED BY HIGHER JUDICIAL AUTHORITIES. BEFORE US, REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THAT OF EARLIER YEAR NOR HAS PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2010-11 AND FOR SIMILAR REASON S FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUNDS OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 13 TH DAY OF MARCH, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 13 TH MARCH, 2019. YAMINI 9 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-5, PUNE. PR.CIT, PUNE-4, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $,-./ GUARD FILE. / BY ORDER , // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE