INCOME TAX OFFICER 25(2)(3), MUMBAI V. DAMYANTI ASHWIN PATEL, MUMBAI

ITA 5450/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency; Question of law; Set aside
• Section: 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5450 /MUM/201 7 ( / ASSESSMENT YEAR: 20 12 - 13 ) THE ITO 25(2)(3) R. NO.504, C - 10, 5 TH FLOOR, P RATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. . / VS. DAMYANTI ASHWIN PATEL 201, DEO NEO VIKRAM, B WING, 2 ND FLOOR, SAHAKAR NAGAR CHS, ABOVE AUDI CAR SHOW ROOM, NEW LINK ROAD, ANDHERI (W), MUMBAI - 400053. ./ ./ PAN/GIR NO. : AABPP2154K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 16 / 0 5/ 201 9 / DATE OF PRONOUNCEMENT : 24 /0 6 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 12 . 0 6 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 37 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 1 3 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - REVENUE BY : SHRI R . SINDHU (SR. A R) ASSESSEE BY: SHRI V. G. GINDE/SHRI KUMAR KALE ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 2 ' 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO TREAT THE PROFIT ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME HELD BY THE ASSESSING OFFICER, IGNORING THAT THE AO DETAILED FINDING THAT THERE IS A DISCREPANCY BETWEEN PURCHASES AND SALES THAT OF CORRESPONDING MOVEMENTS IN THE ASSESS EES DEMAT ACCOUNT. 2 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO TREAT THE PROFIT ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME HELD BY THE ASSESSING OFFICER, IGNORING THAT THE MISMATCH IN DEMAT ACCOUNT IS NEW POINT WHICH IS NOT INVOLVED EITHER IN ANY OF THE REFERRED CASE LAWS OR IN CIRCULAR NO.06/2016 DATED 29.02.2016 ISSUED BY CBDT. 3 . THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROU NDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 . THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME O N 30 . 0 8 .20 12 DECLARING TOTAL INCOME TO THE TUNE OF RS.11,41,484 / - FOR THE A.Y.2012 - 13 . THEREAFTER, THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE S U /S 143 (2) & 142(1) OF THE ACT WERE ISSU ED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES & SECURITIES & F & O. THE ASSESSEE CLAIMED INCOME OF SHARE EQUITY AND INVESTMENT INCOME AS CAPITAL GAIN. THE ASSESSING OFFICER HAS ISSUED THE NOTICE IN THIS REGAR D AND AFTER GOING THROUGH THE REPLY , TREATED THE INCOME WERE SALE OF SHARE AS BUSINESS INCOME. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED IN SUM OF RS.1,07,67,190/ - . F EELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO TREATED THE INCOM E FROM SALE OF SHARE AS LONG/SHORT ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 3 TERM CAPITAL GAIN BUT THE REVENUE WAS NOT SATISFIED , THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO S .1 & 2 4. UNDER THESE ISSUE S THE REVENUE HAS CHALLENGED THE TREATMENT OF THE INCOME OF SHARE AS LONG TERM CAPITAL GAIN. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE ASSESSING OFFICER HAS RIGHTLY TREATED THE GAIN FROM SHARES AS BUSINESS INCOME BUT THE CIT(A) HAS WRONGLY TREATED THE INCOME FROM SALE OF SHARES AS LONG TERM CAPITAL GAIN/SHOR T TERM CAPITAL GAIN, THEREFORE, IN THE SAID CIRCUMSTANCES, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE AND IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A ) IN QUESTION. BEFORE GOING FURTHER WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5. I HAVE CONSIDERED THE FACTS, ORAL CONTENTIONS AND WRITTEN SUBMISSIONS OF THE APPELLANT AS AGAINST THE OBSERVATION/FINDINGS OF THE AO IN ASSESSMENT ORDER. THE SUBMISSIONS AND CONTENTIONS OF THE APPELLANT ARE BEING DISCUSSED AND DECIDED AS UNDER: - 5.1 DURING THE COURSE OF THE SCRUTINY PROCEEDINGS, THE A.O. OBSERVED THAT HAS SHOWN LONG TERM CAPITAL GAINS OF RS.95,96,054/ - AND SHORT TERM CAPITAL GAIN ON RS.6,86,067/ - . THE APPELLANT HAS CLAIMED EXEMPTION U/S.10(38) OF THE ACT FOR THE ENTIRE LTCG. THE A.O. TREATED STCG AND LTCG AS BUSINESS INCOME IN THE ASSESSMENT ORDER. THE MOST RELEVANT ASPECT IS THE INTENTION OF THE ASSESSEE BEHIND PURCHASING AND HOLDIN G THE SHARES AND SUCH INTENTION HAS TO BE GATHERED FROM THE FACTS AND THE CONDUCT OF THE ASSESSEE. THE A.O. REFERRED TO THE DECISION IN CASE OF SARNATH INFRASTRUCTURE (P) LTD. VS. ACIT REPORTED IN 120 TTJ (LUCKNOW) 216 AND CIRCULAR NO.4/2007 DATED 15/06/20 07 ISSUED BY THE CBDT FOR THE GUIDELINES TO DECIDE THE ISSUE. THE A.O. HAS OBSERVED MASSIVE TRANSACTIONS GIVING OBVIOUS CHARACTER OF TRADING THAN INVESTMENT. THE HOLDING PERIOD OF MAJORITY OF SCRIPTS IS LESS THAN 360 DAYS. THE APPELLANT HAS TENDENCY TO BOO K PROFIT/LOSS EVEN ON SLIGHT MOVEMENT OF THE PRICES OF SHARES. ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 4 5.2 DURING THE APPELLANT PROCEEDINGS APPELLANT HAS STATED THE APPELLANT IS HIGH NET WORTH INDIVIDUAL HAVING HIS OWN CAPITAL OF RS.9.41CRORES AS AT 31.3.2012 AND INVESTMENT IN SHARES OF RS.16.38 CRORES ON THAT DATE. THE APPELLANT HAS BORROWED FUNDS ONLY FROM THE FAMILY MEMBERS, NO INTEREST HAS EITHER BEEN PAID OR DEBITED TO THE CAPITAL ACCOUNT OF THE APPELLANT FOR THE RELEVANT FINANCIAL YEAR. FOR THIS SIZE OF PORTFOLIO, IT IS OBVIOUS THAT INVESTME NT WILL BE SPREAD OVER A NUMBER OF SCRIPTS TO DIVERSIFY THE RISK. THE QUANTITY OF SHARES WILL DEPEND UPON THE FACE VALUE OF SHARES. IN JANAK S. RANGWALA VS. ACIT (11 SOT 627) (MUM), IT WAS HELD THAT MERE VOLUME OR MAGNITUDE OF TRANSACTIONS WOULD NOT ALTER ITS NATURE. THERE IS DIFFERENCE BETWEEN A TRADE AND A TRANSACTION BECAUSE IN SCREEN - BASED TRADING A SINGLE TRANSACTION MAY LEAD TO SEVERAL TRADES. THERE ARE FREQUENT TRANSACTIONS OF BUY - SELL - BUY IN A SCRIP IN SHORT TIME SPAN, IT MAY INDICATE TRADING FEATUR E. IN KORADIA CONSTRUCTION P. LTD/S CASE (SUPRA) THE TRIBUNAL HELD THAT A PRUDENT INVESTOR ALWAYS KEEPS A WATCH ON VOLATILITY OF THE MARKET AND MAKES SOUND DECISIONS IN ACCORDANCE WITH SUCH MARKET FLUCTUATIONS AND HAS THE LIBERTY TO LIQUIDATE HIS INVESTMEN TS IN SHARES AS AND WHEN NECESSARY. THE LAW ITSELF HAS RECOGNIZED THIS FACT BY TREATING THE SAME AS SHORT TERM CAPITAL GAINS FOR SHARES HELD LESS THAN 12 MONTHS AND LONG TERM CAPITAL GAINS WHERE THE SHARES ARE HELD FOR MORE THAN 12 MONTHS. THE FACT THAT TH E LAW RECOGNIZES SUCH ,VOLATILITY AND HAS SPECIFICALLY PROVIDED A SEPARATE HOLDING PERIOD IN RESEAT SHARES MAKES IT CLEAR THAT GAINS ON SUCH SHARES HAVING A HOLDING PERIOD OF LESS THAN I ORD HELD AS INVESTMENT WOULD BE CONSIDERED AS SHORT TERM CAPITAL GAIN S HAS POINTED OUT TREND OF BUY - SELL - BUY IN ONLY 10 SCRIPS OUT OF A VARIETY OF SCRIPTS HELD BY THE APPELLANT. THE APPELLANT HAS DECLARED SUBSTANTIAL LTCG OF OVER RS.95.56 LAKHS, SOME OF WHICH HAS BEEN EARNED ON SALE OF SHARES HELD FOR ABOUT 2 - 3 YEARS. THE APPELLANT HAS EARNED DIVIDEND INCOME OF RS.22.22 LAKHS. ALL THESE FACTS CLEARLY SHOW THE APPELLANT HOLDS SHARES FOR LONG TIME. THE RETURN ON INVESTMENT IN LTCG WHICH SHOWS THAT THE APPELLANT HAS WAITED FOR CAPITAL APPRECIATION OVER A LONGER PERIOD. IN SMT . SUJATA KAPADIA VS. 3CIT (2015) 55 TAXMANN.COM 474 (MUMBAI TRIBUNAL) AND ACIT VS. SMT. KINNARY SANGHVI (2015) 56 TAXMANN.COM 288 (MUMBAI TRIBUNAL), THE TRIBUNAL HAS HELD THAT MERELY BECAUSE THE ASSESSEE LIQUIDATES ITS INVESTMENT WITHIN A SHORT SPAN OF TIM E, 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. IT IS NOTED THAT THE APPELLANT H AS EARNED HIGH RETURN IN CASE OF SOME OF THE SHARES SOLD WITHIN 12 MONTHS. WHEN SUCH A HIGH RETURN IS MADE IN SHORT SPAN, THERE IS NO REASON WHY ANY PRUDENT INVESTOR SHOULD NOT SELL THOSE SHARES IN LESS ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 5 THAN 12 MONTHS RESULTING IN STCG. THE EARLY SALE IN S UCH CIRCUMSTANCES WOULD NOT ALTER THE INVESTMENT TO TRADING. 5.4 THE ENTRIES IN THE BOOKS OF ACCOUNT AND BALANCE SHEET OF THE APPELLANT SHOW THE SHARES ARE HELD AS INVESTMENT ONLY. THE APPELLANT HAS VALUED THE SHARES AT 'COST' AND NOT AT LOWER OF 'COST OR MARKET VALUE'. IN GOPAL PUROHIT'S CASE (SUPRA) TRIBUNAL HELD THAT PRESENTATION IN THE BOOKS OF ACCOUNT IS THE MOST CRUCIAL SOURCE OF GATHERING INTENTION OF THE ASSESSEE AS REGARD TO THE NATURE OF TRANSACTION AND IT REFLECTS, PRIMA FACIE, A VIEW OF THE ASSE SSEE ON A PARTICULAR SUBJECT. IN KARAMCHAND THAPAR & BROS. (P) LTD. VS. CIT (82 FR 899), THE HON'BLE SUPREME COURT HELD THAT THE TREATMENT GIVEN BY THE ASSESSEE IN BOOKS OF ACCOUNT MAY NOT BE CONCLUSIVE BUT IT IS A VITAL PIECE OF EVIDENCE. THIS DECISION WA S RELIED UPON BY THE TRIBUNAL IN GOPAL PUROHIT'S CASE (SUPRA) WHICH HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT. THUS, THE ENTRIES MADE BY THE APPELLANT IN BOOKS OF ACCOUNT SHOW HIS INTENTION TO HOLD THESE SHARES AS INVESTMENT AND NOT A TRADING STOCK. IN H . HOICK LARSEN'S CASE (SUPRA), THE HON'BLE SUPREME COURT HELD THAT IT IS THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES THAT IS IMPORTANT TO DECIDE IF THOSE SHARES WERE ACQUIRED BY HIM FOR INVESTMENT OR TRADING. THEREFORE, INTENTION OF THE APPELLANT GATHERED FROM PRESENTATION OF ENTRIES IN BOOKS OF ACCOUNT SHOWS THAT THE SHARES ARE HELD AS INVESTMENT AND NOT A TRADING STOCK. THE APPELLANT'S INTENTION IS ALSO NOTED FROM THE CONSISTENT STAND TAKEN BY HIM IN HIS INCOME - TAX RETURNS FILED YEAR A FTER THE REFERENCE TO WHICH HAS BEEN MADE EARLIER. 5.5 FROM PERUSAL OF THE APPELLANT'S BALANCE SHEET, IT IS SEEN THAT NO INTEREST N PAID OR CLAIMED BY THE APPELLANT. ALL THE TRANSACTIONS ARE DELIVERY - BASED. THE APPELLANT DOES NOT USE ANY INFRASTRUCTURE OR OFFICE SET UP FOR CARRYING OUT THE RE ACTIVITY. THERE IS NO ORGANIZED SHARE TRADING ACTIVITY AS NO EXPENSES ARE AIMED BY THE APPELLANT. IN CIRCULAR NO.6/2016, DATED 29.02.2016 ISSUED BY THE CBDT, WHEREIN IT HAS BEEN PROVIDED THAT IN RESPECT OF LISTED SHARE S AND SECURITIES HELD FOR A PERIOD OF MORE THAN 12 MONTHS 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 PUT TO DISPUTE BY THE ASSESSING O FFICER. HOWEVER, THIS STAND, ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR ASSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSMENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED TO ADOPT A DIFFERENT STAND/CONTRARY STAND IN THIS REGARD IN SUBSEQUE NT YEARS. THIS CIRCULAR SHOWS THAT THE CHOICE RESTS WITH THE ASSESSEE TO TREAT THE INCOME FROM SALE OF LISTED SHARES AS CAPITAL GAIN IF THE SAME IS HELD FOR PERIOD OF MORE THAN 12 MONTHS. IN OTHER WORDS, IN CASE OF LTCG, ONCE THE ASSESSEE MAKES CHOICE OF T REATING IT AS CAPITAL GAIN, THE ASSESSING ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 6 OFFICER SHOULD ACCEPT THE SAME. THE CIRCULAR ALSO UNDERLIES THE IMPORTANCE OF CONSISTENCY IN THE APPROACH OF THE TAXPAYER IN THIS REGARD. THIS CIRCULAR, THOUGH ISSUED NOW, SUPPORTS THE APPELLANT'S STAND AT LEAST IN SO FAR AS LTCG ON SHARES IS CONCERNED. IT FURTHER REITERATES THE PRINCIPLE OF CONSISTENCY, WHICH THE APPELLANT HAS BEEN FOLLOWING IN THIS REGARD IN EARLIER YEARS. 5.6 I HAVE CONSIDERED THE ARGUMENT OF APPELLANT, PERUSED THE ASSESSMENT ORDER, MATERIAL PLAC ED ON RECORD, THE APPELLANT'S WRITTEN SUBMISSIONS AND THE RELEVANT CASE LAWS ON THE SUBJECT. THE A.O. HAS TREATED THE CAPITAL GAINS EARNED BY THE APPELLANT ON SALE OF SHARES AS BUSINESS INCOME. I FIND THAT IN THE A.Y. 2010 - 11 THE A.O. HAD TREATED PROFIT ON SALE OF SHARES AS BUSINESS INCOME WHEREAS THE APPELLANT HAD SHOWN THE SAME AS STCG AND LTCG. VIDE ORDER DATED 23.03.2016 IN APPEAL NO. CIT (A) - 37/IT - 56/ACIT - 25(3)/13 - 14, PASSED BY ME IN THE APPELLANT'S CASE FOR A.Y.2010 - 11, I DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. THE RELEVANT PORTION OF MY ORDER OF A.Y.2010 - 11 IS REPRODUCED BELOW: - IN CIRCULAR NO.6/20I6, DATED 29.02.2016 ISSUED BY THE CBDT, WHEREIN IT HAS BEEN PROVIDED THAT IN RESPECT OF LISTED SHARES AND SECURITIES HELD FOR A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER, ([THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM THE TRANSFER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PUT TO DISPUTE BY THE ASSESSING OFFICER. HOWEVER, THIS STAND, ONCE TAKEN BY THE A SSESSEE IN A PARTICULAR ASSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSMENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED TO ADOPT A DIFFERENT STAND/CONTRARY STAND IN THIS REGARD IN SUBSEQUENT YEARS. THIS CIRCULAR SHOWS THAT THE CHOICE RE STS WITH THE ASSESSEE TO TREAT THE INCOME FROM SALE OF LISTED SHARES AS CAPITAL GAIN THE SAME IS HELD FOR PERIOD OF MORE THAN 12 MONTHS. IN OTHER WORDS, IN CASE OF LTCG, ONCE THE ASSESSEE MAKES CHOICE OF TREATING IT AS CAPITAL GAIN. THE ASSESSING OFFICER S HOULD ACCEPT THE SAME THE CIRCULAR ALSO UNDERLIES THE IMPORTANCE OF CONSISTENCY IN THE APPROACH OF THE TAXPAYER IN THIS REGARD. THIS CIRCULAR THOUGH ISSUED NOW, SUPPORTS THE APPELLANTS STAND AT LEAST IN SO FAR AS LTCG ON SHARES IS CONCERNED. IT FURTHER, R EITERATES THE PRINCIPLE OF CONSISTENCY, WHICH THE APPELLANT HAS BEEN FOLLOWING IN THIS REGARD IN EARLIER YEARS. THE APPELLANT HAS RELIED UPON PAST HISTORY OF THE APPELLANT'S CASE CITING THE HON 'BLE BOMBAY HIGH COURTS JUDGMENTS IN GOPAL PUROHIT (SUPRA), W HERE IT WAS HELD THAT THOUGH THE PRINCIPLE OF RES ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 7 JUDICATA NOT APPLICABLE TO TAX PROCEEDINGS, THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. THE APPELLANT FILED A CHART SHOWING THE FACTUAL POSITION OF THE PAST ASSESSMENTS FROM A. Y. 2001 - 02 TO A.Y. 2009 - 10 ALONG WITH COPIES OF RETURN OF INCOME, COMPUTATION STATEMENTS AND INTIMATIONS U/S.143(1) FOR A.1'. 2006 - 07. THIS CHART SHOWS THAT THE APPELLANT'S STATUS OF INVESTOR IN SHARES WAS ACCEPTED AT THE A SSESSMENT STAGE IN THE PAST. PRINCIPLE OF CONSISTENCY HAS TO BE APPLIED WHERE FACTS ARE IDENTICAL. THE A. 0. HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE FACTS IN THE YEAR UNDER APPEAL WERE DIFFERENT COMPARED TO THE EARLIER YEAR IDENTICALLY IN T HE CASE OF PAN/CA] PATEL, RELATIVE OF APPELLANT, IN THE ASSESSMENT YEAR 2003 - 04, 2004 - 05 THE BOMBAY HIGH COURT HAS HELD IN FAVOUR OF THE PANKAJ PATEL AND TREATED PROFIT ON SALE OF SHARES AS CAPITAL GAINS. THE INVESTMENT ACTIVITY IN THE APPELLANT'S CASE IS ALSO SIMILAR IN THE YEAR OF THE CONSIDERATION, THEREFORE, THE JUDGMENT IN THE CASE OF THE PANKAJ PATEL IS ALSO APPLICABLE TO HIM. THE RELEVANT PORTION OF THE JUDGMENT DATED 23/01/2013 IN INCOME TAX APPEAL NO. 953 & 954 OF 2011 IS REPRODUCED BELOW: 'I. IN T HESE APPEALS BY THE REVENUE FOR THE ASSESSMENT YEARS 2003 - 2004 AND 2004 - 05, THE BASIC QUESTION IS WHETHER THE TRIBUNAL WAS CORRECT IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE RESPONDENT ASSESSEE ON SALE OF SHARES AS CAPITAL GAIN RATHER T HAN AS BUSINESS INCOME AS SOUGHT BY THE REVENUE. 2. THE RESPONDENT - ASSESSEE IS A TRADER AND AN INVESTOR IN SHARES AND SECURITIES. THE ASSESSING OFFICER ASSESSED THE RESPONDENT ASSESSEE UNDER THE HEAD BUSINESS INCOME ARISING NOT ONLY OUT OF TRADING ACTIVI TY IN SHARES AND SECURITIES BUT ALSO INCOME ARISING ON ACCOUNT OF SALE OF SHARES AND SECURITIES WHICH WERE HELD AS INVESTMENT 3 IN APPEALS, BOTH THE COMMISSIONER OF INCOME TAX (A) AND THE TRIBUNAL HELD THAT THE GAINS ARISING OF SALE OF INVESTMENT HAS TO BE ASSESSED UNDER THE HEAD OF CAPITAL GAIN. THIS IN VIEW OF THE FACT THAT THE PROFITS MADE ON INVESTMENT IN SHARES WERE IN RESPECT OF THOSE SHARES HELD FOR A LONG PERIOD OF TIME AS INVESTMENT FURTHER, IT WAS HELD BY THE APPELLATE AUTHORITIES THAT CONVERSION OF STOCK - IN - TRADE INTO INVESTMENT WAS NOT MOTIVATED BY THE AVOIDANCE. THE TRIBUNAL ALSO RECORDS THE FACT THAT RESPONDENT ASSESSEE STARTED ITS TRADING ACTIVITY IN SHARES AND ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 8 SECURITIES ONLY IN ASSESSMENT 2001 - 02. PRIOR THERETO, THE RESPONDENT ASSESSEE WAS B EING ASSESSED UNDER THE HEAD CAPITAL GAINS IN RESPECT OF ITS PROFIT EARNED ON INVESTMENT OF SHARES AND SECURITIES. 4. THEREFORE, THE DECISION OF TRIBUNAL TO TAX PROFITS ON SALE OF SHARES HELD AS INVESTMENT UNDER THE HEAD CAPITAL GAIN WAS REACHED ON FINDING OF ACT ALSO ARRIVED AT BY THE COMMISSIONER OF INCOME TAX (A). IN VIEW OF THE IMPUGNED ORDER BEING BASED ON FINDING OF FACT, AND THE REVENUE HAS NOT BEEN ABLE TO SHOW THE SAME IN PERVERSE; WE FIND NO QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 5. IN THES E CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE APPEALS. BOTH THE APPEALS ARE ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS.' IN VIEW OF ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE STCG AND LTCG ON SALE OF SHARES CANNOT BE TREATED AS BUS INESS INCOME. THE A. 0. IS DIRECTED TO TREAT THE SAME AS LTCG AND STCG AND ASSESS ACCORDINGLY . 5.7 THE INVESTMENT ACTIVITY IN THE APPELLANT'S CASE IN A.Y.2012 - 13 IS ALSO OF SIMILAR NATURE. FURTHER, APPELLANT HAS STATED THAT THE DEPARTMENT HAS ACCEPTED THE APPELLANT'S STATUS AS A INVESTOR IN THE A.Y.2011 - 12, 2013 - 14 AND 2014 - 15 AND SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE REASONS GIVEN BY THE AO BEING SAME, I FOLLOW MY EARLIER ORDER AND DECIDE GROUND NO.1 AND 2 IN FAVOUR OF THE APPELLANT. THE A.O. IS DIRECTED TO TREAT THE PROFIT ON SALE OF SHARES AS LTCG AND ASSESSEE ACCORDINGLY. GROUND NO.1 AND 2 ARE ALLOWED IN FAVOUR OF THE APPELLANT. SINCE GROUND NO.3 RAISED BY THE APPELLANT IS AN ALTERNATIVE GROUND, IT COMES ACADEMIC AND HENCE DISMISSED AS INFRUCTUOUS IN LIGHT OF MY DECISION ON GROUND NO.1 AND 2. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS CONSIDERED THE HOLDING PERIOD OF THE SHARE BY ASSESSEE. THE HOLDING PERIOD OF THE SHARE OF THE ASSESSEE WAS IN BE TWEEN 2 & 3 YEARS. THE ASSESSEE ALSO HOLD THE SHARE BETWEEN THE PERIOD OF THE 12 MONTHS WHICH WAS NECESSARY TO EARN THE PROFIT. THE ASSESSEE HAS SHOWN THE INVESTMENT OF SHARES IN HIS BOOKS OF ACCOUNT. THE ASSESSEE ALSO TREATED THE SHARES AT COST AND NOT A T LOWER OF COST OR MARKET VALUE. THE ASSESSEE DID NOT TOOK THE LOAN ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 9 FROM ANY INSTITUTION . HOWEVER, HE TOOK THE LOAN FROM HIS FAMILY MEMBERS AND NO INTEREST OF ANY KIND WAS PAID. NO EXPENSES WERE CLAIMED BY ASSESSEE FOR THE TRANSACTION. FURTHER, WE NOTICED THAT THE INCOME FROM SHARES HAS ALREADY TREATED AS SHORT TERM CAPITAL GAIN/ LONG TERM CAPITAL GAIN BY CIT(A) WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2010 - 11, 2011 - 12 & 2012 - 13 , 2013 - 14, 2014 - 15. THERE IS NO CHANGE OF THE CIRCUMSTANCES IF ANY ON RECORD. NOTHING CAME INTO NOTICE THAT THE REVENUE HAS FILED THE APPEAL AGAINST THE FINDING OF THE CIT(A) AND THE FINDING OF THE CIT(A) HAS BEEN CHANGED OR VARIED. THERE IS LOT OF DIFFERENCE BETWEEN BUSSINESS AND THE INVESTMENT. THE ASSESSEE WAS NOT DOI NG THE BUSINESS ON BEHALF OF THE OTHERS. THE MATTER HAS BEEN ADJUDICATED ON THE BASIS OF CONSISTENCY. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WH ICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 /06 /2019 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 24 ./06 /2019 V IJAY ITA NO. 5450 /M/201 7 A.Y.20 12 - 13 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI