Shri Mukesh Jhaweri, Indore V. The Addl.CIT R-1, Indore

ITA 516/IND/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2313 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 04-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: C P RAWKA
• Keywords: Business income; Earning of tax free income; Benefit of exemption
• Section: 14A

Judgement Text

MUKESH JHAVERI ITA 516/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEM BER ITA NO. 516/IND/2013 A.Y. 2005-06 SHRI MUKESH JHAWERI INDORE ::: APPELLANT VS ADDL. CIT RANGE-1, INDORE ::: RESPONDENT APPELLANT BY SHRI C.P. RAWKA RESPONDENT BY SHRI K.G.GOYAL DATE OF HEARING 16.1.201 8 DATE OF PRONOUNCEMENT 2 8 .2.201 8 O R D E R PER SHRI MANISH BORAD, AM THIS APPEAL OF THE ASSESSEE RELATING TO THE ASSESSMENT YEAR 2005-06 IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-III, BARODA HAVING CONCURRENT JURISDICTION OVER CIT(A)-I, INDORE ) DATED MUKESH JHAVERI ITA 516/IND/2013 2 30.4.2013 WHICH IS ARISING OUT OF THE ORDER U/S 143( 3) OF THE ACT DATED 24.12.2007 FRAMED BY THE ADDL. CIT, RANG E-I, INDORE. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. LD. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 14A WITHOUT APPRECIATING THAT NO EXPENSES HAVE BEEN BOOKED WHICH ARE DIRECTLY RELATED TO THE EXEMPT INCOME AND NO INTEREST HAS BEEN DEBITED TO PROFIT AND LOSS ACCOUNT. II. (A) LD. COMMISSIONER OF INCOME TAX (A) ERRED IN ENHANCING THE TAX LIABILITY BY TREATING RS. 4140403 AS BUSINESS INCOME WHICH WAS RIGHTLY ACCEPTED BY THE ASSESSING OFFICER AS SHORT TERM CAPITAL GAIN. MUKESH JHAVERI ITA 516/IND/2013 3 (B) LD. COMMISSIONER OF INCOME TAX (A) ERRED IN ON THE FACTS OF THE CASE AND CONFIRMED THE TREATMENT O F SHORT TERM CAPITAL GAIN AS BUSINESS INCOME AT RS.38,35,595/- MADE BY ASSESSING OFFICER. 3. BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RECOR D, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DEALING IN SHARES. TO TAL TAXABLE INCOME OF RS. 93,34,650/- IS DECLARED IN THE RETURN OF INCOME FILED ON 29.10.2005. THE ASSESSEE HAS ALSO SHOWN INCOME FROM SPECULATIVE SHARE TRADING, HOUSE PROPERTY INCOME, LONG TERM AND SHORT TERM CAPITAL GAIN AND DIVIDEND INCOME. THE CASE SELECTED THROUGH CASS. NO TICE U/S 143(2) WAS SERVED ON THE ASSESSEE. NECESSARY DETAIL S, AS CALLED FOR, WERE SUBMITTED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 13,51,268/- AND ALSO HAD INVESTED IN SHARES BUYT TH ERE WAS NO DISALLOWANCE SUO MOTO MADE BY THE ASSESSEE U/S 14A OF THE ACT AND, THEREFORE, THE ASSESSING OFFICER MADE MUKESH JHAVERI ITA 516/IND/2013 4 DISALLOWANCE OF RS. 2,39,108/-. THE ADDITION FOR LOW HOUSEHOLD EXPENSES WAS ALSO MADE AT RS. 50,000/-. FURTHER, THE ASSESSING OFFICER WHILE EXAMINING THE I NCOME FROM SHORT TERM CAPITAL GAINS AND TRADING OF SHARES OBSERVED THAT THE ASSESSEE WAS INDULGED IN TRADING OF SHARES, INVESTING IN SHORT TERM AND LONG TERM INVESTM ENT IN SHARES AND THE TRANSACTIONS WERE NOT CLEARLY DEFINED AS T O WHETHER THEY ARE BUSINESS IN NATURE OR INVESTMENT IN NATURE. HOWEVER, THE LEARNED ASSESSING OFFICER KEEPI NG IN VIEW CBDT CIRCULAR NO. 4/2007 DATED 15.6.2007 TREATED THE SHORT TERM CAPITAL GAINS OF RS.8,35,595/- AS BUSINE SS INCOME. THE INCOME WAS ASSESSED AT RS.96,35,756/-. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ON VARIOUS GROU NDS BUT FAILED TO SUCCEED ON ANY OF THEM. EVEN THE COMMISSIONER OF INCOME TAX (APPEALS) ENHANCED THE ADDITION BY TREATING TOTAL SHORT TERM CAPITAL GAIN OF RS . MUKESH JHAVERI ITA 516/IND/2013 5 76,30,666/- AS BUSINESS INCOME. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. APROPOS GROUND NO. 1 CHALLENGING THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE DISALLOWANCE U/S 14A OF THE ACT, WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. WE FIND THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF R S. 13,51,268/-. THERE IS AN INVESTMENT IN EQUITY SHARES OF RS.3,80,35,247/-. FURTHER THERE HAVE BEEN REGULAR TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND NO SPECIF IC EXPENDITURE HAS BEEN DISALLOWED SUO MOTO IN THE RETUR N OF INCOME. IT IS BEYOND IMAGINATION THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE. EVEN THROUGH THE METHOD PROVIDED IN RULE 8D READ WITH RULE 14A HAS BEEN BROUG HT INTO EFFECT FROM THE ASSESSMENT YEAR 2008-09 BUT STI LL, IN OUR VIEW, MINOR DISALLOWANCE OF RS. 2,39,108/- IS JUS TIFIED AT THE END OF THE ASSESSING OFFICER. WE FIND NO INF IRMITY IN MUKESH JHAVERI ITA 516/IND/2013 6 THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APP EALS) CONFIRMING THE IMPUGNED DISALLOWANCES. THIS GROUND O F THE ASSESSEE IS DISMISSED. 5. APROPOS GROUND NO. 2 RELATING TO TREATMENT OF SHOR T TERM CAPITAL GAIN AS BUSINESS INCOME, THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS BEEN CARRYING ON TRADING OF SHARES AND MAKING INVESTMENT IN SHARES FROM LAST SEVERAL YEARS. SINCE THE RATE OF TAXATI ON ON INCOME ARISING FROM TRADING AS WELL AS SHORT TERM CAPITAL GAIN WAS SAME UPTO A.Y. 2004-05, THE ASSESSEE HAD NOT BIFURCATED THE HOLDING OF SHARES UNDER TWO DIFFERENT HEADS UPTO31/03/2004. SECTION 111A WAS INTRODUCED IN THE INCOME TAX ACT BY FINANCE ACT 2004 WITH EFFECT FROM 2005. RESULTANTLY, THE RATE OF TAXATION IN RESPECT OF SHORT TERM CAPITAL GAIN ON SALE OF SHARES WAS REDUCED WITH THE INTRODUCTION OF SECURITY TRANSACTION TAX. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE MUKESH JHAVERI ITA 516/IND/2013 7 ASSESSEE, HOWEVER, CONTINUED TO KEEP COMPLETE RECORD OF SHARES HOLDING THAT IS QUANTITY PURCHASE, DATE OF PURCHASE , COST OF PURCHASE, DATE OF SALE AND SALES CONSIDERATION. THE DETAILS OF SHARE HELD DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06 ARE DEPICTED IN A CHART ANNEXED AT PAGE 9 TO 14. HE SUBMITTED THAT FROM THE SAID CHART I T IS EVIDENT THAT THE HOLDING OF SHARES RANGES FROM 88 DAYS AND ABOVE EXCEPT IN ONE STRIP IN WHICH THE ASSESSEE HAS SUFFERED THE LOSS. THEREFORE, THE HOLDING PERIOD IT SELF DEMONSTRATES THAT NONE OF THE TRANSACTION RECORDED IN T HE CHART COULD BE TREATED AS TRADING IN SHARES. HE SUBMITT ED THAT THE ASSESSEE HAS DISCLOSED INCOME FROM TRADING IN SHARES WHICH PERTAINS TO INTRADAY TRADING AS WELL AS FUTU RE AND OPTION. THE ABOVE INCOME IS DULY ACCOUNTED FOR IN THE PROFIT & LOSS ACCOUNT AS INCOME FROM BUSINESS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT TH E ASSESSING OFFICER HAS ASSESSED RS 38, 35,595 AS INCOM E MUKESH JHAVERI ITA 516/IND/2013 8 FROM BUSINESS FROM OUT OF THE INCOME SHOWN BY THE ASSESSEE UNDER THE HEAD OF SHORT TERM CAPITAL GAIN AT RS.65,53,325/-. THE ASSESSING OFFICERS OPINION IS BASED ON FREQUENCY AND VOLUME OF TRANSACTIONS. IT WAS ALSO SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE OBSERVATION MADE BY THE LD ASSESSING OFFICER IS NOT I N THE LINES OF PRINCIPALS LAID DOWN BY VARIOUS JUDICIAL PRONOUNCEMENTS. THE FOUR INGREDIENTS NECESSARY FOR TERMING A TRANSACTION IN THE NATURE OF TRADE ARE VOLUME, FREQUENCY, REGULARITY, AND CONTINUITY. IT MAY KINDLY B E APPRECIATED IN THE INSTANT CASE, THERE IS ONLY ONE INGR EDIENT OF VOLUME. HE SUBMITTED THAT THERE IS NEITHER THE FR EQUENCY NOR THE CONTINUITY AND REGULARITY. EVEN THE ASPECT OF FREQUENCY NOTED BY THE LD ASSESSING OFFICER DOES NOT FIND PLACE IN OUR CASE. THE TOTAL TRANSACTION AS PER THE CHART ANNEXED CLEARLY SUGGESTS THAT THE PRIME MOTIVE OF THE ASSESSEE WAS ALL ALONG THAT OF INVESTMENT. THERE IS NO IOTA MUKESH JHAVERI ITA 516/IND/2013 9 OF TRADE IN ANY OF THE TRANSACTION LISTED IN THE ANNEXED CHART. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBM ITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS REFERRED TO THE ASSESSEES COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2004-05. IN HIS OWN WISDOM THE LD COMMISSIONER OF INCOME TAX (APPEAL) HAS TAKEN NOTE OF INCOME FROM BUSINESS IN THE ASSESSMENT YEAR 2004-05 AND MADE OBSERVATION IN WHICH SHARE HELD IN STOCK WERE REFLECTED ON THE BASIS OF ABOVE OBSERVATION. LD COMMISSIONER OF INCOME TAX APPEAL HAS HELD THAT LIKE ASSESSMENT YEAR 2004-05,THE ASSESSEE WAS CARRYING ON INCOME FROM BUSINESS FROM SHARE TRADING AND ENHANCED THE INCOME OF RS. 27,17,730/- FROM SHORT TERM CAPITAL GAIN TO INCOME FROM BUSINESS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE LD COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN JUMPING TO THE CONCLUSI ON ON THE BASIS OF EARLIER YEAR BALANCE SHEET. SINCE ACCOUNTING OF MUKESH JHAVERI ITA 516/IND/2013 10 SHARE HOLDING WAS IMMATERIAL FACTOR UP TO 31/03/2004; TH E ACCOUNTING OF AGGREGATE SHARE HOLDING UNDER ONE HEAD WAS INCONSEQUENTIAL. HOWEVER, THE REAL CHARACTER OF A PARTICU LAR SHARE DID ALWAYS EXIST. THE CHART ANNEXED AT PAGE 26-29 CLARIFIES THESE ASPECTS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO INVITED OUR ATTENTION TO DMAT ACCOUNT FIL ED IN THE PAPER BOOK PAGES 59 TO 67. HE, THEREFORE, SUBM ITTED THAT THE INTENTION OF INVESTMENT IS APPARENT FROM DATE OF PURCHASE, DIVIDEND EARNED, SHARE RECORDED IN THE DMAT ACCOUNT AND THE VOUCHER OF THE SALES. 6. ON THE OTHER HAND, THE LEARNED DR VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE ISSUE BEF ORE US RELATES TO SHORT TERM CAPITAL GAIN OF RS. 76,30,666/ - WHICH HAS BEEN TREATED AS BUSINESS INCOME BY THE COMMISSIONER OF INCOME TAX (APPEALS) WHEREAS THE MUKESH JHAVERI ITA 516/IND/2013 11 ASSESSING OFFICER TREATED ONLY RS. 38,35,595/- AS BU SINESS INCOME. DURING THE COURSE OF HEARING, THE LEARNED COU NSEL FOR THE ASSESSEE APART FROM RELYING VARIOUS JUDGMENTS AL SO REFERRED TO CIRCULAR NO. 6/2016 DATED 29.2.2016 ISSUE D BY CBDT WHICH DEALT WITH THE ISSUE OF TAXABILITY OF SUR PLUS SALE OF SHARES AND SECURITIES AS TO WHETHER THEY ARE TO BE TAXED AS CAPITAL GAINS OR BUSINESS INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO CLAUSE (B) OF PAR A 3 OF THIS CIRCULAR CONTENDING THAT IN RESPECT OF LISTED S HARES AND SECURITIES HELD FOR A PERIOD OF MORE THAN 12 MONT HS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER, IF THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM THE TRANSFER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PU T TO DISPUTE BY THE ASSESSING OFFICER. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RIGHTL Y SHOWN THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER MUKESH JHAVERI ITA 516/IND/2013 12 THE HEAD LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN. 8. IN ORDER TO APPRECIATE THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE, WE LOOK TO THE FINANCIAL STATEMENTS PROVIDED BY THE ASSESSEE FOR THE ASSESSMEN T YEARS 2004-05 AND 2005-06. FROM THE PERUSAL OF THE PRO FIT AND LOSS ACCOUNT FOR THE F.Y. 2003-04 PLACED AT PAGE 22 OF THE PAPER BOOK WE FIND THAT THE ASSESSEE HAS SHOWN PURCHASE AND SALE OF SHARES AS BUSINESS. IN THE PROFIT AND LOSS ACCOUNT THERE APPEARS OPENING STOCK, PURCHASES, S ALES AND CLOSING STOCK. IN THE BALANCE SHEET ALSO THE ASSESSE E HAS SHOWN CLOSING STOCK OF EQUITY SHARES OF RS. 1,96,43,532/-. IN THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAS SHOWN PROFIT FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD BUSINE SS INCOME AND HAS ALSO SET OFF BROUGHT FORWARD LOSSES OF RS.33,20,098/-. SO THERE CANNOT BE ANY DISPUTE AT THE END MUKESH JHAVERI ITA 516/IND/2013 13 OF THE ASSESSEE THAT FOR THE ASSESSMENT YEAR 2004-05 T HE ASSESSEE HAS SHOWN PURCHASE AND SALE OF SHARES AS BUSINESS INCOME. NOW COMING TO THE YEAR, UNDER APPEAL , WE OBSERVE THAT IN THE PROFIT AND LOSS ACCOUNT THE ASS ESSEE HAS NOT SHOWN THE CLOSING STOCK OF PRECEDING FINANCI AL YEAR AS OPENING STOCK. IT HAS ONLY SHOWN INCOME FROM SHARE TRADING AT RS.9,58,920/- AND THE REMAINING GAIN FROM PURCHASE AND SALE OF SHARES HAS BEEN SHIFTED UNDER CAPITAL GAINS HEAD. IN THE STOCK MARKET FOR THE ASSESSMENT YEA R UNDER APPEAL, THE ASSESSEE HAS DEALT WITH IN AROUND 100 SCRIPTS OF EQUITY SHARES AND THE TOTAL QUANTITY OF SHARES AS ON 1.4.2004 WAS 369381, PURCHASE 2911916, SALES 1795817 AND CLOSING QUANTITY 14,85,480. THE VALUE OF EQUITY SHARES HELD BY THE ASSESSEE AS ON 31.3.2004 HAS SURGED FROM RS. 2,10,29,258/- (AS ON 31.3.2004) TO RS.4,80,35,247/-. AS REGARDS THE BORROWING OF FUND IS CONCERNED, WE FIND THAT ON THE LIABILITY SIDE THE CAPI TAL MUKESH JHAVERI ITA 516/IND/2013 14 ACCOUNT SHOWS THE BALANCE OF RS.4,80,84,299/- AND SUM O F RS.1,68,39,268/- ARE UNSECURED LOANS AND PETTY CREDITO RS. SO THE FINANCIAL STATEMENT PROVES THAT THE ASSESSEE HAS BORROWED FUNDS DURING THE YEAR AND THE VALUE OF SHARES HELD ON 31.3.2005 HAS ALSO INCREASED IN COMPARISON TO PRECEDING YEAR AND THE ASSESSEE HAS DEALT WITH IN MULTI PLE SCRIPTS ROUND THE YEAR. 9. NOW SUMMARISING THE OVERALL FACTS, AS DISCUSSED ABOVE , WE OBSERVE THAT UP TO THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAS SHOWN THE PURCHASE AND SALE OF SHARES AS BUSINESS AND HAS ALSO SET OFF BUSINESS LOSS OF PRECEDI NG YEARS AGAINST THE BUSINESS INCOME FROM TRADING OF SHARE S. DURING THE ASSESSMENT YEAR 2005-06 THE ASSESSEE CHANGED THE MODUS OPERANDI AND DID NOT DISCLOSE THE CLOSING S TOCK OF EQUITY SHARES IN PREVIOUS FINANCIAL YEAR AS OPENING ST OCK DURING THE YEAR. THE MAJOR GAIN FROM PURCHASE AND SALE OF SHARES HAS BEEN SHOWN AS SHORT TERM CAPITAL GAIN AND LONG MUKESH JHAVERI ITA 516/IND/2013 15 TERM CAPITAL GAIN BUT THE ASSESSEE HAS ALSO DONE TRADING I N SHARES DURING THE YEAR. EVEN BEFORE US, THE ASSESSEE FAILED TO DEMARKET STATEMENTS ALONG WITH SEPARATE D-MAT ACCOUNTS WHICH CAN PROVE THAT THE ASSESSEE WAS MAINTAINING SEPARATE RECORDS FOR THE EQUITY SHARES HELD AS INVESTMENT AND THE REMAINING HELD AS BUSINESS ASSETS. IF SUCH DETAILS ARE NOT PROVIDED BY THE ASSESSEE, IT BECO MES VERY DIFFICULT TO ACCEPT THE ASSESSEES CONTENTION OF RUNNING THE BUSINESS OF SHARES AS WELL AS INVESTMENT IN SHARES SIDE BY SIDE. IT SEEMS THAT THE ASSESSEE IN ORDER TO TAKE B ENEFIT OF EXEMPTION FOR LONG TERM CAPITAL GAIN AND LOWER RATE O F TAX FOR SHORT TERM CAPITAL GAIN HAS CHANGED THE TREATMENT OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES FOR THE ASSESSMENT YEAR 2005-06. FURTHER EVEN WHEN WE EXAMINE THE FACTS OF THE CASE IN THE LIGHT OF THE CBDT CIRCUL AR NO. 6/2016 REFERRED TO ABOVE, WE FIND THAT CLAUSE (A) OF P ARA 3 SAYS WHERE THE ASSESSEE ITSELF IRRESPECTIVE OF THE PERIOD OF MUKESH JHAVERI ITA 516/IND/2013 16 HOLDING LISTED SHARES AND SECURITIES, OPTS TO TREAT TH EM AS STOCK IN TRADE, THE INCOME ARISING FROM TRANSFER OF SU CH SHARES/SECURITIES WOULD BE TREATED AS ITS BUSINESS INC OME. IN OUR VIEW, THIS CLAUSE (A) OF PARA 3 SQUARELY APPLIES TO THE ASSESSEES CASE AS IT OPTED TO SHOW THE HOLDING OF EQUI TY SHARES AS STOCK IN TRADE DURING THE ASSESSMENT YEAR 200 4- 05 AND THEREAFTER THE CONSISTENCY SHOULD HAVE BEEN MAINTAINED. 10. EVEN IF WE GO THROUGH CLAUSE (B) OF PARA 3 RELIE D UPON BY THE ASSESSEE, WE OBSERVE THAT IN THE LAST FOUR LINE S IT READS HOWEVER, THIS STAND, ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR ASSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSMENT YEARS ALSO AND THE TAX PAYER SHALL NOT BE ALLOWED TO ADOPT A DIFFERENT/CONTRARY STATEMENT I N THIS REGARD IN SUBSEQUENT YEARS. EVEN CLAUSE (B) OF P ARA 3 ALSO DOES NOT SUPPORT THE CONTENTION OF THE ASSESSEE BECAUSE THE STAND OF SHOWING THE BUSINESS HAS BEEN TAKE N MUKESH JHAVERI ITA 516/IND/2013 17 UP TO THE ASSESSMENT YEAR 2004-05 THEN THE SAME CANNOT BE CHANGED IN THE SUBSEQUENT YEARS JUST FOR THE SAKE OF TAKING BENEFIT OF LOWER RATE OF TAXATION/EXEMPTION. TH E CASE WOULD HAVE BEEN DIFFERENT IF THE ASSESSEE HAD BEEN SUCCESSFUL TO BIFURCATE THE TRANSACTIONS THROUGH A SEPAR ATE D-MAT ACCOUNT WHICH WOULD HAVE BEEN OTHERWISE USED ONE FOR THE PURPOSE OF INVESTMENT IN SHARES AND THE OTHER FOR THE REGULAR TRADING IN SHARES. THIS IS NOT THE CASE OF THE ASSESSEE AS APART FROM NON-MAINTENANCE OF SEPARATE D-MAT ACCOUNT, THE ASSESSEE HAS BORROWED FUNDS AND THERE HAS BEEN REGULAR TRADING IN SHARES. 11. FURTHER WE ARE ALSO OF THE VIEW THAT IN THE STATUTE SIMILAR TYPE OF TRANSACTIONS CAN BE CATEGORISED AS BUSIN ESS INCOME AS WELL AS CAPITAL GAIN. THE BENEFITS ARE AVAILABLE IN BOTH THE CATEGORIES AS IN THE CASE OF BUSINESS, THE AS SESSEE CAN CLAIM VARIOUS EXPENDITURE AND IN CASE OF CAPITAL GAIN, THERE IS BENEFIT OF EXEMPTION FOR LONG TERM CAPITAL G AIN AND MUKESH JHAVERI ITA 516/IND/2013 18 LOWER RATE OF TAX FOR SHORT TERM CAPITAL GAIN. IN NORM AL PARLANCE IF THE ASSESSEE IS INDULGED IN SOME REGULAR ACTIVITY, WHICH MAY BE OF PROVIDING SERVICE, EARNING SALARY, ANY BUSINESS OTHER THAN THAT OF EQUITY SHARES AND ALONG WITH THIS REGULAR ACTIVITY, IF IT OCCASIONALLY DEALS IN EQUITY SHARES THEN SUCH GAIN IS NORMALLY SHOWN CA CAPITAL GAIN BUT IN THE CASE OF THE ASSESSEE IT HAS NO OTHER SOURC E OF INCOME AND IS ENGAGED IN TRADING OF SHARES AND SECURITI ES CONSISTENTLY SINCE LONG AND MAJOR SOURCE OF INCOME I S FROM TRADING IN SHARES ONLY AND IF SUCH ASSESSEE SUBSEQUENTL Y OPTS TO SHOW TRANSACTIONS OF PURCHASE AND SALE OF SHARES AS CAPITAL GAINS AND SIMULTANEOUSLY ALSO SHOWS TRADING IN SHARES THEN BOTH THE THINGS CANNOT GO TOGETHER UNLESS OTHERWISE DEMARKETED WITH PROPER RECORDS. WE, THEREF ORE, IN THE GIVEN FACTS AND CIRCUMSTANCES, FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) TREATING RS. 76,30,666/- AS BUSINESS INC OME MUKESH JHAVERI ITA 516/IND/2013 19 RELYING ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF WALLFORT FINANCIAL SERVICES (2010) 41SOT 200 (MUM) AND PURAN ASSOCIATES PVT. LTD., (2012) 20 TAXMANN.COM 147. 12. IN THE RESULT, GROUND NOS. 2, 3 AND 4 OF THE ASSESSEE ARE DISMISSED. 13. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN OPEN COURT ON 28 FEBRUARY, 2018. SD SD (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 28 TH FEBRUARY, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE