ADD CIT 25(3), MUMBAI V. JAGRUT P. GANDHI (AOP), MUMBAI

ITA 6431/MUM/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70698 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 01-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR K SHIVARAM
• Assessee Lawyers: PANKAJ KUMAR SR
• Keywords: Business income; Business expenditure; Rule of consistency; Transactions in derivatives; Question of law; Capital expenditure
• Section: 14A

Judgement Text

1 J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH , MUMBAI BEFORE SHRI I.P. BANSAL, JM AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO.5784/M/2008 ( / ASSESSMENT YEAR : 2005-2006 ) JAGRUT P. GANDHI (AOP ), 1603, CHALLENGER TOWER-1, THAKUR VILLAGE, KANDIVALI (E), MUMBAI 400 101. / VS. ADD. CIT-25(3), C-11, R.NO. 308, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. ./PAN : AAAAJ 1138 M ( ! /APPELLANT) .. ( '#! / RESPONDENT) ./I.T.A. NO.6431/M/2009 (AY: 2006-2007 ) ADD. CIT-25(3), C-11, R.NO. 308, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. / VS. JAGRUT P. GANDHI (AOP), 1603, CHALLENGER TOWER-1, THAKUR VILLAGE, KANDIVALI (E), MUMBAI 400 101. ./PAN : AAAAJ 1138 M ( ! /APPELLANT) .. ( '#! / RESPONDENT) ! $ % / ASSESSEE BY : SHRI PANKAJ KUMAR, SR. AR '#! $ % / REVENUE BY : DR. K. SHIVARAM $ & /DATE OF HEARING : 1.8.2013 '( $ & /DATE OF PRONOUNCEMENT : 23.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. ITA NO. 5784/M/2008 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT (A)-XXV, MUMBAI DATED 10. 7.2008 FOR THE AY 2005-2006 AND ITA NO.6431/M/2009 IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT (A)-35, MUMBAI DATED 29.9.2009 FOR THE AY 2006- 2007. SINCE, THE ISSUES INVOLVED IN BOTH THE APPEALS ARE PARTLY IDENTICAL, FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND DISPO SED OF IN THIS COMMON ORDER. 2 2. FIRSTLY, WE SHALL TAKE UP ITA NO.5784/M/2008 WHI CH IS FILED BY THE ASSESSEE FOR THE AY 2005-2006. AT THE OUTSET, DR. SHIVARAM, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO GROUND NO.1, 2 & 3 AND MEN TIONED CATEGORICALLY THAT THESE GROUNDS ARE NOT PRESSED. AFTER GIVING AN OPPORTUNI TY TO THE LD DR FOR RESPONSE, IF ANY, THE SAID GROUNDS NOS. 1, 2 & 3 ARE DISMISSED ARE NOT PRESSED . IT IS ALSO MENTIONED THAT GROUND NO.7 & 8 ARE GENERAL IN NATUR E. THEREFORE, THEY STAND DISMISSED TOO . THEREFORE, GROUNDS NO.4, 5 & 6 ARE LEFT FOR SPEC IFIC ADJUDICATION AND THEY READ AS UNDER: 4. THE LD CIT (A) ERRED IN CONFIRMING THE ORDER O F THE ASSESSING OFFICER BY TREATING THE FOLLOWING CAPITAL GAINS AS BUSINESS IN COME AND HOLDING THAT THE ASSESSEE HAS ENTERED INTO THE ADVENTURE OF THE NATURE OF TRA DE: SHORT TERM CAPITAL GAINS FOR THE PERIOD 1.4.04 TO 3 0.9.2004 RS. 30,39,221/- SHORT TERM CAPITAL GAINS FOR THE PERIOD 1.10.04 TO 31.3.05 RS. 45,96,012/- RS. 76,35,233 /- 5. LD CIT (A) FAILED TO APPRECIATE THE SHARES WERE HELD AS INVESTMENTS AND NOT STOCK IN TRADE. 6. THE LD CIT (A) FAILED TO APPRECIATE THE CORRECT FACTS OF THE ASSESSEE AND CONSIDER THE SUBMISSIONS FAILED DURING THE COURSE O F APPEAL PROCEEDINGS, WHEN THE ASSESSEE EXPLAINED IN DETAIL THE REASONS FOR TREATING THE SA LE OF INVESTMENTS AS CAPITAL GAINS AND HENCE THE ADDITION CONFIRMED BY THE CIT (A), T REATING THE SALE OF INVESTMENTS AS BUSINESS INCOME MAY BE DELETED. 3. REFERRING TO THE ABOVE GROUNDS, DR. SHIVARAM, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THESE GROUNDS REVOLVE AROUND A SINGU LAR ISSUE RELATING TO THE CORRECT HEAD OF INCOME WITH RESPECT TO THE PROFIT & GAINS O F RS. 76,35,233/- EARNED ON SALE OF THE SHARES. ASSESSEE CLAIMS THAT THESE GAINS HAV E TO BE TAXED AS SHORT TERM CAPITAL GAINS. IN THE ASSESSMENT, AO REJECTED THE SAME AND HELD THE SAID GAINS AS BUSINESS INCOME; WHICH SHOULD BE TAXED UNDER THE HEAD PROFIT & GAIN S FROM BUSINESS OR PROFESSION. RELEVANT FACTS IN THIS RE GARD ARE THAT THE ASSESSEE IS AN AOP AND FILED THE RETURN OF INCOME DISCLOSING THE BUSIN ESS INCOME OF RS. 2,46,80,049/- , SHORT TERM CAPITAL GAINS OF RS. 76,35,234/-, INCOM E FROM OTHER SOURCES AMOUNTING TO RS. 1,24,887/- ETC. THE AMOUNTS CREDITED TO THE P & L ACCOUNT ARE AS UNDER: PROFITS FROM TRADING IN SHARES 44,58,25 4 . 76/ - PROFITS FROM TRADING IN SHARES (F&O) 2,31,13,886.25/- S HORT TERM CAPITAL GAINS (1.4.04 TO 30.9.2004) 30 , 33 , 221 . 25/ - SHORT TERM CAPITAL GAIN (1.4.2004 TO 30.9.2004) 45,96,012.48/- BANK INTEREST 1,24,887/ - DIVIDEND ON SHARES 95,000/- INTEREST ON DEPOSIT 6 , 15 , 000/ - TOTAL 3 , 60 , 42 , 262.22/ - 3 4. RELEVANT FACTS RELATING TO THE CLAIM OF STCG ARE GIVEN PARA 4.2 OF THE CIT (A)S ORDER WHICH ARE AS UNDER: 4.2. AO ... IS AN ASSOCIATION OF PERSONS HAVING TWO MEMBERS MR. JAGRUT P. GANDHI AND MR. MANISH P. GANDHI. APPELLANT HAS SUBMI TTED THE AUDIT REPORT IN FORM 3CB ALONG WITH THE RETURN OF INCOME WHEREIN THE NAT URE OF BUSINESS OR PROFESSION IS STATED AS TRADING IN SHARES, INCOME FROM CAPITAL G AINS AND OTHER SOURCE. APPELLANT IS MAINTAINING REGULAR BOOKS OF ACCOUNTS FOR THIS PURPOSE HAVE BEEN AUDITED. AS PER THE STATEMENT OF TRADING IN SHARES FILED ALONG WITH THE RETURN OF INCOME IT IS OBSERVED THAT APPELLANT HAS PURCHASED 52,20,564 NUMBER OF SHARES FOR RS. 1,542,458,191.47/- AND SOLD THE SAME FOR RS. 1, 546,919,446.23/-. THESE SCRIPS PERTAINED TO 83 COMPANIES AND TOTAL NO. OF TRANSACTIONS DONE BY THE APPELLAN T WERE 990 . IN ADDITION TO THIS AS SHOWN IN THE STATEMENT OF SHORT TERM CAPITAL GAINS FROM 1.4.04 TO 30.9.2004 APPELLANT HAS PURCHASED 10 07225 NUMBER OF SHARES FOR RS. 81,557,201.70/- AND SOLD THE SAME FOR RS. 84,59 6,442.95/- THEREBY EARNING A PROFIT OF RS. 30,39,221.25/-. THESE SCRIPS PERTAIN ED TO 31 COMPANIES AND TOTAL NO. OF TRANSACTIONS DONE BY THE APPELLANT WAS 168 . FURTHER, AS SHOWN IN THE STATEMENT OF SHORT TERM CAPITAL GAINS FROM 1.1.2004 TO 31.3.2 005 APPELLANT HAS PURCHASED 284027 NUMBER OF SHARES FOR RS. 22,691,299.05/- AND SOLD THE SAME FOR RS. 27,287,311.53/-, THEREBY EARNING A PROFIT OF RS. 45 ,96,012.48/-. THESE SCRIPS PERTAINED TO 8 COMPANIES AND TOTAL NUMBER OF TRANSA CTIONS DONE BY THE APPELLANT WAS 36. IN THE NUTSHELL DURING THE YEAR, APPELLANT HAS CARRIED OUT 1194 TRANSACTIONS IN 122 SCRIPS INVOLVING 6511816 NO. OF SHARES AMOUN TING TO RS. 164,67,06,691/-. 5. FURTHER, THE AO NOTED THAT THE ASSESSEE BORROWED MONEY FROM SHRI PRAMOD G. SHETH AND HAS A FULL-FLEDGED OFFICE WITH INFRAST RUCTURE FOR CARRYING OUT OF BUSINESS OF SHARE TRADING ACTIVITIES. FURTHER, AO FOUND THAT THE ASSESSEE IS DEALT WITH THE SCRIPS, WHICH ARE BOTH DELIVERY BASED AND NON-DELIV ERY BASED TRANSACTIONS. FURTHER, AO CONSIDERED THE CBDT CIRCULAR NO.4/2007 DURING TH E ASSESSMENT PROCEEDINGS TOO. HOWEVER, ASSESSEE CLAIMS THAT THE RELEVANT INCOME S HOULD BE TAXED AS CAPITAL GAINS. THE CONTENTION OF THE ASSESSEE INCLUDES THAT THE AO P HAS BEEN CONSISTENTLY MAKING THIS KIND OF CLAIMS AS CAPITAL GAINS IN THE PAST AY S INCOME AND THE SAID CLAIMS WERE ACCEPTED BY THE AO WITHOUT ANY DISTURBANCE. HOWEVE R, IT IS FOR THE FIRST TIME, THE CLAIM OF THE ASSESSEE WAS REJECTED IN THIS YEAR. I T IS ALSO THE CLAIM OF THE ASSESSEE THAT SINCE NO BORROWED FUNDS WERE UTILISED IN THE I NVESTMENT ACTIVITIES, THE INCOME AS CAPITAL GAINS SHOULD BE ACCEPTED. IT IS THE STAT EMENT OF THE ASSESSEE THAT THE INTRA-DAY AND F&O TRANSACTIONS, BEING NON-DELIVERY BASED, WERE TREATED AS BUSINESS TRANSACTIONS. IT IS THE CLAIM OF THE ASSESSEE THAT DELIVERY BASED TRANSACTIONS SHOULD BE TREATED AS CAPITAL GAIN TRANSACTIONS CONSIDERING THE UTILIZATION OF OWN FUNDS BY THE ASSESSEE. HE RELIED ON VARIOUS DECISIONS WHICH ARE NARRATED IN PARA 9, 10 AND 11 OF THE IMPUGNED ORDER. WITH REGARD TO THE INTENTION, ASSESSEE RELIED ON THE BOOK 4 ENTRIES AND ALSO RELIED ON VARIOUS DECISIONS. HOWE VER, AO REJECTED THE ABOVE CLAIM OF THE ASSESSEE AND HELD THAT THE SHORT TERM CAPITA L GAINS OF RS. 76,35,233/- IS ALSO A BUSINESS INCOME AND RECOMPUTED THE TOTAL BUSINESS INCOME AT RS. 3,23,15,282/- INSTEAD OF 2,46,80,049/-. CONTENTS OF PARA 4.11 OF THE IMPUGNED ORDER ARE RELEVANT IN THIS REGARD AND THE SAME RE REPRODUCED HERE UNDE R: 4.11. IN VIEW OF ABOVE, AO HELD THAT APPELLANT IS E NGAGED IN ONLY ONE ACTIVITY IE ACTIVITY OF EARNING PROFIT THROUGH SALE AND PURCHASE OF SHARES, BE IT DERIVATIVES, INTRA-DAY TRADING OR PURCHASE AND SALE WITHIN SHORT PERIOD. THE EXPENSE S INCURRED THEREON ARE ALSO INSEPARABLE. HE HELD THAT THE APPELLANT HAS WRONGLY CLASSIFIED H IS INCOME UNDER THE TWO HEADS IE BUSINESS INCOME AND CAPITAL GAINS. THE ENTIRE PROFITS ARISI NG OUT OF PURCHASE AND SALE OF SHARES WAS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND P ROFESSION. CONSEQUENTIALLY, THE BENEFIT OF INDEXATION AND EXEMPTIONS ON THE SHARE INVESTMEN TS CLAIMED AS LONG TERM INVESTMENTS WAS DISALLOWED. ACCORDINGLY, THE BUSINESS INCOME WAS C OMPUTED AS UNDER: BUSINESS PROFIT OF TRADING IN SHARES AS PER COMPUTA TION RS. 2,46,80,049/- PROFIT ON SALE OF SHARES SHOWN AS SHORT TERM BEFORE 1.10.2004 BY APPELLANT RS. 30,39,221/- PROFIT IN SALE OF SHARES SHOWN AS SHORT TERM AFTER 1.10.04 BY APPELLANT RS. 45,96,012/- RS.3,23,15,282/- WHILE CALCULATING THE ABOVE INCOME, AO ALLOWED VARIOUS EXPENSES LIKE ACCOUNTANCY CHARGES, AUCTION, COMMISSION, BANK CHARGES, BUSINES S PROMOTION, PETROL EXPENSES, CONVEYANCE, CAR INSURANCE, DEMAT CHARGES, DEPRECIAT ION ON CAR AND COMPUTER, MEMBERSHIP FEES, MISCELLANEOUS EXPENSES, STAFF WELFARE EXPENSE S, SALARY EXPENSES, TELEPHONE EXPENSES AND OTHER EXPENSES. 6. AGGRIEVED WITH THE SAME, ASSESSEE IS IN APPEAL B EFORE THE CIT (A). 7. DURING THE PROCEEDINGS BEFORE THE CIT (A), ASSES SEE MADE VARIOUS SUBMISSIONS AND EXPLAINED THAT THE SHARES ARE DELIV ERY BASED, THE BOOK ENTRIES SUGGEST THE INVESTMENT ACTIVITY AND NON-UTILIZATIO N OF BORROWED FUNDS IN INVESTMENT PURPOSES ALSO SUPPORTS THE CLAIM OF ASSESSEE. CIT (A) CONSIDERED THE SAME AND REJECTED THE CLAIM BEFORE HOLDING THAT THE IMPUGNED SHORT TERM CAPITAL GAINS CONSTITUTE BUSINESS INCOME . PARA 4 AND ITS SUB-PARAS ARE RELEVANT IN THIS RE GARD. BRIEFLY, THE CIT (A) DEALT WITH DETAILS PERTAINING TO THE SHARES TRANSACTIONS, WHICH ARE DELIVERY BASED, THE HOLDING PERIOD OF THE SHARES, W HICH IS MERELY A FEW DAYS AND ALSO DISCUSSED THE FREQUENCY, MAGNITUDE AND THE INTENTIO N BEHIND THE IMPUGNED TRANSACTIONS LIKE FREQUENCY, CONSISTENCY ETC AND DI STINGUISHED VARIOUS DECISIONS CITED BEFORE HIM. FURTHER, CIT (A) ALSO MENTIONED THAT AS SESSEE HAS TAKEN A LOAN OF RS. 10 LACS FROM SHRI PRAMOD G. SHETH (PARA 4.16 OF THE IM PUGNED ORDER) AND ANALYZED THE DETAILS OF QUANTITY AND+ TRANSACTIONS FOR AYS 2001- 02 TO 2004-05. THE VOLUME OF THE TRANSACTIONS AND THE TURNOVER ARE TABULATED AS UNDER: 5 AY PURCHASE QUANTITY PURCHASE AMOUNT SALES QUANTITY SALES AMOUNT 2001 - 02 176300 36919586 175300 37680448 2002 - 03 2186505 321187624 2039682 317340122 2003 - 04 7796641 1026031216 7897011 1053046902 2004 - 05 7944329 796039842 7396988 811546790 8. FINALLY, CIT (A) DECIDED THE APPEAL AGAINST THE ASSESSEE AND PARA 4.17 AND 4.18 OF HIS ORDER ARE RELEVANT IN THIS REGARD AND S AME ARE REPRODUCED HERE UNDER: 4.17. ABOVE DETAILS CLEARLY SHOW THAT THERE IS LARGE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY IN THE TRANSACTION. THE ISSUE IS DI RECTLY COVERED AGAINST THE APPELLANT BY THE RECENT DECISION OF ITAT, AHMEDABAD IN THE CA SE OF DCIT VS. DEEPA SHAH 99 ITD 219 IN WHICH IT IS HELD THAT VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTIONS IN SHARES MAKES IT BUSINESS OF SHARES AND IT CANNOT BE ASSESSED UNDER THE....... FOLLOWED THE DECISION MENTIONED IN 113 I TR 173. 4.18. IN VIEW OF DETAILED DISCUSSION HELD HEREINABO VE AS WELL AS IN THE ASSESSMENT ORDER. I HOLD THAT APPELLANT IS ENGAGED IN ADVENTURE IN THE NATURE OF TRADE ON FULL SCALE AND IT HAS SHOWN PURCHASE OF SHARES AS INVESTMENT WITH A VIEW TO EVADE TAX INVESTMENT SHOWN IN THE BOOKS OF ACCOUNT IS NOTHING BUT STOCK-IN-TRADE. AO IS JUSTIFIED IN ASSESSING WHOLE INCOME FROM SHARE DEAL ING AS INCOME FROM BUSINESS IN VIEW OF ABOVE STAND TAKEN BY THE AO IS CONFIRMED. GROUND NO. 2 & 3 OF APPEAL ARE DISMISSED. 9. AGGRIEVED WITH THE ABOVE, ASSESSEE FILED THE PRE SENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 10. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET , LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO DISPUTE ON THE FACTS WHI CH ARE MENTIONED IN THE ORDERS OF THE REVENUE. HOWEVER, THE CONCLUSIONS ARE STRONGLY DISPUTED AND HE RELIED ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES. AS PER THE BRIEF FACTS SUBMITTED BEFORE US, ASSESSEE MADE CERTAIN PR OPOSITIONS AND SAME INCLUDES (I) RULE OF CONSISTENCY NEEDS TO BE APPRECIATED AND R ELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOPAL PUROHIT, SLP (CC 16802 OF 2010); AND (II) DOMINATE INTENTION IN MAKING THE INVESTMENT IS TO EARN CAPITAL APPRECIATION AND NOT THE PROFIT OF THE BUSINESS OF SHARE TRADING ACT IVITY. IN THAT CASE, THE CLAIMS OF THE ASSESSEE NEED TO BE ACCEPTED IN THIS YEAR ALSO. IN THIS REGARD, ASSESSEE RELIED ON VARIOUS DECISIONS. FURTHER, HE REFERRED TO THE HOLD ING PERIODS OF THE IMPUGNED INVESTMENT IN SHARES AND MENTIONED THAT 50% OF THE IMPUGNED GAINS ARE ATTRIBUTABLE TO THE SHARES HELD FOR THE PERIOD MORE THAN 60 DAYS. HE FURTHER MENTIONED THAT ASSESSEE DEALT WITH 31 SCRIPS UP TO THE FIRST HALF OF THE YEAR AND 6 ANOTHER 8 SCRIPS IN THE LATTER HALF OF THE YEAR. B RINGING OUR ATTENTION TO THE CONTENTS OF THE PAPER BOOK PAGE NO.36, 37, 38 ETC, LD COUNSE L FAIRLY MENTIONED THAT ASSESSEE HAD RE-ENTERED TRANSACTIONS INTO THE SAME SCRIPS. WHEN THE BENCH RAISED THE APPLICABILITY OF THE COORDINATE BENCH DECISION IN T HE CASE OF VEENA S. KALRA VIDE ITA NO. 2403/M/2012 DATED 10.7.2013 WHERE THE ISSUE OF RE-ENTERED TRANSACTIONS WERE DEALT WITH QUA THE BUSINESS INTENTION OF THE ASSESSEE, LD COUNSEL MENTIONED THAT ASSESSEE HAS NOTHING TO SAY IN THIS REGARD EXCEPT R ELYING ON THE SUBMISSIONS AND THE RULE OF CONSISTENCY. 11. ON THE OTHER HAND, LD DR RELIED HEAVILY ON THE ORDERS OF THE REVENUE AUTHORITIES. LD DR ALSO MENTIONED THAT WHEN THE ASS ESSEE BUYS AND SELLS SHARES FOR INVESTMENT, ASSESSEE IS EXPECTED TO HOLD ON TO THE SHARES FOR A LONGER PERIOD DESPITE THE TEMPTATION OF EARLY BOOKING OF THE PROFITS. IN CASE, WHERE THE ASSESSEE SELLS THE SAME SHARES IN THE YEAR UNDER CONSIDERATION, THE MO TIVE OF INVESTMENT ACTIVITY IS QUESTIONED. FURTHER, WHEN THE ASSESSEE BUYS THE SAME SCRIP WHICH WAS EARLIER PURCHASED AND SOLD, IT CONFIRMS THAT ASSESSEE HAS A BUSINESS MOTIVE AND NOT THE INVESTMENT MOTIVE. IN THIS REGARD, LD D R RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF VEENA S. KALRA ( SUPRA ). 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE FACTS PERTAINED TO THE C ORRECT HEAD OF INCOME FOR TAXING THE SAID INCOME OF RS. 76,35,233/-. IT IS ADMITTED POSI TION THAT THE ASSESSEE HAS A UNDISPUTED HISTORY OF RE-ENTERED SCRIPS/TRANSACTIONS LIKE IN THE CASE OF VEENA S. KALRA (SUPRA). THIS ORDER WAS AUTHORED BY BOTH OF U S. THERE WAS DISCUSSION IN THE COURT ON THE ISSUE OF REMANDING FOR ADJUDICATION BY LOWER AUTHORITIES AFTER CONSIDERING THE ORDER OF THE TRIBUNAL IN THE CASE O F VEENA S KALRA, SUPRA. LD COUNSEL PRAYED FOR A DECISION IN THE MATTER INSTEAD OF REMA NDING TO AO / CIT (A). IN THE SAID CASE ALSO, THE TRIBUNAL HAS ANALYSED THE FACTS OF THAT CASE AND REASONED THAT THE ASSESSEES INTENTION BECOMES BUSINESS ORIENTED ONE RATHER THAN THE INVESTMENT ACTIVITIES, DESPITE THE (I) BOOK ENTRIES AS INVESTM ENT AND (II) THE RULE OF CONSISTENCY WHICH ARE HEAVILY RELIED ON BY THE ASSESSEE. ON FAC TS AND LAW, THE ISSUES RAISED ARE ALREADY ADJUDICATED BY US AND THE RELEVANT DISCUSSI ON OF THE SAID DECISION OF THE TRIBUNAL (SUPRA) IS APPLICABLE TO THE PRESENT CASE. THEREFORE, RELEVANT DISCUSSION 7 FROM THE SAID ORDER OF THE TRIBUNAL IN THE CASE OF VEENA S KARLA (SUPRA), IS REPRODUCED IN THE FOLLOWING PARAGRAPHS. TRIBUNAL DECISION: 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE FACTS PLACED BEFORE US. THE UNDISPUTED FACTS ARE THAT THE IS NO CLARITY ON PREPARATION AND FURNISHING OF THE COMPLETE BALANCE SHEETS OF VARIOU S AYS TO DEMONSTRATE THE BOOK ENTRIES OF THE SHARES AS INVESTMENTS INCLUDING THAT OF THE AY 2007-2008. COLUMNS IN THE BALANCE SHEET WERE KEPT BLANK. IT IS ALSO A FACT THAT THE ASSESSEE DEALT WITH 31 COMMON SCRIPS, SIX (6) OF WHICH ARE COMMONLY TRADED AS STOCKS AS PART OF F & O BUSINESS AND ALSO EARNED STCG OUT OF UNLOADING OF SUCH SHARES. IN FACT, THER E ARE COMMON SCRIPS QUA THE LTCG TOO. ASSESSEE HAS THE HISTORY OF RE-ENTERING INTO THE SAME SCRIPS TOO AND THE RELEVANT GAINS CONSTITUTES RS 21,50,410/-. OTHER UNDISPUTED FACTS INCLUDE (I) ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE TAXING OF RS 21,50,410/- AS BUSI NESS INCOME; (II) THE TOTAL PURCHASES ARE OF THE VALUE OF RS. 25.37 CR AND TOTAL SALES OF RS. 28.92 CR, (III) CLOSING STOCK OF RS. 17.96 LACS IS VERY CLOSE TO OPENING STOCK OF RS. 18.29 LA CS. (IV) IT IS ALSO A FACT THAT AY 2008-2009 (CURRENT AY) REPORTEDLY IS DISTINGUISHABLE ON FACTS QUA THE NUMBER OF SCRIPS PURCHASED, THE NUMBER OF TRANSACTIONS (162 + 184= 346) AGAINST OTH ER YEARS SINGLE OR DOUBLE DIGITS. (V) STOCK TURNOVER RATIO IS 1:16 AD CAPITAL TURNOVER RATIO IS 1:10 (THESE ARE THE FEATURES OF BUSINESS ACTIVITY). THE CASE OF THE REVENUE: WITH THE ABOVE UNDISPUTED FACTS, THE CASE OF THE R EVENUE IS THAT THE ALLEGED TRANSACTIONS OF LTCG IS AKIN WITH THE ACTIVITIES OF THE F&O QUA THE INTENTION OF THE ASSESSEE AND SCRIPS TRADED BY THE ASSESSEE D URING THE YEAR. THE TRANSACTIONS FOR THE CURRENT YEAR ARE FACTUALLY DISTINGUISHABLE WITH THA T OF THE EARLIER AND LATER YEARS, THEREFORE, THE PRINCIPLE OF CONSISTENCY QUA THE RATIO OF THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS GOPAL PUROHIT (BOM) HAS NO APPLICATION TO THE ASSESSMENT YEAR UNDER CONSIDERATION. PROPER BALANC E SHEETS WERE NOT PREPARED AND FURNISHED BY THE ASSESSEE FOR MANY YEARS TO READ TH E INTENTION OF THE ASSESSEE AND THE ENTRIES IN THE BOOKS OF ACCOUNTS. IT IS AN ACCEPTE D POSITION THAT THE SOME OF THE SO CALLED STCG WERE AGREED TO BE THE BUSINESS TRANSACTION AS CONFIRMED BY THE CIT (A). THE STOCK TURNOVER RATIO AND THE CAPITAL TURNOVER RATIOS INDI CATES BUSINESS INCOMES AND DECISION OF THE ITAT, RAJKOT IN THE CASE OF DCIT VS. MUKESHBHAI BAB ULAL SHAH [2013] 32 TAXMANN.COM 6 (RAJKOT) CONFIRMS THE DEPARTMENTAL VIEWS. THEREFOR E, NOTWITHSTANDING THE CLAIMS OF THE ASSESSEE IN THE RETURNS, THE AY UNDER CONSIDERATION AND THE OTHER AYS, THE CONCLUSIONS OF THE AO ARE REQUIRED TO BE UPHELD. 10. PER CONTRA, THE CASE OF THE ASSESSEE IS THAT IN VIEW OF THE PRINCIPLE OF CONSISTENCY WHICH THE REVENUE HAS BEEN ACCEPTING TH E CLAIMS IN THE RETURNS OF THE ASSESSEE, THE IMPUGNED INCOME SHOULD BE TAXED AS STCG NOT AS A BUSINESS INCOME. ON THE TRANSACTIONS INVOLVING REENTRY, ASSESSEE HAS NOTHIN G TO STATE EXCEPT RELYING ON THE DETAILED REPLIES GIVEN BY THE ASSESSEE DURING THE FIRST APPE LLATE PROCEEDINGS, WHICH ARE ENUMERATED IN THE TABLE GIVEN IN PARA 4 OF THE IMPUGNED ORDER. BRIEFLY, COMMONALITY OF THE SCRIPS DEALT AS F&O AND THE LTCG IS NOT A DETERMINING FACTOR. W HEN THE ASSESSEE IS INVESTED HER OWN FUNDS IN LISTED SCRIPS INVOLVING INDIVIDUAL COMPANI ES, THEY HAVE TREATED AS STCG ONLY. AS PER THE ASSESSEE, ALL THE GAINS WERE ACTUALLY EARNED IN 8 YEARS ALTHOUGH IT INVOLVED ONLY 31 SCRIPS. FURTHER, IT WAS ASSERTED THAT THE SAID TRAN SACTIONS WERE ENTERED IN THE BOOKS AS INVESTMENTS AND ASSESSEE IS AUTHORIZED BY THE CBDT CIRCULAR NO.4/2007 TO DO BOTH THE ACTIVITIES NAMELY INVESTMENT AS WELL AS STOCK-IN-TR ADE. OTHERWISE, ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES FOR T HE PROPOSITION THAT THE SCHEME OF STCGS SHOULD BE ACCEPTED. 11. WE HAVE CONSIDERED THE ABOVE DIVERGENT STANDS O F THE LD REPRESENTATIVES OF THE PARTIES IN DISPUTE. CORE ISSUE FOR ADJUDICATION IN THIS APPEAL OF THE REVENUE RELATES IF THE BALANCE OF SHORT TERM CAPITAL GAINS (RS. 2,17,24,10 4/- MINUS RS 21,50,410/-) ARE ASSESSABLE TO TAX UNDER THE HEAD PROFITS AND GAINS FROM BUSIN ESS OR PROFESSION. THE STCG OF RS 21,50,410/-, WHICH ARE ATTRIBUTABLE TO THE RE-ENTER ED SCRIPS, ARE HELD ASSESSABLE AS BUSINESS PROFITS BY THE CIT(A) AND THE ASSESSEE ACCEPTED THE SAID DECISION. ASSESSEE HAS NOT FILED APPEAL AGAINST SUCH DECISION AND THEREFORE, SO FAR AS THE HEAD OF INCOME FOR SUM OF RS 21,50,410/- IS CONCERNED, THE FINALITY IS ATTAINED. HENCE THE NATURE OF THE BALANCE GAINS OF RS. 2,17,24,104/- IS THE DISPUTE BEFORE US. 8 12. REGARDING THE LEGAL SCOPE OF THE ISSUE UNDER CONSIDERATION, IT IS A SETTLED POSITION THAT THE ISSUE RELATING TO A PARTICULAR TRANSACTION CONSTITUTES CAPITAL GAIN TRANSACTION OR BUSINESS TRANSACTION IS A MIXED QUESTION OF LAW AND FACT . THE ANSWER TO THE DISPUTE DEPENDS ON THE FACTS OF EACH CASE. FURTHER, IT IS A LSO A SETTLED LAW THAT THE PRINCIPLE OF ESTOPPELS OR RES JUDICATA DOES NOT APPLY TO THE TAX PROCEEDINGS AS HELD BY T HE ITAT, MUMBAI IN THE CASE OF HITESH S. BHAGAT VIDE ITA NO. 6588/MUM/2010 AND THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NEW JAHANG IR VALKIL MILLS LTD, 49 ITR 137 (SC). FURTHER ALSO, THE RULE OF CONSISTENCY SHOULD BE FOLLOWED SO LONG AS THE FACTS ARE NOT DIFFERENT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE O F COMMISSIONER OF INCOME-TAX VS GOPAL PUROHIT (BOM), 336 ITR 287. REGARDING THE INTENTION OF THE ASSESSEE, THE DECISION OF ITAT, RAJKOT IN THE CASE OF DCIT VS. MU KESHBHAI BABULAL SHAH AND IT IS RELEVANT FOR THE PROPOSITION WHERE INTENTION OF THE ASSESSE E BEHIND PURCHASE AND SALES OF THE SHARES WAS QUICKLY TO REALIZE PROFITS AND NOT TO EARN DIVIDEND FROM THEM, THE INCOME WOU LD BE ASSESSABLE AS BUSINESS INCOME. THIS PROPOSITION W AS DRAWN ON THE FACTS OF THE STOCK TURNOVER RATIO OF 1:16 AND CAPITAL TURNOVER RATIO O F 1:14. ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. BHAGAT (SUPRA) RELIED UPON BY THE LD DR I S RELEVANT FOR THE PROPOSITION THAT THE STCG CLAIMED BY THE ASSESSEE WERE TREATED AS BUSINE SS INCOME ON THE FACTS THAT WHICH INVOLVE 86 TRANSACTIONS ON SALE WITH THE HOLDING PE RIOD OF 1 TO 44 DAYS. IN THE SAID DECISION, THE TRIBUNAL HELD ACCEPTANCE OF THE CLAIM FOR THE EARLIER YEAR WOULD NOT OPERATE RES JUDICATA OR ESTOPPELS ON THE ASSESSING OFFICER FOR DECIDING THE ISSUE FOR THE YEAR UNDER CONSIDERATION WHEN THE FACTS ARE NOT STRICTLY IDENTICAL. 13. FACTS OF THE ASSESSEES CASE : CIT(A) INCORPORATED A TABLE CONTAINING RELEVANT DATA FOR MANY AYS 2004-05 TO 2011-12 FOR PURPOSE OF COMPARISON AND DISTINGUISHING THE FIGURES FOR THE PRESENT AY 2008-2009 FROM THAT OF THE OTHER AYS. DATA RELATE TO THE NUMBER OF SCRIPS, SHARES PURCHASED AND SOLD, OPENING AND C LOSING STOCKS, VOLUMES/TURNOVERS, NO OF TRANSACTIONS OF SALE AND PURCHASES, TURNOVERS OF PU RCHASE AND SALES AND RATIOS ETC. THE SAID TABLE IS AS UNDER:...... .......(TABLE)..... 14. FROM THE ABOVE IT IS EVIDENT, THAT THE FIGURES FOR THE AY 2008-2009 ARE NOT COMPARATIVE QUA THE EARLIER AND SUBSEQUENT ASSESSME NT YEARS. THE CHART IS PREPARED FOR COMPARING 13 PARAMETERS AND MOST OF THEM IE VOLUMES /TURNOVERS, NUMBER OF SCRIPS/TRANSACTION NO, OPENING/CLOSING STOCK POSITI ON, RATIOS ETC SHOW DISTINCTLY INCREASING TENDENCY FOR THE AY 2008-09 AIMED AT MAKING QUICK PROFITS. THE DATA FOR THE YEAR UNDER CONSIDERATION IS CLEARLY DISTINGUISHABLE FROM THAT OF THE OTHER YEARS. THEREFORE, THE JUDGMENT IN THE CASE OF GOPAL PUROHIT (SUPRA) WILL NOT HELP THE ASSESSEE IN MATTERS OF PRINCIPLE OF CONSISTENCY. THEREFORE, THE RELATED ARGUMENTS OF L D COUNSEL FOR THE ASSESSEE ARE DISMISSED. AS SUCH IT IS A SETTLE LEGAL POSITION THAT THE PRIN CIPLES OF RES JUDICATA AND THE ESTOPPELS DO NOT APPLY TO THE PROCEEDINGS UNDER THE ACT. 15. REGARDING THE INTENTION OF THE ASSESSEE , NORMALLY ENTRIES ORIGINALLY MADE IN THE BOOKS OF ACCOUNTS SOON AFTER A PURCHASE TRANSACTION IS COMPLETE, BECOMES RELEVANT FACTOR OR INDICATING FACTOR FOR DECIDING THE SAID INTENTION. IT IS THE CASE OF THE ASSESSEE THAT THE RELATABLE INVESTMENTS ARE MADE FOR SHORT TERM GAINS PURPOSE. NOW THE QUESTION IS HOW TO DEMONSTRATE THE SAME IF NOT WITH THE HELP OF THE BO OKS OF ACCOUNTS AND ENTRIES THEREIN AND OF COURSE, STAND BY THE SAME WITHOUT YIELDING TO TH E TEMPTATION OF MAKING QUICK PROFITS AND IDEALLY TO EARN THE DIVIDEND INCOME ON ONE SIDE AND THE CAPITAL APPRECIATION ON THE OTHER. IN THIS CASE, THE ASSESSEE FAILED TO DEMONSTRATE THE S AME WITH THE HELP OF THE BOOKS. THE CONDUCT OF THE ASSESSEE DEMONSTRATES DIFFERENT. AS DISCUSSED ABOVE, THERE IS PROBLEMS IN FILING BALANCE SHEET COPIES FOR RELEVANT AYS, THERE ARE PROBLEMS IN NOT STICKING TO THE INVESTMENTS, THE ASSESSEE BUYS A SCIP ON A PARTICUL AR DAY AND SELL IT WHEN THERE IS RAISE IN INDEX IN OPEN MARKET FOR PROFITS, ASSESSEE BUYS THE SAME SCRIP LATER ONLY FOR UNLOADING LATER FOR PROFITS AGAIN. THIS CONDUCT OF THE ASSESSEE DOE S NOT CONGRUOUS WITH HIS CLAIMS IN THE RETURN. IT IS THE CLAM OF THE ASSESSEE THAT AS AN I NDIVIDUAL, SHE IS NOT UNDER OBLIGATION TO PREPARE AND FILE BALANCE SHEETS. THIS VIEW POINT MA Y CORRECT HAD THE ASSESSEE NOT BEEN INVOLVED IN THE TRANSACTIONS OF THIS MAGNITUDE CLAI MING ENGAGED IN THE BUSINESS AT LEAST UNDISPUTEDLY FOR THE EXTENT OF F&O. THEREFORE, THIS PART OF THE EXPLANATION OF THE ASSESSEE IS REJECTED ON FACT OF THE PRESENT CASE. THUS, THE ASS ESSEE HAS FAILED TO DEMONSTRATE THE BOOK ENTRIES INVOLVING EACH OF THE TRANSACTION. FURTHER, ON THE INTENTION RELATED ARGUMENTS, IT IS AN ADMITTED POSITION THAT ASSESSEE ACCEPTED THE DECISION OF THE CIT (A) WITH REGARD TO THE BUSINESS NATURE OF THE GAINS OF RS. 21,50,410/- REL ATABLE TO THE REENTERED TRANSACTIONS IN THE SAME SCRIP. WITH NO APPEAL OF THE ASSESSEE AGAI NST THE ORDER OF THE CIT(A), IT IS AGREED 9 POSITION NOW THAT THE SO CALLED BOOK ENTRIES ON THE SHARE TRANSACTIONS AS INVESTMENT (WITH REFERENCE TO THE SAID REENTERED TRANSACTION) HAVE T O BE NOW DEEMED THEM AS BUSINESS TRANSACTIONS. THESE DEVELOPMENTS INDEED RAISED MAN Y ISSUES RELATING TO THE (I) QUALITY OF SO CALLED BOOK ENTRIES FOR OTHER SCIPS, (II) THE CREDI BILITY OF THE ASSESSEES CLAIMS RELATING TO THE ORIGINAL INTENTION, (II) WHY NO THE OTHER TRANSAC TIONS ARE ALSO TO TREATED AS BUSINESS TRANSACTIONS AS WELL ETC. WITH THE SAID DEVELOPMENT S, THE ONUS NOW SHIFTS TO THE ASSESSEE TO DEMONSTRATE THAT THE OTHER TRANSACTIONS DO NOT CONS TITUTES BUSINESS TRANSACTION AND ASSESSEE FAILED TO DO SO NOT EVEN BEFORE US. THUS, THE ASSESSEE HAS FORFEITED THE ORIGINAL CLAIM OF INVESTMENT NATURE OF THE TRANSACTIONS FOR THE GAIN OF RS. 21,50,410/- CLEARLY AND THEREFORE, FOR OTHERS TOO. THUS, SUCH CONDUCT OF TH E ASSESSEE IN MATTERS OF THE CLAIMS MADE IN THE RETURN W R TO STCG IS UNACCEPTABLE. THEREFOR E, THE VIEWS OF THE AO ARE SUSTAINABLE AND HENCE, THE CONCLUSION OF THE CIT(A) ON THE BALA NCE OF THE STCG IS REVERSIBLE. 16. FURTHER, THE INTENTIONS OF ASSESSEE FOR REALIZI NG OF THE QUICK PROFITS, A BUSINESS TRAIT, WE FIND THAT IT IS AN ADMITTED FACT THAT THE ASSESS EE ENTERED INTO COMMON SCRIPS FOR CONDUCTING THE BUSINESS OF F & O ON SIDE AND THE IN VESTMENT IN STCG ON THE OTHER. IN FACT, THERE ARE COMMON SHARES FOR THE INVESTMENT FOR STCG AND LTCG TOO. THEREFORE, THE ALLEGATION OF QUICK PROFITS AND THE ISSUE OF THE BU SINESS AKINNESS, CAME UP IN THE ASSESSMENT PROCEEDINGS. ASSESSEE PICKED UP THE SIX COMMON SCRIPS FOR BUSIN ESS OF F&O AS WELL AS THE STCG. THIS IS THE AREA OF DISPUTE BETWE EN THE PARTIES AND THERE IS NO ISSUE ON CHANGE OF CLASSIFICATION OF STCG AS LTCG OR VICE VE RSA BEFORE US. THERE IS NO CLARITY ON WHAT BASIS CERTAIN TRANSACTIONS INVOLVING THE SAME SCRIP ARE TREATED AS BUSINESS AND OTHERS AS STCG AND THE ASSESSEE HAS NO EXPLANATION IN THIS RE GARD EXCEPT RELYING ON THE BOOK ENTRIES, WHICH WE REJECTED ALREADY FOR DETAILED REASONS GIVE N ABOVE. IN THE PROCESS, THE ASSESSEE GOT AN UNFAIR ADVANTAGE OF LOWER TAX RATES APPLICABLE T O THE STCG. SUCH ADVANTAGE IS ALLOWABLE UNLESS THE ONUS CAST ON THE ASSESSEE IS DEMONSTRATE D. ASSESSEE COULD NOT DEMONSTRATE THE REASONS FOR SUCH TREATMENT, WHICH TURNED OUT TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSIDERING THE FAILURE OF THE ASSESSEE, WE ARE OF THE OPINION THE DECISION OF THE AO BECOMES SUSTAINABLE. 17. NOW WE SHALL TAKE UP THE ISSUES RELATING TO REV ENUES ALLEGATION OF QUICK REALIZATION OF THE PROFITS, WHICH IS A BUSINESS TRAIT. WE FIND THAT THE ASSES SEE PURCHASED SHARES WORTH RS. 25.37 CR DURING THE YEAR AND UNLOA DED THE SHARES TO THE VALUE OF MORE THAN RS. 28.92 CR. THESE VOLUMES INDICATE THAT WHAT IS PURCHASED IN THE YEAR IS COMPLETELY SOLD. THUS, INESCAPABLE INFERENCE IS THAT THE ASSES SEE INTENDS TO REALIZE THE INVESTMENT AND ALSO TO QUICKLY REALIZE THE RELATABLE PROFITS IN TH E YEAR ITSELF. OUT OF RS 28.92 CR OF SALE PROCEEDS, THE ASSESSEE AGAIN PURCHASED SHARES WORTH RS 2.19 CRORES AND RS 36,800/- IN THE SUCCEEDING AYS. ASSESSEE COMPLETELY EXITED BY THE E ND OF AY 2011-12. THESE FACTS GO AGAINST THE ASSESSEES CLAIM AND CONFIRM THE AOS A LLEGATION THAT THE ASSESSEE BELIEVES IN QUICK PROFITS AND NOT IN THE SHORT TERM INVESTMENT ACTIVITY. OTHER RELEVANT DATA COMPILED IN THE TABLE GIVEN ABOVE SHOWS THE BUSINESS TRAITS OF THE TRANSACTIONS. ASSESSEE MAINTAINS UNIFORMLY THE CLOSING STOCK WORTH RS 17- RS 18 LAKH S IN ALL RECENT AYS. THE SAME IS CASE WITH OPENING STOCKS OF SHARES TOO. IN FACT, THE OPENING AND CLOSING VALUES ARE MORE OR LESS EQUAL. THE NUMBER OF SCRIPS, TRANSACTIONS OF PURCHASE AND SALES ALSO SUGGESTS THE INCREASING TRENDS FOR MAKING QUICK BUSINESS PROFITS. THUS, THE DECISI ON OF THE TRIBUNAL IN THE CASE OF MUKESHBHAI BABULAL SHAH (SUPRA) WHICH IS RELEVANT F OR THE PROPOSITION THAT WHERE INTENTION OF THE ASSESSEE BEHIND PURCHASE AND SALES OF THE SH ARES WAS QUICKLY TO REALIZE PROFITS AND NOT TO EARN DIVIDEND FROM THEM, THE INCOME WOUL D BE ASSESSABLE AS BUSINESS INCOME , HELPS THE REVENUE. FURTHER, WE HAVE ANALYSED THE O THER UNDISPUTED FACTS NARRATED IN 9 ABOVE ABOUT THE FACT OF ASSESSEE ACCEPTING THE VERD ICT OF THE CIT(A) OF TAXING OF RS 21,50,410/- AS BUSINESS INCOME, PURCHASE AND SALE T O OF RS. 25.37 CR AND RS. 28.92 CR RESPECTIVELY, CLOSING STOCK OF RS. 17.96 LACS IS VE RY CLOSE TO OPENING STOCK OF RS. 18.29 LACS, THE NUMBER OF TRANSACTIONS (162 + 184= 346) AGAINST OTHER YEARS SINGLE OR DOUBLE DIGITS AND FIND THE SAID DATE HELPS THE REVENUE. FURTHER, WE ALSO REITERATE THAT THE WITH THE STOCK TURNOVER RATIO IS 1:16 , IT IS COMMONSENSE TO INFER THAT THE ASSESSEE INTE NTION IS TO QUICKLY TO REALIZE THE PROFITS AND NOT TO WAIT FOR THE DIVI DEND OR CAPITAL APPRECIATION. IN ANY CASE, THE ISSUE OF ESTABLISHING THE REAL CAPITAL APPRECIATION OF THE SHARES IS DIFFICULT FOR THE ASSESSEE IN THE CAPITAL MARKET OF RAPID FLUCTUATIONS OF RELEVAN T INDICES. 18. TO SUM, THE FACTS ABOUT THE ENTRIES IN THE BOOK S OF ACCOUNTS ARE INCONCLUSIVE. BY NOT CONTESTING THE CONCLUSION OF THE CIT(A) WITH RE GARD TO SO CALLED STCG RS 21,50,410/-, THE ASSESSEE FORFEITED THE CLAIMS RELATING TO THE C REDIBILITY OF THE BOOKS ENTRIES ATLEAST WITH REFERENCE TO THE TRANSACTIONS INVOLVING THE RE-ENTE RED SCIPS. WITH THIS, WITH REGARD TO CLAIMS OF INVESTMENT IN OTHER SCRIPS, THE ONUS SHIFTS TO A SSESSEE AND ASSESSEE FILED TO DISCHARGE THE 10 SAME. THE INTENTION OF ACQUIRING THE SHARES AS INV ESTMENT FOR CAPITAL APPRECIATION IS NOT TRANSLATED AND INSTEAD THE SYMPTOMS OF GOING FOR QU ICK PROFITS ARE EVIDENT. THE STOCK: TURNOVER RATIO AT 1:16 DOES AGAINST THE CLAIMS OF T HE ASSESSEE. OTHER DATA RELATING TO OPENING STOCKS AND CLOSING STOCKS ON ONE SIDE AND T HE ASSESSEES FINAL EXITING FROM THE SO CALLED CLAIM OF STCG AT THE END OF 2011-12 INDICATE S THE ASSESSEES CONDUCT FOR QUICK PROFITS AND NOT FOR INVESTMENT. OF COURSE, THE HOLDING PERI OD PARTICULARS ALSO CONFIRM THE AOS CONCLUSIONS. REGARDING THE DECISIONS RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE, WE FIND THOSE CASES ARE FACTUALLY DISTINGUISHABLE AND NONE OF THEM HAS THE RECORD OF RE-ENTERED TRANSACTIONS, HIGH STOCK: TO RATIO AND ALSO THE HIS TORY OF CAUSING DENT TO THE ORIGINAL CLAIM OF THE ASSESSEE WITH REGARD TO THE BOOK ENTRIES AND TH E INTENTION OF THE ASSESSEE. THEREFORE, FROM THE FACTS AND THE LEGAL PROPOSITIONS NARRATED ABOVE, WE ARE OF THE OPINION THAT THE CONCLUSIONS OF THE CIT (A) ON THE BALANCE OF THE ST CG ARE REVERSED AND ORDER OF THE AO IS RESTORED. WITH REGARD THE LD COUNSELS CLAIM ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 14A OF THE ACT, WE DIRECT THE AO TO GRANT ELIGIBLE AND CONSEQUENTIAL RELIEF TO THE ASSESSEE IN ACCORDANCE WITH THE LAW IN FORCE. ACCORDINGLY, GROU ND RAISED BY THE REVENUE IS ALLOWED . 13. IT IS THE SETTLED LAW THAT THE ISSUE RELATING TO THE TAXABILITY OF IMPUGNED INCOME EARNED ON SALE OF SHARES UNDER THE HEAD CA PITAL GAINS OR PROFIT & GAINS OF BUSINESS OR PROFESSION IS A MIXED QUESTION OF LAW ON THE FACT. FOR DECIDING THE APPROPRIATE HEAD OF INCOME FOR TAXING THE SAME, THE RE ARE VARIOUS PARAMETERS WHICH ARE REQUIRED TO BE EXAMINED BEFORE TAKING A DECISIO N. SOME OF THEM ARE; INTENTION AND MOTIVE OF THE ASSESSEE, TURNOVER OF SALES AND P URCHASES AND THE VOLUME THEREOF, THE FREQUENCY OF TRANSACTIONS, THE HISTORY OF THE ASSESSEE AND THE TREATMENT GIVEN BY THE ASSESSEE TO SUCH INCOME IN EARLIER YEA RS, THE BOOK ENTRIES WHETHER SHOWN AS INVESTMENT OR STOCK-IN-TRADE, WHETHER THE ASSESSEE HAS TAKEN BORROWED CAPITAL, CONDUCT OF THE ASSESSEE AND THE TIME SPENT ON THESE TRANSACTIONS, NUMBER OF SCRIPS INVOLVED AND IF THEY ARE LISTED COMPANIES OR NOT, THE AMOUNT OF DIVIDEND EARNED BY THE ASSESSEE, WHETHER THE ASSESSEE IS RES ORTING TO QUICK REALIZATION OF THE PROFITS, STOCK TURNOVER RATIOS, RULE OF CONSISTEN CY ETC. ALL THESE PARAMETERS ARE SIGNIFICANT AS THEY FINALLY HELP THE ADJUDICATOR TO REACH THE CONCLUSION ON THE INTENTION AND THE PROFIT MOTIVE OF THE ASSESSEE WHE N HE ENTERS INTO THE SHARE TRANSACTIONS. IT IS A TRITE LAW THAT NO SINGLE PAR AMETER DECIDES SUCH ISSUE AS THEY ARE MERELY INDICATIVE OF THE INTENTION OF THE ASSESSEE. IN THE CASE OF VEENA S. KARLA (SUPRA), AFTER ANALYZING THE FACTS OF THAT CASE, WE HAVE NOTICED THAT ASSESSEE RE- ENTERED INTO THE SAME SCRIP WITH THE MOTIVE OF QUIC K REALIZATION OF THE PROFITS, WHICH CONSTITUTES A DRIVING FORCE FOR UNLOADING THE SCRIP S AND RE-ENTERING INTO THE SCRIPS. IN THAT SENSE, WHEN THE ASSESSEE HAS A HISTORY OF RE -ENTERED TRANSACTIONS INTO THE SAME SCRIP, THE INTENTION IS OBVIOUSLY FOR EARNING OF QUICK PROFITS. NO INVESTOR IS TEMPTED BY THE DAY TO DAY FLUCTUATIONS OF THE MARKE T AS THE MAIN AIM IS TO HOLD ON TO THE INVESTMENT FOR A REASONABLE PERIOD EITHER FO R CAPITAL APPRECIATION OR FOR 11 EARNING OF THE DIVIDEND INCOME. ASSESSEE, WITH AN INTENTION OF REALISING QUICK PROFITS, WHICH IS HALLMARK OF THE PRESENT CASE, CAN NOT BE DESCRIBED AS INVESTOR AS CLAIMED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. IN THAT SENSE, THE CHARACTER OF RE-ENTRY INTO THE SAME SCRIP IS ONE OF THE IMPORTAN T FEATURES LISTED ABOVE AND IT DESERVES MORE WEIGHTAGE VIS-A-VIS OTHER FACTORS SUC H AS ENTRY IN THE BOOKS OF ACCOUNTS AS INVESTMENT FOR EARNING OF NEGLIGIBLE DI VIDEND INCOME, NUMBER OF TRANSACTIONS AND SCRIPS ETC. FROM THAT POINT OF VI EW, CONSIDERING THE FAIR ADMISSION OF DR. SHIVARAM ABOUT THE RE-ENTERED TRANSACTIONS, WE ARE OF THE OPINION THAT THE PRESENT ASSESSEES INTENTION IN BUYING AND SELLING OF THE IMPUGNED SCRIPS CONSTITUTES BUSINESS INCOME. THE DETAILS OF SUCH TRANSACTIONS A RE ALREADY DISCUSSED IN THE ABOVE PARAS OF THIS ORDER AFTER MAKING REFERENCE TO PAGE 36, 37 AND 38 OF THE PAPER BOOK. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF THE ITAT, MUMBAI, WE ARE OF THE OPINION THAT THE ORDERS OF THE CIT (A) AND THE AO DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS. 4, 5 & 6 AR E DISMISSED . 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . I.T.A. NO.6431/M/2009 (AY: 2006-2007) (BY REVENUE) 15. THIS APPEAL FILED BY THE REVENUE ON 14.12.2009 IS AGAINST THE ORDER OF CIT (A)-35, MUMBAI DATED 29.9.2009 FOR THE ASSESSMENT Y EAR 2006-07. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO ACCEPT THE CLAIM OF SH ORT TERM CAPITAL GAIN & LONG TERM CAPITAL GAIN ON PROFIT ARRIVING FROM PURCHASE & SAL E OF SHARES INSTEAD OF BUSINESS INCOME TREATED BY THE AO WITHOUT APPRECIATING THE F ACT THAT THE ASSESSEE IS DEALING IN LARGE VOLUME OF SHARES, MOST OF THE SHARES ARE BOUG HT AND SOLD WITHOUT SHORT PERIOD, WHILE SOME ARE NOT SOLD DUE TO MARKET CONDITIONS AN D THEIR HOLDING WITH ASSESSEE REMAINS BEYOND FEW DAYS, IT WILL NOT CHANGE THE NAT URE OF TRANSACTIONS AND THE ASSESSEE IS VERY WELL ENGAGED IN THE BUSINESS OF SH ARE TRADING, WHICH DENOTE THAT THE MOTIVE OF THE ASSESSEE IS TO CARRY ON BUSINESS IN S HARES TO BOOK PROFIT RATHER THAN INVESTMENT IN SHARES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO RESTRICT THE DISALLOWA NCE OUT OF BUSINESS PROMOTION FROM RS. 8,43,704/- TO RS. 5,00,000/- WITHOUT APPRECIATI NG THE FACT THAT NO DETAILS OR EVIDENCES WERE FILED TO PROVE THE NEXUS OF THESE EX PENSES TO THE BUSINESS OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO RESTRICT THE DISALLOWA NCE OUT OF MEMBERSHIP & SUBSCRIPTION FROM RS. 60,814/- TO RS. 3,000/- WITHO UT APPRECIATING THE FACT THAT NO 12 DETAILS/ EVIDENCE WAS FILED TO PROVE NEXUS BETWEEN EXPENDITURE FOR PURCHASE OF NEWSPAPERS / MAGAZINES AND THE ASSESSEES BUSINESS AND PAYMENT TOWARDS COMPUTER SOFTWARE IS CAPITAL EXPENDITURE AND NOT REVENUE EXP ENDITURE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO RESTRICT THE DISALLOWA NCE OUT OF REPAIR AND MAINTENANCE FROM RS. 87,440/- TO RS. 67,440/- WITHOUT APPRECIAT ING THE FACT THAT NO BREAK-UP OR DETAILS WERE FILED REGARDING THE EXACT NATURE OF TH ESE EXPENSES AND ITS NEXUS TO THE BUSINESS OF THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO RESTRICT THE DISALLOWA NCE OUT OF TRAVELLING EXPENSES FROM RS. 3,32,814/- TO RS. 1,66,407/- WITHOUT APPRECIATI NG THE FACT THAT NO DETAILS OR EVIDENCES WERE FILED TO PROVE THAT THESE EXPENSES W ERE INCURRED WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS. 16. GROUND NO.1 RAISED BY THE REVENUE IS IDENTICAL TO THE ISSUE RAISED IN GROUND NO.4, 5 & 6 OF THE ABOVE APPEAL REGARDING THE CORRECTNESS OF HEAD OF INCOME FOR TAXING GAINS EARNED ON SALE OF SHARES. IDENTICAL GROUND WAS ADJUDICATED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. WE HAVE AL READY DISCUSSED THE ISSUE IN DETAIL VIDE PARA 13 OF THIS ORDER AND DECIDED THE SAME IN FAVOUR OF TH E REVENUE. IN THE PROCESS, THE TRIBUNALS ORDER IN THE CASE OF VEENA S. KALARA (SUPRA) WAS RELIED UPON. SINCE, THE ISSUE INVOLVED IN GROUND NO.1 IS IDENTICAL TO THAT OF GROUND NO.4, 5 & 6 OF THE ASSESSEES APPEAL, CONSIDERING THE PRINCIPL E OF CONSISTENCY, WE ALLOW THIS GROUND RAISED BY THE REVENUE. 17. GROUND NO.2 RELATES TO THE ISSUE DISALLOWANCE OF RS. 5 LACS OF BUSINESS PROMOTION EXPENSES OUT OF THE CLAIM OF RS. 8,43,704/- ON AD-HOC BASIS FOR WANT OF DETAILS. BRIEFLY STATED, RELEVANT FACTS ARE THAT , DURING THE YEAR, ASSESSEE DEBITED RS. 8,43,704/- TOWARDS BUSINESS PROMOTION EXPENSES IN THE P&L ACCOUNT. DURING THE ASSESSMENT, AO OPINED THAT THE EXPENDITURE WAS NOT INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HELD THAT THE ASSESSEE COUL D NOT ESTABLISH THE NEXUS OF THE EXPENDITURE TO THE BUSINESS OF THE ASSESSEE. AO DIS ALLOWED THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR. MATTER TR AVELLED TO THE FIRST APPELLATE AUTHORITY. 18. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) RESTRICTED THE DISALLOWANCE TO RS. 5 LACS. PARA 7.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS REPRODUCED HERE UNDER: 13 7.3. AFTER CONSIDERING THE SUBMISSIONS OF THE REPRE SENTATIVE, I FIND THAT THE APPELLANT HAS TO NECESSARILY INCUR CERTAIN EXPENDIT URE IN CONNECTION WITH THE BUSINESS FOR THE PURPOSE OF ATTENDING THE MEETINGS HELD TO D ISCUSS THE CAPITAL MARKET CONDITIONS, FACTORS AFFECTING THE CAPITAL MARKET AS THE APPELLANT DEALS AND INVESTS IN SHARES AND SECURITIES. THE APPELLANT HAS ADMITTED B USINESS INCOME OF RS. 2,77,12,978/- AS PROFIT FROM SHARE TRADING AND FOR EARNING THIS MUCH INCOME, THE APPELLANT HAS TO INCUR CERTAIN EXPENDITURE UNDER TH E HEAD BUSINESS PROMOTION. EVEN FOR AY 2005-2006, THE AO DISALLOWED ONLY PART OF TH E EXPENDITURE. IN THESE CIRCUMSTANCES, I FIND THAT THE AO IS NOT JUSTIFIED IN DISALLOWING THE ENTIRE EXPENDITURE AND I RESTRICT THE DISALLOWANCE TO RS. 5 LACS AS IN AY 2005-06. 19. AGGRIEVED WITH THE ABOVE, THE REVENUE IS IN APP EAL BEFORE THE TRIBUNAL VIDE THE GROUND NO.2. 20. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 21. ON THE OTHER HAND, LD COUNSEL RELIED ON THE ORD ER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. 22. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE U S. WHILE RESTRICTING THE DISALLOWANCE TO RS. 5 LACS, THE CIT (A) HAS REASONA BLY CONSIDERED THE NECESSITY OF INCURRING OF THE EXPENDITURE WHILE DEALING THE BUSI NESS OF SHARES AND SECURITIES AND ALSO TAKEN INTO ACCOUNT THE DISALLOWANCE MADE BY TH E REVENUE FOR THE AY 2005- 2006. NOTHING IS BROUGHT ON RECORD TO SUGGEST THE DECISION ON THIS ISSUE FOR THE AY 2005-06 ARE REVERSED AND AMENDED. THEREFORE, WE FIN D NO INFIRMITY IN THE ORDER OF THE CIT (A) AND THE SAME DOES NOT CALL FOR ANY INTE RFERENCE. ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED . 23. GROUND NO.3 RELATES TO RESTRICTING THE CLAIM OF MEMBERSHIP & S UBSCRIPTION FROM RS. 60,814/- TO RS. 3,000/- FOR WANT OF DETAIL S. RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSEE CLAIMED EXPENDITURE OF RS. 1, 26,934/- ON ACCOUNT OF EXPENDITURE ON CAPITALLINE UPDATE; NEWS PAPERS AND MAGAZINES AND CLUB EXPENSES. IN THE ASSESSMENT, AO DISALLOWED RS. 60,814/-. AGGR IEVED WITH THE DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 24. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, CIT (A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND GRAN TED RELIEF ON ACCOUNT OF 14 CAPITALLINE SOFTWARE UPDATE AND NEWSPAPERS AND MAGA ZINES AND CONFIRMED THE DISALLOWANCE REGARDING CLUB SUBSCRIPTION. PARA 9.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS REPRODUCED HERE UNDE R: 9.3. AFTER CONSIDERING THE SUBMISSIONS, I FIND THAT THE AO ASSUMED THAT THE AMOUNT PAID TO CAPITAL MARKET PUBLISHER INDIA PVT. LTD. REPRESENTS PURCHASE OF SOFTWARE PROGRAMME WHEREAS ACTUALLY IT REPRESENTS R ENEWAL CHARGES FOR CAPITALLINE SOFTWARE PROGRAMME FOR NOVEMBER, 2005 TO NOVEMBER, 2006 AS PER THE BILL ISSUED BY THEM. IN THE CIRCUMSTANCES, THE AO WAS NOT CORR ECT IN TREATING THE SAME AS CAPITAL EXPENDITURE. REGARDING, NEWSPAPER AND MAGAZINES , I ACCEPT THE CLAIM OF THE REPRESENTATIVE THAT THE EXPENDITURE CLAIMED IS REASONABLE WHICH COMES TO ONLY RS. 1,000/- PER MONTH TOWARDS PURCHASE OF VARI OUS FINANCIAL NEWSPAPERS AND BOOKS RELATING TO STOCK MARKET, CAPITAL MARKET AND DERIVATIVES AND, THEREFORE, THE EXPENDITURE IS TO BE ALLOWED AS DEDUCTION. IN THE CIRCUMSTANCES, THE AO SHALL ALLOW BOTH THE ITEMS OF ABOVE EXPENDITURE. THE DISALLOWA NCE REGARDING CLUB SUBSCRIPTION IS CONFIRMED. 25. AGGRIEVED, REVENUE FILED THE APPEAL BEFORE THE TRIBUNAL RAISING THE ABOVE MENTIONED GROUND NO.3 26. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 27. ON THE OTHER HAND, LD COUNSEL RELIED ON THE ORD ER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND PARA 9.3 OF THE CIT (A) S ORDER IN PARTICULAR. ON PERUSAL OF THE CIT (A)S ORDER REGARDING THE ASSESSEES CLAIM OF EXPENDITURE ON ACCOUNT OF SOFTWARE PROGRAMME, WE FIND THAT THE EXPENDITURE OF RS. 1,10,200/- WAS INCURRED BY THE ASSESSEE TOWARDS RENEWAL CHARGES FOR CAPITALLIN E SOFTWARE PROGRAMME AND NOT FOR PURCHASE OF THE NEW SOFTWARE AS HELD BY THE AO. CIT(A) HAS RIGHTLY EXAMINED THE BILLS AND ALLOWED RELIEF. THE SAID DECISION OF THE CIT(A) IS FAIR AND PROPER AND IT DOES NOT CALL FOR ANY INTERFERENCE. 28.1. REGARDING NEWSPAPERS AND MAGAZINES ALSO THE A SSESSES CLAIM OF EXPENDITURE IS REASONABLE. THEREFORE, THE CIT (A)S REASONING A ND THE DECISION IN ALLOWING THE ASSESSEES CLAIM OF EXPENDITURE ON ACCOUNT OF SOFTW ARE UPDATE AND NEWSPAPERS AND MAGAZINES IS REASONABLE. WE ARE OF THE OPINION THAT THE SAME DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.3 RAISED BY T HE REVENUE IS DISMISSED . 15 29. GROUND NO.4 RELATES TO THE DISALLOWANCE OF REPAIR AND MAINTENA NCE AMOUNTING TO RS. 67,440/- ON ADHOC BASIS AND FOR W ANT OF DETAILS. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE CLAIMED RS. 87,440/- TOWARDS REPAIRS AND MAINTENANCE IN RESPECT OF TWO FLATS (FLAT NO.1603 & 1604) IN CHALL ENGER TOWER. IN THE ASSESSMENT, AO DISALLOWED THE ENTIRE AMOUNT ON THE REASONING TH AT THE ASSESSEE HAS NOT FURNISHED THE BREAKUP DETAILS OF THE EXPENDITURE. A GGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 30. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANTED RE LIEF TO THE ASSESSEE TO THE EXTENT OF RS. 20,000/- AND DISALLOWED RS.67,440/-. PARA 10 .3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS REPRODUCED HERE UNDER:- 10.3. AFTER CONSIDERING THE SUBMISSIONS, I FIND THA T THE EXPENDITURE INCLUDED THE REPAIRS AND MAINTENANCE EXPENSES OF FLAT NO. 1604 W HICH WAS EXCLUSIVELY USED AS RESIDENCE . THE AO HAS GIVEN A CLEAR FINDING THAT ONLY PART OF FLAT NO. 1603 WAS USED AS OFFICE OF THE APPELLANT. IN THE CIRCUMSTANCES, I DIRECT T HE AO TO ALLOW RS. 20,000/- TOWARDS REPAIRS IN RESPECT OF BUSINESS POR TION OF THE RESIDENCE AND DISALLOW THE BALANCE AMOUNT OF RS. 67,440/-. 31. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A ), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NO.4. 32. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 33. ON THE OTHER HAND, LD COUNSEL RELIED ON THE ORD ER OF THE CIT (A). 34. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND PARA 10.3 OF THE CIT (A) S ORDER IN PARTICULAR. ON PERUSAL OF THE SAID PARA, WE FIND THAT THE CIT (A) HAS REAS ONABLY ALLOWED THE EXPENSES OF RS. 20,000/- TOWARDS REPAIR RELATABLE TO THE BUSINE SS USES OF THE FLAT. IT IS SETTLED POSITION THAT THE EXPENDITURE OF PERSONAL NATURE AR E NOT ALLOWABLE U/S 37 OF THE ACT. THE DECISION OF THE CIT (A) IN THIS REGARD DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.4 RAISED BY THE REVENUE IS DISMISSED . 35. GROUND NO.5 RELATES TO THE DISALLOWANCE OF TRAVELLING EXPENSES OF RS. 3,32,814/- FOR WANT OF DETAILS. BRIEFLY STATED, TH E FACTS ARE THAT THE ASSESSEE DEBITED RS. 3,32,814/- TOWARDS TRAVELLING EXPENSES. DURING THE ASSESSMENT 16 PROCEEDINGS, AO NOTICED THAT THE AO DID NOT FILE TH E EVIDENCES TO PROVE THE NEXUS OF EXPENDITURE WITH THE BUSINESS OF THE ASSESSEE AN D DISALLOWED THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE. AGGRIEVED, AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 36. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, CIT (A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND ALLO WED 50% OF THE ASSESSEES CLAIM OF TRAVELLING EXPENSES DEBITED IN THE P&L ACC OUNT. PARA 11.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS RE PRODUCED HERE UNDER: 11.3. AFTER CONSIDERING THE SUBMISSIONS OF THE REPR ESENTATIVE, IT IS SEEN THAT THE APPELLANT HAS SEGREGATED THE BUSINESS EXPENDITURE A ND PERSONAL EXPENDITURE AND BOOKED ONLY THE BUSINESS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT AS SUBMITTED BEFORE THE AO AS PER LETTER DATED 18.12.2008. IN T HE EARLIER YEAR, THE APPELLANT HAD CLAIMED THE ENTIRE TRAVELLING EXPENDITURE IN THE PR OFIT AND LOSS ACCOUNT. TAKING INTO ACCOUNT THE FACT THAT THE APPELLANT UNDERTOOK TRAVE LLING TO AHMEDABAD, UDAIPUR, RAJKOT, PUNE IN CONNECTION WITH BUSINESS OF THE APP ELLANT, I DIRECT THE AO TO ALLOW 50% OF THE TRAVELLING EXPENDITURE DEBITED IN THE P& L ACCOUNT. 37. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIB UNAL BY RAISING THE GROUND NO.5 MENTIONED ABOVE. 38. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 39. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 40. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND PARA 11.3 OF THE CIT (A) S ORDER IN PARTICULAR. ON THE PERUSAL OF THE SAID PARA 11.3, WE FIND THAT THE CIT (A) HAS TAKEN INTO ACCOUNT THE BUSINESS EXPEDIENCY OF THE ASSESSEE TO TRAVEL VARIO US PLACES AND REASONABLY ALLOWED 50% OF THE TRAVELLING EXPENDITURE DEBITED TO THE P& L ACCOUNT. NO ADDITIONAL MATERIAL IS FILED BEFORE US TO IMPROVE THE CASE OF THE REVEN UE. CIT (A) DISALLOWED 50% OF THE CLAIM AFTER CONSIDERING ALL THE FACTS PLACED BE FORE HIM. THEREFORE, CONSIDERING THE SAME, WE FIND NO REASON TO INTERFERE WITH THE C IT (A) IN THIS REGARD. ACCORDINGLY, GROUND NO.5 RAISED BY THE REVENUE IS DISMISSED . 41. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED . 17 ORDER PRONOUNCED IN THE OPEN COURT ON 23.8.2013. SD/- SD/- (I.P. BANSAL ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; )* 23.8.2013. . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. +& ( ) / THE CIT(A)- 4. +& / CIT 5. ,-. '& , , / DR, ITAT, MUMBAI 6. ./ 0 / GUARD FILE. #,& '& //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI