DCIT, Jaipur V. MAHENDER KUMAR BADER, Jaipur

ITA 605/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5345 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NOS. 605/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 . THE DCIT, CIRCLE - 2, JAIPUR. CUKE VS. SHRI MAHENDER KUMAR BADER, DHANRAJ MAHAL, 3827, MSB KA RASTA, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ADJPB 4635 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI RAJEEV SOGANI & SHRI ROHAN SOGANI, (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11.02.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18/03/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THE PRESENT APPEAL FILED BY THE REVENUE IS ARISING FROM THE ORDER DATED 18.03.2013 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR THE A.Y. 2008-09. THE GROUND RAISED IS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN TREATING INCOM E ARISING FROM SALES OF SHARES AS INCOME FROM SHORT TERM CAPITAL G AIN IGNORING THE FACTS THAT THERE WERE SUBSTANTIAL AND FREQUENT TRAN SACTIONS AND MOTIVE WAS TO EARN PROFIT AND HOLDING PERIOD OF SUC H SHARES WAS VERY SHORT. 2 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED THE RETURN OF INCOME ON 29.09.2008 DECLARING TOTAL INCOME OF RS. 85,86,7 60/-. THE ASSESSEE DERIVED INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES. THE C ASE WAS SCRUTINIZED UNDER SECTION 143(3). DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO OBSERVED THAT THE ASSESSEE CLAIMED INVESTMENT ACTIVITY AND SHOWN SHOR T TERM CAPITAL GAIN FROM SHARE TRANSACTION OF RS 73,70,214/-. EXAMINATION OF D-MAT ACCOUNTS AND TRANSACTIONS IN BROKERS ACCOUNT FURNISHED BY THE ASSESSEE MAKES IT CLEAR THAT PURCHASE AND SALE OF SHARES/UNITS IS NOT INVESTMENT ACTIVITY BUT IT IS T HE BUSINESS OF THE ASSESSEE. DURING THE COURSE OF THE PROCEEDINGS, THE ASSESSEE WAS ASKED T O SUBMIT AN ANALYSIS OF THE ENTIRE PORT FOLIO TAKING INTO CONSIDERATION VARIOUS PARAME TERS SUCH AS NUMBER OF SCRIPS, VOLUME, FREQUENCY OF TRANSACTIONS AND THEIR SYSTEMA TIC AND PERIOD NATURE. THE DETAILS REGARDING THE INHERENT NATURE OF THE PORT FOLIO WER E DULY ANALYZED IN THE LIGHT OF CBDT CIRCULAR NO 4 OF 2007 DATED 15.06.2007, DECISION OF APEX COURT IN THE CASE OF CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY PVT. LTD. ETC. THE AO DISCUSSED THE ACTIVITY OF THE ASSESSEE AS UNDER : 3. THE DETAILS SUBMITTED BY THE ASSESSEE ALONG WITH RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, D-MAT ACCOUNT OF ASSESSEE AND TRANSACTIONS IN D-MAT ACCOUNT OF BROKER REVEALS THAT ASSESSEE HAS D ONE VOLUMINOUS TRANSACTIONS IN SHARES & UNITS. THE TRANSACTIONS ARE FREQUENT AND A MOUNT INVOLVED IS VERY LARGE. THE ASSESSEE HAS DONE MANY TRANSACTIONS OF PURCHASE & S ALE DURING THE YEAR. THE VOLUME OF TRANSACTIONS CAN BE ASCERTAINED FROM THE DETAILS OF SHARES TRANSACTION ENTERED INTO BY THE ASSESSEE. ON CAREFUL ANALYSIS OF THE ENTIRE PO RTFOLIO AND RESULTANT PURCHASE AND 3 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER SALE OF SCRIPS, THE AO OBSERVED THAT THE TRANSACTIO NS ENTERED INTO BY THE ASSESSEE ARE NUMEROUS PERIODIC, REPETITIVE WITH GREAT AMOUNT OF REGULARITY & PERIODICALLY. THE AO ALSO OBSERVED THAT THERE HAS BEEN A SYSTEMATIC AND REGULAR TRADING PATTERN AND SHARES HAVE BEEN PURCHASED AND SOLD AT VERY REGULAR INTERV ALS. THIS FEATURE IS SEEN IN RESPECT OF BUYING OF SHARES OF A SINGLE COMPANY OR IN RESPE CT OF BUYING AND SELLING OF SHARES OF MANY A COMPANY FOR A VERY SHORT HOLDING PERIOD OF A FEW DAYS AND FEW MONTHS. IT IS WELL SETTLED THAT WHENEVER AN ACTIVITY IS PERIODIC, SYSTEMATIC AND REGULAR WITH A CLEAR PROFIT MOTIVE IT CAN CERTAINLY ASSUME THE CHARACTER OF A BUSINESS ACTIVITY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT HE IS INVESTING WITH INTENTION TO KEEP INVESTED IN SHARES FOR THE PURPOSES OF EARNING INCOME FROM CAPITAL GAINS AND DIVIDEND THEREON. THE AO FOUND THE EXPLANATION OF T HE ASSESSEE UNACCEPTABLE SEEING THE DETAILS FURNISHED BY THE ASSESSEE AS HARDLY ONE CAN EARN ANY DIVIDEND WITH SUCH SHORT PERIOD OF HOLDINGS. THE AO NOTICED THAT THE A VERAGE HOLDING PERIOD IN MANY SCRIPS RANGES FROM MERELY FEW DAY TO FEW MONTHS. FROM THE DETAILS FURNISHED IT IS CLEAR THAT OUT OF TOTAL NO. OF SHARES, MOST OF TRANSACTIONS HE LD IS FOR LESS THAN 5 MONTHS, MANY OF THE SHARES HAVE BEEN SOLD WITHIN FEW DAYS OF PURCHA SE. ON BEING ASKED TO JUSTIFY HIS CLAIM OF INCOME FROM SHARES AS SHORT TERM CAPITAL G AIN, RATHER THAN BUSINESS INCOME, THE LD. A/R REPLIED AS UNDER :- AS SUBMITTED EARLIER THAT THE SHORT TERM CAPITAL GAIN SHOWN IS ON SHARES HELD BY THE ASSESSEE AS INVESTMENT. ASSESSEE HAS BE EN INVESTING IN SHARES FROM LAST SEVERAL YEARS AND HAS BEEN DECLARI NG CAPITAL GAIN ON THE SAME. ALL SHARES ARE ON DELIVERY BASIS. EVEN IN THE EARLIER YEARS THE ASSESSEE SHOWN SHARES AS HIS INVESTMENT AND DECLARE CAPITAL GAIN IF ANY ARISING AT THE TIME OF SALE WHICH HAS BEEN ACCEPTED AND ASSESSED AS SUCH. ASSESSEE HAS NEVER DONE SHARE TRANSACTION WITH THE INTENTION OF BUSINESS. 4 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER AS IS EVIDENT THAT THE NUMBER OF SCRIPTS IS WHICH A SSESSEE HAS INVESTED ARE VERY LESS AND THE SAME HAS BEEN DONE WITH THE MOTIV E OF INVESTMENT AND THE ASSESSEE HAS REGULARLY DECLARED THE SAME AS HIS SHARE INVESTMENT. WE ARE ENCLOSING THE COPY OF RETURNS AND COMPUTATION S HOWING THE CAPITAL GAIN DECLARED BY THE ASSESSEE IN EARLIER YEARS. EVEN CBDT IN CIRCULAR NO. 4/2007 DATED 15.06.2007 HAVE CLEARLY LAID DOWN THE GUIDELINES AS TO WHETHER A SHARE TRANSACTION IS FOR PURPOSE OF INVES TMENT OF BUSINESS AND THE ASSESSEE FULFILLS AS CRITERIA OF THE SAID CIRCU LAR. THE AO CONSIDERED THE EXPLANATION OF THE ASSESSEE B UT COULD NOT FOUND IT NON-TENABLE. INTENTION OF THE ASSESSEE WAS NOT INVESTMENT WHICH IS ALREADY DISCUSSED SUPRA. MERE DELIVERY OF SHARES DOES NOT DECIDE THE NATURE OF TR ANSACTIONS. IT HAS THE HOLDING PERIOD; FREQUENCY OF TRANSACTION AND OTHER CRITERIA LAID DO WN DETERMINES NATURE OF TRANSACTIONS. MERE FACT THAT ASSESSEE HAS TAKEN DELIVERY, AT MOST , PUT THE NATURE OF BUSINESS AS NON SPECULATIVE BUSINESS INCOME. THE AO OBSERVED THAT T HE ASSESSEE HIMSELF HAS CLAIMED THAT ON THE BASIS OF SHARES, ALLEGEDLY CLOSING STOC K OF THE ASSESSEE LYING WITH BROKER, HE IS ALLOWED TO PURCHASE & SALE OF SHARES ON CREDIT. SUCH NATURE OF TRANSACTION MERELY FORTIFIES THE FACT THAT ASSESSEE IS ENGAGED IN BUSI NESS OF TRANSACTION OF SHARES NOT AS AN INVESTMENT. FURTHER, ASSESSEE AS REFERRED TO THE CI RCULAR OF CBDT WHEREIN ONLY THIS IS CLARIFIED THAT ASSESSEE CAN HAVE INVESTMENT AND BUS INESS PORTFOLIO OF SHARES SIMULTANEOUSLY. HOWEVER, WHETHER ALLEGED INVESTMENT ACTIVITY IS ACTUALLY INVESTMENT OR BUSINESS ACTIVITY SHALL BE EXAMINED IN THE LIGHT OF CASE LAWS & CIRCULARS DISCUSSED SUPRA. ASSESSEE HAS TAKEN THE PLEA THAT HE HAS SHOWN ACTIV ITY AS INVESTMENT IN PREVIOUS BALANCE SHEETS. THE AO PLACING RELIANCE ON THE VARI OUS JUDICIAL PRECEDENTS HELD THAT ENTRIES IN THE BOOKS OF ACCOUNT ALONE ARE NOT CONCL USIVE PROOF TO DECIDE THE REAL NATURE OF TRANSACTIONS AND ALSO ONE CANNOT RELY ON MERE BO OK ENTRIES TO ARRIVE AT A PROPER 5 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER CONCLUSION AS TO THE REAL NATURE OF THE INCOME. THE AO OBSERVED THAT THE ACTIVITY SO CARRIED OUT BY THE ASSESSEE CLEARLY SUBSTANTIATE TH AT THE ASSESSEE HAS BEEN INDULGED IN THE ACTIVITIES OF BUSINESS OR PROFESSION BY VIRTUE OF TRADING IN SHARES, MUTUAL FUNDS, DEBENTURES ETC.; THUS DURING THE YEAR UNDER CONSIDE RATION INCOME FROM SHARES IS HELD AS BUSINESS ACTIVITY OF THE ASSESSEE. 3.1. IN VIEW OF THE FACTS & CIRCUMSTANCES OF MENTIO NED ABOVE, THE AO HELD THAT IT IS CLEARLY ESTABLISHED THAT ASSESSEES MOTIVE WAS NOT INVESTMENT BUT IT WAS A BUSINESS ACTIVITY IN SHARES. THE QUANTUM OF PURCHASES AND SA LE OF SHARES WAS VERY HIGH CURING THE YEAR. THERE ARE REPETITIONS OF THE TRANSACTIONS PERIOD OF HOLDING OF SHARES IS VERY LESS EVEN MOST SHARES HAS BEEN TRANSACTED WITHIN FE W DAYS. THUS THE AO TREATED THE PROFIT OF RS. 73,70,214/- AS INCOME FROM BUSINESS I NSTEAD OF INCOME DECLARED BY THE ASSESSEE AS A SHORT TERM CAPITAL GAIN, AND ADDED TH E SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A) WHO AFTER DISCUSSING THE MATTER AT LENGTH, ALLOWED THE GROUND OF THE ASSESSEE BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE S UBMISSIONS MADE. THE SUBMISSION OF THE APPELLANT IS ACCEPTABLE. THE ADDI TION HAS BEEN MADE BY THE AO IN A ROUTINE AND PERFUNCTORY MANNER WITHOUT BRINGING ON RECORD ANY MATERIAL TO JUSTIFY THE ADDITION MADE. IT IS ST ATED THAT IN THE A.Y. 2007-08 THE SHORT TERM CAPITAL GAIN OF RS. 2,83,209 /- DECLARED BY THE ASSESSEE UNDER SIMILAR CIRCUMSTANCES WAS NOT DISTUR BED BY THE DEPARTMENT. THE DECISION QUOTED BY THE A/R FOR THE APPELLANT IN THE CASE OF NAGINDAS P SHETH (HUF) VS. ACIT-21 (3) MUMBAI IT A NO. 6 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER 961/MUM/210 A.Y. 2006-07 IS CLEARLY APPLICABLE WHER EIN IT WAS HELD THAT THE ASSESSEE IS AN INVESTOR. SUCH BEING THE CASE, M ERELY BECAUSE ASSESSEE TRANSACTED IN 158 SHARES THAT SHOULD NOT B E TAKEN AS A SOLD CRITERION TO COME TO THE CONCLUSION THAT ASSESSEE I S A TRADER IN SHARES. IT IS NOT IN DISPUTE THAT IN THE BOOKS OF ACCOUNTS ASSESS EE HAS DECLARED THE SHARES AS INVESTMENT AND THE FINDING OF THE LEARNED CIT (A) THAT ONLY OWN FUNDS WERE UTILIZED FOR PURCHASE OF SHARES WAS NOT CONTRADICTED BY THE LEARNED DR. IT WAS ALSO HIGHLIGHTED BY THE LEARNED CIT (A) THAT ASSESSEE HAD NOT INDULGED IN ANY SQUARING-UP OF THE TRANSACT IONS ON THE SAME DAY. ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW T HAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES, IN THE INSTANT CASE, D ESERVES TO BE CONSIDERED AS INVESTMENT AND PROFIT THEREON HAS TO BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. HENCE, IN VIEW OF THESE FACTS AND JUDICIAL DECISION REFERRED BY THE A.R FOR THE APPELLANT IT I S HELD THAT IT IS NOT IN DISPUTE THAT IN THE BOOKS OF ACCOUNTS HAS DECLARED THE SHARES AS INVESTMENT AND THE FINDINGS OF THE AO THAT ONLY OWN FUNDS WERE UTILIZED FOR PURCHASE OF SHARES WAS NOT CONTRADICTED BY THE AO,. HENCE, THE TRANSACTION OF PURCHASE AND SALE OF SHARES IN THE I NSTANT CASE, DESERVES TO BE CONSIDERED AS INVESTMENT AND PROFIT THEREON HAS TO BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. THE APPELLANT SUCCE EDS ON THIS GROUND. 5. NOW THE REVENUE IS BEFORE US. 5.1 WE HAVE HEARD THE RIVAL CONTENTION OF THE PARTI ES AND HAVE ALSO PERUSED THE RECORD. THE LD. D/R FOR THE REVENUE HAS SUBMITTED THAT THE INCOME EARNED BY THE ASSESSEE ON ACCOUNT OF SALE AND PURCHASE OF SHARES IS REQUIRED TO BE TREATED AS BUSINESS INCOME AND NOT REQUIRED TO BE TREATED AS S HORT TERM CAPITAL GAIN. HE RELIED 7 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER UPON THE ORDER PASSED BY THE AO AND PRAYED THAT THE ORDER OF LD. CIT (A) IS REQUIRED TO BE SET ASIDE. 5.2. ON THE CONTRARY, THE LD. A/R FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CONSISTENTLY DECLARED THE GAINS/LOSSES UNDER TH E HEAD CAPITAL GAINS, EVEN IF THE SAME WAS DISADVANTAGEOUS TO THE ASSESSEE. THE LD. C IT (A) HAS MENTIONED THE SAME IN THE ORDER AS UNDER :- YET ANOTHER IMPORTANT FACT HAVING BEARING ON THE ISSUE UNDER APPEAL IS THAT THE ASSESSEE CONTINUED TO DECLARE TH E GAINS/LOSSES UNDER THE HEAD CAPITAL GAINS. IN THE A.Y. 2010-11 T HE ASSESSEE LOST THE BENEFIT OF SET OFF OF LONG TERM CAPITAL LOSS AM OUNTING TO RS. 27,94,426/- BECAUSE HE HAD DECLARED THE SAID LOSS U NDER THE HEAD CAPITAL GAIN AND NOT UNDER THE HEAD INCOME FROM BUS INESS AND PROFESSION. COPY OF COMPUTATION OF TOTAL INCOME FOR A.Y. 2010-11 IS ENCLOSED HEREWITH FOR YOUR REFERENCE. HERE, IT I S TO BE NOTED THAT, IF THE ASSESSEE HAD REALLY CARRIED ON THE SHARE TRA DING BUSINESS, HE COULD HAVE CLAIMED THE LOSS FROM SHARES UNDER THE H EAD BUSINESS AND PROFESSION AND ACCORDINGLY WOULD HAVE REDUCED T HE TAX LIABILITY BY SETTING OFF THE SAME FROM INCOME OF JEWELLERY BU SINESS. THIS CONSISTENT APPROACH, EVEN TO THE ASSESSEES DISADVA NTAGE, SUBSTANTIATES THE INVESTMENT IN SHARES, BEING OF CA PITAL ASSETS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DECL ARED THE SHORT TERM CAPITAL GAIN OF RS. 2,83,209/- IN THE A.Y. 2007-08. THE LD. CIT (A) HAS NOT DISTURBED THE FINDING WHILE PASSING THE ORDER UNDER SECTION 143(2) OF THE IT AC T. THE LD. A/R FURTHER RELIED UPON THE FOLLOWING JUDGMENTS IN SUPPORT OF HIS CONTENTIO N : CIT VS. KARAMCHAND THAPAR & SONS LTD. 115 ITR 250 (CAL.) TRUPTI INVESTMENT CO. VS. ITO 35 ITD 200 (ITAT AHMEDABAD) 8 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER CIT VS. SUGAR DEALERS 100 ITR 424 (ALL.) CIT VS. GUEST KEEN & NEETLEFOLD LTD. 115 ITR 205 (CAL.) CIT VS. MANNA LAL NIRMAL KUMAR SURANA 264 ITR 116 (RAJ.) CIT VS. SIMPSON GENERAL FINANCE CO. LTD. 230 ITR 222 (MAD.) ACIT VS. KHETAN KUMAR A SHAH, 242 ITR 83 (KERALA) ASHOKA VINIYOGA LTD. VS. CIT 70 ITR 381 5.3. BEFORE US THE MOOT QUESTION WHICH IS REQUIRED TO BE DECIDED IS WHETHER THE INCOME EARNED BY THE ASSESSEE ON ACCOUNT OF SHARE I S REQUIRED TO BE TREATED AS BUSINESS INCOME OR REQUIRED TO BE TREATED AS SHORT TERM CAPITAL GAIN. AFTER THE MATTER WAS HEARD ON 11.02.2016, THE CBDT CAME OUT WITH THE CIRCULAR NO. 6/2016 DATED 29.02.2016 IN THE FOLLOWING MANNER :- SUB-SECTION (14) OF SECTION 2 OF THE INCOME-TAX AC T, 1961 ('ACT') DEFINES THE TERM 'CAPITAL ASSET' TO INCLUDE PROPERT Y OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS B USINESS OR PROFESSION, BUT DOES NOT INCLUDE ANY STOCK-IN-TRADE OR PERSONAL ASSETS SUBJECT TO CERTAIN EXCEPTIONS. AS REGARDS SH ARES AND OTHER SECURITIES, THE SAME CAN BE HELD EITHER AS CAPITAL ASSETS OR STOCK-IN- TRADE/ TRADING ASSETS OR BOTH. DETERMINATION OF THE CHARACTER OF A PARTICULAR INVESTMENT IN SHARES OR OTHER SECURITIES , WHETHER THE SAME IS IN THE NATURE OF A CAPITAL ASSET OR STOCK-I N-TRADE, IS ESSENTIALLY A FACT-SPECIFIC DETERMINATION AND HAS L ED TO A LOT OF UNCERTAINTY AND LITIGATION IN THE PAST. 9 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER OVER THE YEARS, THE COURTS HAVE LAID DOWN DIFFERENT PARAMETERS TO DISTINGUISH THE SHARES HELD AS INVESTMENTS FROM THE SHARES HELD AS STOCK-IN-TRADE. THE CENTRAL BOARD OF DIRECT TAXES ( 'CBDT') HAS ALSO, THROUGH INSTRUCTION NO. 1827, DATED AUGUST 31, 1989 AND CIRCULAR NO. 4 OF 2007 DATED JUNE 15, 2007, SUMMARIZED THE S AID PRINCIPLES FOR GUIDANCE OF THE FIELD FORMATIONS. 3. DISPUTES, HOWEVER, CONTINUE TO EXIST ON THE AP PLICATION OF THESE PRINCIPLES TO THE FACTS OF AN INDIVIDUAL CASE SINCE THE TAXPAYERS FIND IT DIFFICULT TO PROVE THE INTENTION IN ACQUIRING SUCH SHARES/SECURITIES. IN THIS BACKGROUND, WHILE RECOGN IZING THAT NO UNIVERSAL PRINCIPAL IN ABSOLUTE TERMS CAN BE LAID D OWN TO DECIDE THE CHARACTER OF INCOME FROM SALE OF SHARES AND SECURIT IES (I.E. WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINE SS INCOME), CBDT REALIZING THAT MAJOR PART OF SHARES/SECURITIES TRANSACTIONS TAKES PLACE IN RESPECT OF THE LISTED ONES AND WITH A VIEW TO REDUCE LITIGATION AND UNCERTAINTY IN THE MATTER, IN PARTIA L MODIFICATION TO THE AFORESAID CIRCULARS, FURTHER INSTRUCTS THAT THE ASSESSING OFFICERS IN HOLDING WHETHER THE SURPLUS GENERATED FROM SALE OF LISTED SHARES OR OTHER SECURITIES WOULD BE TREATED AS CAPITAL GAI N OR BUSINESS INCOME, SHALL TAKE INTO ACCOUNT THE FOLLOWING- A) WHERE THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PE RIOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO TREAT THEM AS STOCK- IN-TRADE, THE INCOME ARISING FROM TRANSFER OF SUCH SHARES/SECURIT IES WOULD BE TREATED AS ITS BUSINESS INCOME, B) IN RESPECT OF LISTED SHARES AND SECURITIES HELD FO R A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRA NSFER, IF THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM THE TRANSF ER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PUT TO DISPUTE BY THE A SSESSING OFFICER. HOWEVER, THIS STAND, ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR ASSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQU ENT ASSESSMENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED TO ADOP T A DIFFERENT/CONTRARY STAND IN THIS REGARD IN SUBSEQUENT YEARS; C) IN ALL OTHER CASES, THE NATURE OF TRANSACTION (I.E . WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS INCOME) SHAL L CONTINUE TO BE DECIDED KEEPING IN VIEW THE AFORESAID CIRCULARS ISSUED BY T HE CBDT. 4. IT IS HOWEVER CLARIFIED THAT THE ABOVE SHALL NOT APPLY TO SUCH TRANSACTIONS IN SHARES/SECURITIES WHERE THE GENUINE NESS OF THE TRANSACTION IS ITSELF QUESTIONABLE SUCH AS BOGUS CL AIMS OF LONG TERM CAPITAL/SHORT TERM CAPITAL LOSS OR ANY OTHER SHAM T RANSACTIONS. 10 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER 5. IT IS REITERATED THAT THE ABOVE PRINCIPLES HAVE BEEN FORMULATED WITH THE SOLE OBJECT OF REDUCING THE LIT IGATION AND MAINTAINING CONSISTENCY IN APPROACH ON THE ISSUE OF TREATMENT OF INCOME DERIVED FROM TRANSFER OF SHARES AND SECURITI ES. ALL THE RELEVANT PROVISIONS OF THE ACT SHALL CONTINUE TO AP PLY ON THE TRANSACTIONS INVOLVING TRANSFER OF SHARES AND SECUR ITIES. IN VIEW OF THE CIRCULAR, WE HAVE CLEARLY NOTICED TH AT THE ISSUE RAISED IN THIS APPEAL STANDS FULLY COVERED BY THE CIRCULAR ISSUED BY THE CBDT. SINCE THE ASSESSEE HAS TREATED THE SECURITIES AS INVESTMENT AND NOT AS STOCK IN TR ADE IN ALL THE YEARS, THEREFORE, IN VIEW OF THE CBDT CIRCULAR, THE REVENUE IS NOT PERMITTED TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR AND CLAIMED THAT THE SECURITY IS STOCK IN TRADE AND, THEREFORE, THE PROFIT/GAIN CAUSED TO THE ASSESSEE BE TREATED AS BU SINESS INCOME. IN OUR VIEW, THERE IS NO MERIT IN THE CONTENTION OF THE REVENUE AND IS DE SERVES TO BE DISMISSED IN VIEW OF THE CIRCULAR. WE, THEREFORE, CONFIRM THE IMPUGNED ORDE R OF LD. CIT (A) IN THIS REGARD AND DISMISS THE GROUND RAISED IN THIS APPEAL. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/03/2016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18 /03/2016. DAS/ 11 ITA NO. 605/JP/2013 DCIT VS. SHRI MAHENDER KUMAR BADER VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-SHRI MAHENDER KUMAR BADER, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 605/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR