DHAIRESH K. SANGHVI, MUMBAI V. ACIT CIR 17(1), MUMBAI

ITA 6298/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5416 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 18-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARESH SHAH
• Keywords: Capital asset; Business income; Wrong claim; Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI AMARJIT SINGH , JM ITA NO. 6298 / MUM/20 1 7 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI DHAIRESH K. SANGHVI 3 RD FLOOR, UNION CO - OP INSURANCE BUILDING P.M. ROAD, FORT, MU MBAI 400 001 VS. ACIT CIRCLE 17(1) AAYAKAR BHAVAN MUMBAI PAN/GIR NO. AAFPS24855B ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI PARESH SHAH REVENUE BY MS. RIDDHI MISHRA DATE OF HEARING 22 / 01 /201 9 DATE OF PRONOUNCEMENT 25 / 01 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 28, (IN SHORT CIT(A)), MUMBAI DATED 6 TH JULY 2017 FOR A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.1 43(3) OF THE IT ACT, 1961. 2. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS, THE ONLY EFFECTIVE ISSUE TO BE DECIDED IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE ASSESSEE AS A TRADER IN SHARES AS AGAINST THE CLAIM OF THE ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 2 ASSESSEE TO BE AN INVESTOR IN SHARES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF INTENDING AGENT , IMPORT AND EXPORT OF CHEMICALS, WAREHOUSING BUSINESS AND BUSINESS CENTRE UND ER THE PROPRIETARY CONCERN OF M/S. KANTILAL SANGHVI & CO., THE ASSESSEE IS DERIVING INCOME FROM HOUSE PROPERTY, BUSINESS, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME FOR THE A.Y.2010 - 11 WAS FILED ON 24/09/2010 DECLARING TOTAL INCOME OF RS.2,12,69,990/ - COMPRISING OF THE FOLLOWING: - HEAD OF INCOME AMOUNT AMOUNT INCOME FROM HOUSE PROPERTY 7,99,680 PROFIT FROM BUSINESS OR PROFESSION (PROP. CONCERN) 2,06,53,783 CAPITAL GAINS SHORT TERM CAPITAL GAINS (SHARES &MF) 1,30,52 ,634 LESS : BROUGHT FORWARD SHORT TERM CAPITAL LOSS (1,30,52,634) LONG TERM CAPITAL LOSS (EXEMPT) (84,85,720) - INCOME FROM OTHER SOURCES INTEREST INCOME RS.26,5 8,764 LESS : F& O LOSS (RS.27,28,256) (69,492) GROSS TOTAL INCOME 2,13,83,971 LESS : DEDUCTION CHAPTER VIA 1,13,985 TAXABLE INCOME 2,12,69,990 ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 3 4. THE LD. AO SOUGHT TO TREAT THE ASSESSEES INCOME FROM SHORT TERM CAPITAL GAINS FROM SHARES AND MUTUAL FUNDS IN THE SUM OF RS.1,30,52,634/ - AS BUSINESS INCOME OF THE ASSESSEE TREATING THE ASSESSEE AS A TRADER IN SHARES AND MUTUAL FUNDS. THE LD. AO HOWEVER, ACCEPTED THE CLAIM OF LONG TERM CAPITAL LOSS OF RS.84,85,720/ - AS SUCH BY TREATING THE ASSESSEE AS AN INVESTOR IN SHARES. THE ASSESSEE PLEADED THAT HE HAS BEEN MAKING INVESTMENT IN THE SHARES FOR THE LAST FEW YEARS AND HAD BEEN REFLECTING THE SAME AS INVESTMENT IN HIS BOOKS OF ACCOUNTS AND IN BALANCE SHEET AND HAD BEEN REGULARLY DECLARING SHORT TERM CAPITAL GAINS / LOSSES OR LONG TERM CAPITAL GAINS / LOSSES , AS T HE CASE MAY BE , IN THE PAST AND THE SAME HAD BEEN ACCEPTED BY THE DEPARTMENT IN SCRUTINY ASSESSMENTS FRAMED U/S.143(3) OF THE ACT EXCEPT FOR A.Y.2008 - 09 WHEREIN , THE SHORT TERM CAPITAL GAIN DERIVED BY THE ASSESSEE W AS TREATED AS BUSINESS INCOME BY THE LD. AO. 5. THE ASSESSEE PLEADED THAT THERE IS NO CHANGE IN THE BEHAVIO U R I AL PATTERN OF THE ASSESSEE WITH REGARD TO PURCHASE AND SALE OF SHARES AND MUTUAL FUNDS DURING THE YEAR UNDER APPEAL AND ALSO STATED THAT THE ENTIRE INVESTMENTS WERE MADE OUT OF OWN FUNDS AND THE SHARES WERE PURCHASED WITH AN INTENTION TO EARN DIVIDEND TO DERIVE CAPITAL APPRECIATION THEREOF. THE ASSESSEE FURTHER PLEADED THAT WHERE VER THE ASSESSEES CALCULA TION WENT WRONG WITH REGARD TO HIS FORETHOUGHT OF HAVING A REASONABLE APPRECIATION IN THE PRICE OF CERTAIN SCRIPS, THE ASSESSEE DECIDED TO EXIT FROM THE SAID SCRIPS AFTER HOLDING THE SAID SHARES FOR A LIMITED PERIOD OF ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 4 TIME , WHICH IN SOME CASES WERE ALSO HELD FOR LESS THAN 30 DAYS FROM THE DATE OF PURCHASE OF THE SAME. IT WAS PLEADED THAT THIS CONSCIOUS DECISION OF THE ASSESSEE BY EXITING FROM CERTAIN SCRI P S WITHIN A SHORT SPAN OF TIME THEREBY HAVING SHORTER HOLDING PERIOD OF SHARES WOULD NOT CATEGORIZE HIM AS A TRADER IN SHARES. IT WAS SPECIFICALLY PLEADED THAT ASSESSEE HAD INDEED DERIVED DIVIDEND INCOME FROM SHARES AND MUTUAL FUNDS TO THE TUNE OF RS.2,19,78,819/ - DURING THE YEAR UNDER APPEAL. ALL THESE CONTENTIONS OF THE ASSESSEE WERE NOT APPRECIATED BY THE LD. AO AND THE LD. AO CONCLUDED THAT ASSESSEE HAD DEALT WITH 103 SCRIPTS DURING THE YEAR AND THAT HE HAD BEEN PERIODICALLY INVESTING AND EXITING FROM THE SHARES IN A SYSTEMATIC MANNER WHICH WOULD MAKE HIM AS A TRADER DEALING IN SHARES. ACCORDINGLY, THE GAINS DERIVED THEREO N WERE TREATED AS INCOME FROM BUSINESS IN THE SUM OF RS 1,30,52,63 4/ - TREATING THE ASSESSEE AS TRADER IN SHARES AND COMPLETED THE ASSESSMENT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 6 . WE HAVE HEARD RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT THE LD. CIT(A) H AD CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER TO REPLY / COMMENT ON THE SPECIFIC ISSUE AS TO WHETHER THE FACTS IN A.Y.2010 - 11 ARE SIMILAR TO A.Y.2008 - 09 IN THE CASE OF THE ASSESSEE HEREIN. THE LD. AO IN THE REMAND REPORT REPLIED AS UNDER: - ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 5 ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 6 ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 7 7. THE ASSESSEE FILED A REJOINDER TO THIS REMAND REPORT BEFORE THE LD CITA BY WAY OF A TABULATION AS UNDER: - REPRODUCE PAGES 99 TO 100 OF PAPER BOOK 8 . WE FIND THAT THE LD. AO IN HIS REMAND REPORT HAD SPECIFICALLY STATED THAT THE NATURE OF PROFILE OF AC TIVITIES UNDERTAKEN BY THE ASSESSEE IN THE A.YRS. 2008 - 09 AND 2010 - 11 ARE SIMILAR. THE LD. AO HAD ALSO STATED IN HIS REMAND REPORT THAT FOR 30% OF THE SHARES, THE HOLDING PERIOD WAS LESS THAN 50 DAYS AND FOR 71 SCRIPS, THE HOLDING PERIOD WAS LESS THAN 30 D AYS. LD. AO HAVING SAID THIS HAD ALSO MENTIONED IN HIS REMAND REPORT THAT THIS PATTERN IS SIMILAR TO WHAT IS OBSERVED BY HIM IN THE CASE OF THE ASSESSEE IN A.Y.2008 - 09 ALSO. THE LD. AO IN THE REMAND REPORT ONLY STATED THAT IN THE A.Y. 2008 - 09, THE ASSESSEE HAS TRADED IN 68 SCRIPS WHEREAS IN THE A.Y.2010 - 11, BEING THE YEAR UNDER APPEAL, THE ASSESSEE HAD TRADED IN 103 SCRIPS. 9 . BASED ON THIS INCREASE IN NUMBER OF SCRIPS ALONE, WE FIND THAT THE LD. AO HAD JUMPED TO THE CONCLUSION WITHOUT ANY BASIS THAT THE IN TENTION OF THE ASSESSEE IN THE A.Y.2010 - 11 IS TO ENGAGE IN SHARE TRADING AS BUSINESS ACTIVITY AND NOT AS AN INVESTMENT. THIS CONCLUSION OF THE LD. AO, IN OUR CONSIDERED OPINION, IS ABSOLUTELY BASELESS AND NOT EMANATING FROM THE FACTS. WE FIND THAT THE ASSE SSEE HAD ALSO FILED A DETAILED REJOINDER BY WAY OF A TABULATION EXPLAINING THE COMPLETE BEHAVIOURAL P ATTERN OF HIM AND HAD ALSO FILED A COMPARATIVE CHART VIS - - VIS HIS BEHAVIO U R AND THE BEHAVIO U R OF THE INCOME TAX DEPARTMENT IN TREATING VARIOUS TRANSACTION S ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 8 WITH REGARD TO PURCHASE AND SALE OF SHARES IN A.YRS. 2008 - 09 AND 2010 - 11 WHICH HAD BEEN ALREADY BEEN REPRODUCED HEREINABOVE. WE FIND THAT ASSESSEE HAD BEEN CONSISTENTLY SHOWING THE INVESTMENTS IN HIS BALANCE SHEET AND IN HIS BOOKS UNDER THE HEAD INVESTM ENTS CLEARLY PROVING HIS INTENT OF BEING AN INVESTOR IN SHARES. WE ALSO FIND THAT ASSESSEE HAD DERIVED GAINS IN THE PAST FROM THE SAID INVESTMENTS AND HAD DULY RE PORTED SHORT TERM CAPITAL GAINS / LOSSES AND LONG TERM CAPITAL GAINS / LOSSES IN EARLIER YEARS WHICH HAD BEEN DULY ACCEPTED BY THE REVENUE IN SCRUTINY ASSESSMENTS. HOWEVER, FOR THE A.YR 2008 - 09 ALONE, THE REVENUE HAD SHIFTED ITS STAND BY TREATING THE ASSESSEE AS A TRADER IN SHARES AND CONSEQUENTLY, TREATING THE GAINS RECEIVED ON SALE OF SHARES AS B USINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN. WE FIND THAT THE TREATMENT MADE BY THE LD. AO FOR THE A.Y 2008 - 09 WAS SUBJECT MATTER OF APPEAL AND ADJUDICATION BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2937/MUM/2013 FOR A.Y.2008 - 09 DATED 16/10/ 2015 , WHEREIN , THIS TRIBUNAL HAD TREATED THE ASSESSEE AS AN INVESTOR IN SHARES AND CONSEQUENTLY DIRECTED THE LD. AO TO TREAT THE GAINS ON SALE OF SHARES AS SHORT TERM CAPITAL GAINS. WE FIND THAT THE FACTS OF A.Y.2008 - 09 ARE EXACTLY SIMILAR TO A.Y . 2010 - 11. WE ALSO FIND THAT DURING THE A.Y.2010 - 11, THE ASSESSEE HAD INDEED DERIVED DIVIDEND INCOME OF RS.2,19,78,819/ - WHICH SHOWS CLEARLY THAT THE ASSESSEE HAD ENTERED THE SHARE MARKET WITH AN INTENTION TO EARN DIVIDEND AND DERIVED CAPITAL APPRECIATION THEREOF AND NOT WITH AN INTENTION TO RE - SALE. THIS CLINCHING FACT DESCRIBES THE TRUE ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 9 CONDUCT OF THE ASSESSEE TO BE AN INVESTOR IN SHARES. MOREOVER, WE FIND THAT ASSESSEE HAD ALSO DECLARED LONG TERM CAPITAL LOSS OF RS.84,85,720/ - IN ITS RETURN OF INCOME WHICH HAD BEEN ACCEPTED BY THE REVENUE AS SUCH. HENCE, WE ARE NOT ABLE TO APPRECIATE THE D IVERGENT STAND TAKEN BY THE REVENUE IN AS MUCH AS FOR THE LONG TERM CAPITAL GAINS OR LOSSES, THE REVENUE HAS ACCEPTED THE ASSESSEE TO BE AN INVESTOR AND FOR SHORT TERM CAPITAL GAIN S, THE REVENUE HAS TREATED THE ASSESSEE NOT TO BE AN INVESTOR. THIS DIVER GENT STAND OF THE REVENUE, IN OUR CONSIDERED OPINION , IS NOT SUSTAINABLE IN LAW. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT ASSESSEE HAD BEEN CONSTANTLY SHOWING THE GAINS DERIVED FROM SALE OF SHARES AS SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS , AS THE CASE MAY BE , IN THE EARLIER YEARS AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE IN SCRUTINY ASSESSMENT EXCEPT FOR THE A.Y.2008 - 09. EVEN FOR A.Y.2008 - 09, THIS TRIBUNA L HAD HELD THAT ASSESSEE IS ONLY AN INVESTOR IN SHARES. HENCE, GOING BY THE PRINCIPLE OF CONS ISTENCY , THE REVENUE OUGHT TO HAVE TREATED THE ASSESSEE ONLY AS A INVESTOR AND NOT AS A TRADER. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT REPORTED IN 336 ITR 287 (BOM) HAD AN OCCASION TO ADDRESS THE VERY SAME ISSUE. IN THE FACTS BEFORE THE HONBLE BOMBAY HIGH COURT, THE ASSESSEE HAD MAINTAINED DUAL PORTFOLIOS AND ULTIMATELY, THE COURT HELD THAT THE RESULTS AND GAI NS FROM THE INVESTMENT ACTIVITY WOULD BE ASSESSABLE AS CAPITAL GAINS AND NOT BUSINESS INCOME. IN VIEW OF THE FACT THAT THE VALUATION OF INVESTMENT WAS DONE BY THE ASSESSEE AT COST AS IS ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 10 EVIDENT FROM THE ACCOUNTING POLICIES FORMING PART OF THE AUDITED FINAN CIAL STATEMENTS AND GOING BY THE PAST TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOKS AND IN THE TAX RECORDS. WE DO NOT FIND ANY LOGICAL REASON FOR THE REVENUE TO DEVIATE FROM ITS CONS ISTENT STAND TAKEN IN THE EARLIER YEARS EXCEPT FOR THE A.Y.2008 - 09, WHICH A LSO STOOD SUBSEQUENTLY DELETED BY THIS TRIBUNAL IN ASSESSEES OWN CASE. WE ALSO FIND THAT THE AFORESAID DECISION OF HONBLE BOMBAY HIGH COURT WAS FURTHER AGITATED BY THE REVENUE BY WAY OF SPECIAL LEAVE PETITION (SLP) BEFORE THE HONBLE SUPREME COURT WHICH WAS DISMISSED BY THE HONBLE SUPREME COURT. IN ANY CASE , MAINTENANCE OF DUAL PORTFOLIO S ARE PERMITTED FOR AN ASSESSEE AND ALSO EQUALLY PERMITTED BY CBDT CIRCULAR NO.4 OF 20 07 DATED 15/06/2007. 8. IN THE INSTANT CASE, THE ASSESSEE HAD MAINTAINED ONLY ONE PO RTFOLIO I.E., INVESTMENT. BUT THE REVENUE IS TRYING TO STATE THAT THE ASSESSEE HAS MAINTAINED DUAL PORTFOLIOS I.E., (1) FOR INVESTMENT ON WHICH ASSESSEE HAD DERIVED LONG TERM CAPITAL LOSS WHICH HAS BEEN ACCEPTED BY THE REVENUE, (2) AS TRADER FROM WHICH ASS ESSEE HAS DERIVED SHORT TERM CAPITAL GAINS WHICH THE DEPARTMENT TREATED THE GAINS ON SALE OF SHARES AS BUSINESS INCOME. WE FIND THAT THERE IS ABSOLUTELY NO INTERMINGLING OF SHARES AND TRANSACTIONS AND THERE IS NO MATERIAL BROUGHT ON RECORD THAT ASSESSEE HA D TRIED TO TAKE TAX ADVANTAGE BY SHOWING THE GAINS ON SALE OF SHARES AS INCOME FROM SHORT TERM CAPITAL GAINS. FINALLY, WE FIND THAT THE CBDT CIRCULAR NO.6/2016 DATED 29/02/2016 STATES THAT : - ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 11 SUB - SECTION (14) OF SECTION 2 OF THE INCOME - TAX ACT, 1961 ('AC T') DEFINES THE TERM 'CAPITAL ASSET' TO INCLUDE PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, BUT DOES NOT INCLUDE ANY STOCK - IN - TRADE OR PERSONAL ASSETS SUBJECT TO CERTAIN EXCEPTIONS. AS REGARDS SHARES 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 - IN - TRADE, IS ESSENTIALLY A FACT - SPECIFIC DETERMINATION AND HAS LED TO A LOT OT UNCERTAINTY AND LITIGATION IN THE PAST. 2. OVER THE YEARS, THE COURTS HAVE LAID DOWN DIFFERENT PARAMETERS TO DISTINGUISH THE SHARES HELD AS INVESTMENTS FROM THE SHARES H ELD 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 SAID PRINCIPLES FOR GUIDANCE OF THE FIELD FORMATIONS . 3. DISPUTES , HOWEVER, CONTINUE TO EXIST ON THE APPLICATION 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 RECOGNIZING THAT NO UNIVERSAL PRINCIPAL IN ABSOLUTE TERMS CAN BE LAID DOWN TO DECIDE THE CHARACTER OF INCOME FROM SALE OF SHARES AND SECURITIES (IE. WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS 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 PARTIAL MODIFICATION TO THE AFORESAID CIRCULARS, FURTHER INSTRUCTS THAT THE ASSESSING OFFICERS IN HOLDING WHETHER THE SURPLUS GENERATED FROM SA LE OF LISTED SHARES OR OTHER SECURITIES WOULD BE TREATED AS CAPITAL GAIN OR BUSINESS INCOME, SHALL TAKE INTO ACCOUNT THE FOLLOWING) A) WHERE THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PERIOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO TREAT THEM AS S TOCK - IN - TRADE, THE INCOME ARISING FROM TRANSFER OF SUCH SHARES/SECURITIES WOULD BE TREATED AS ITS BUSINESS INCOME. B) IN RESPECT OF LISTED SHARES 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 OFFICER. 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/CONTRARY STAND IN THIS REGARD IN SUBSEQUENT YEARS; ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 12 C) IN ALL OTHER CASES, THE NATURE OF TRANSACTION (I.E. WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS INCOME) SHALL CONTINUE TO BE DECIDED KEEPING IN VIEW THE AFORESAID CIRCULARS ISSUED BY THE CBDT. . 4. IT IS, HOWEVER, CLARIFIED THAT THE ABOVE SHALL NOT APPLY IN RESPECT OF SUCH TRANSACTIONS IN SHARES/SECURITIES WHERE THE GENUINENESS OF THE TRANS ACTION ITSELF IS QUESTIONABLE, SUCH AS BOGUS CLAIMS OF LONG TERM CAPITAL GAIN / SHORT TERM CAPITAL LOSS OR ANY OTHER SHAM TRANSACTIONS. 5. IT IS REITERATED THAT THE ABOVE PRINCIPLES HAVE BEEN FORMULATED WITH T HE SALE OBJECTIVE OF REDUCING LITIGATION AND M AINTAINING CONSISTENCY IN APPROACH ON THE ISSUE OF TREATMENT OF INCOME DERIVED FROM TRANSFER OF SHARES AND SECURITIES. ALL THE RELEVANT PROVISIONS OF THE ACT SHALL CONTINUE TO APPLY ON THE TRANSACTIONS INVOLVING TRANSFER OF SHARES AND SECURITIES. 9. IN V IEW OF THE AFORESAID OBSERVATIONS AND RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL FOR A.Y.2008 - 09 IN THE CASE OF THE ASSESSEE AND IN VIEW OF THE AFORESAID CBDT CIRCULAR NO. 6/2016 DATED 29/02/2016 , WE HOLD THAT THE ASSESSEE HAD TO BE TREATED ONLY A S AN INVESTOR IN SHARES AND CONSEQUENTLY THE GAINS DERIVED FROM SALE OF SHARES ARE TO BE TAXED ONLY AS SHORT TERM CAPITAL GAINS IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESUL T, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 / 01 /201 9 SD / - ( AMARJIT SINGH) SD/ - ( M. BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 25 / 01 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT ITA NO. 6298/MUM/2017 SHRI DHAIRESH K SANGHVI 13 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//