DCIT, New Delhi V. M/s. Utkal Investments Ltd., New Delhi

ITA 6461/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0130 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: M L DUJARI
• Keywords: Capital asset; Business income; Speculation loss; Speculative transactions
• Section: 14A; 43(5); 10; 11

Judgement Text

1 ITA NO . 6461/DEL/13 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A .NO.-6461/DEL/2013 (ASSESSMENT YEAR-2009-10) DCIT CIRCLE-18 (1), ROOM NO, 193, C. R. BUILDING NEW DELHI (APPELLANT) VS UTKAL INVESTMENTS LTD. B-47, SHIV MAHAL, CANNAUGHT PLACE, NEW DELHI AAACU1603L (RESPONDENT) APPELLANT BY SH. GAURAV DUDEJA, SR. DR. RESPONDENT BY SH. M. L. DUJARI, ORDER PER S.V. MEHROTRA, AM THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) XXI,, NEW DELHI DATED 23/09/2013 IN APPEAL NO. 301/2011-1 2 FOR ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.64,85,372/-. THE ASSESSING OFFICER NOTICED FROM THE TAX AUDIT REPORT THAT ASSESSEE HAD CARRIED OUT SHARE TR ADING, INVESTMENTS, FINANCING AND POWER GENERATION DURING THE RELEVANT PREVIOUS YEAR. FURTHER THERE WAS NO CHANGE IN THE NATURE OF BUSINESS OF THE ASSESSEE COMPANY. HE FURTHER OBSERVED FROM ITEM 5 DATE OF HEARING 22.06.2015 DATE OF PRONOUNCEMENT 30.06.2015 2 ITA NO . 6461/DEL/13 OF PART B (NOTES TO ACCOUNTS) OF SCHEDULE 14, THE F OLLOWING QUANTITATIVE DETAILS IN RESPECT OF SECURITIES TRADED AND DERIVATIVES, WHICH ARE REPRODUCED HEREUNDER:- QUANTITATIVE DETAILS IN RESPECT OF SECURITIES TRADE D: SECURITIES (EQUITIES) 2008-09 2007-08 QUANTITATIVE DETAILS IN RESPECT OF DERIVATIVES: SECURITIES(DERIVATIVES 2008-09 2007-08 3. THE ASSESSING OFFICER NOTICED THAT ASSESSEE COMP ANY HAD RETURNED BUSINESS INCOME OF RS.60,28,209/-, SPECULATION LOSS OF RS.15 9,905/-, LONG TERM CAPITAL LOSS OF RS.4,86,31,790/- AND SHORT TERM CAPITAL LOSS OF RS.31,33,251. THE ASSESSEE HAD ALSO RETURNED INCOME OF RS.6,32,163/- AS INCOME FRO M OTHER SOURCES AND DECLARED SHARE IN PROFIT FROM PARTNERSHIP RS.91,55,203/- CLA IMING THE SAME AS EXEMPT U/S10 (2A) OF THE INCOME TAX ACT 1961. IN ADDITION, LONG TERM CAPITAL GAIN OF RS.4,89,38,309/- WAS CLAIMED EXEMPT U/S 10 (38) OF THE INCOME TAX ACT. THE NO. OF SHARES AMOUNT (RS.) NO. OF SHARES AMOUNT (R S.) OPENING STOCK 99,933 1,70,67,889 19,000 44,55,580 PURCHASES 14,83,953 11,80,66,597 7,49,865 16,68, 17,319 SALES/TRANSFER 14,67,873 12,23,90,936 6,68,932 13 ,60,03,212 CLOSING STOCK 1,16,013 93,22,732 99,933 1,70,67,889 NO. OF SHARES AMOUNT (RS.) NO. OF SHARES AMOUNT ( RS.) OPENING STOCK NIL NIL NIL NIL PURCHASES 25,99,340 2,80,51,384 23,48,650 1 ,67,46,431 SALES/TRANSFER 26,17,676 2,82,28,191 23,48, 650 1,27,21,481 CLOSING STOCK 18,336 2.89.553 NIL NIL 3 ITA NO . 6461/DEL/13 ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS.3,40,31 ,627/- WHICH WAS ALSO CLAIMED EXEMPT. THE ASSESSSEE HAD ALSO MADE ADDITION TO TH E INCOME IN RESPECT OF SECURITY TRANSACTION TAX PAID DURING THE YEAR AMOUNTING TO R S.7,76,231/-, PROPORTIONATE DEPOSITORY CHARGES RELATING TO TAXABLE CAPITAL GAIN RS.21,126/- AND DISALLOWANCE U/S 14A OF THE INCOME TAX ACT RS.73,43,636/- 4. IN THE BACK DROP OF THESE DETAILS, THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE PROFITS ARISING FROM PURCHAS E AND SALE OF SHARES BE NOT TREATED AS BUSINESS INCOME. THE ASSESSEES DETAILE D REPLY HAS BEEN REPRODUCED IN PARA 5 OF THE ASSESSMENT ORDER. THE A.O REFERRED T O THE ASSESSMENT ORDER FOR A. Y 2006-07 WHEREIN DETAILED REASONING HAD BEEN GIVEN FOR HOLDING THAT ASSESSEE HAD CARRIED OUT REGULAR AND NORMAL BUSINESS OF PURCHASE AND SALE OF SHARES AND THE INCOME ARISING OUT OF THESE TRANSACTIONS WAS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE FROM SHARE TRADING. HE FURTHER POINTE D OUT THAT THE TURNOVER OF SALE AND PURCHASE OF SHARES WAS RS.229,72,94,768/- AND R S.205,18,33,625/- RESPECTIVELY. HE FURTHER OBSERVED THAT THE ASSESSE E COMPANY WAS NOT MAINTAINING STOCK REGISTER AND IN THE ABSENCE OF STOCK REGISTER IT WAS VERY DIFFICULT TO IDENTIFY WHICH SCRIPT WAS HELD FOR INVESTMENT AND WHICH SCRI PT WAS HELD FOR TRADING. HE, THEREFORE, DID NOT ACCEPT THE ASSESSEES EXPLANATIO N THAT IT HAD TWO PORTFOLIOS VIZ INVESTMENT PORTFOLIO AND TRADING PORTFOLIO. HE FUR THER OBSERVED THAT FROM THE DETAILS SUBMITTED BY THE ASSESSEE IN REGARD TO SALE OF INVESTMENT, IT WAS CLEAR THAT MAJORITY OF SCRIPTS HAD BEEN BOUGHT DURING FINANCIA L YEAR 2004-05 AND SOLD DURING FINANCIAL YEAR 2005-06, AFTER HOLDING THEM HARDLY F OR AN YEAR. THE ASSESSING OFFICER ALSO RELIED ON THE DECISION FOR A. Y 2007-0 8 FOR HIS CONCLUSION. THE ASSESSING OFFICER, ACCORDINGLY, DETERMINED THE TO TAL INCOME AT RS.3,30,44,790/-. 5. LD. CIT(A) FOLLOWING THE ORDER OF A.Y 2006-07, 2007-08 AND 2008-09 ALLOWED THE ASSESSEES APPEAL HOLDING THAT THERE WA S NO PROPER JUSTIFICATION FOR TREATMENT OF THE CAPITAL GAIN FROM THE SALE OF SHA RE INVESTMENT EITHER AS BUSINESS 4 ITA NO . 6461/DEL/13 INCOME OR AS SPECULATION INCOME. BEING AGGRIEVED WI TH THE ORDER OF THE CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE US. AND HAS RAIS ED FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT ERRED IN DIRECTING THAT OUT OF THE ENTIRE BUSINESS INCOME OF RS.3,25,77,623/- TREATED AS SUCH BY THE AO, ONLY A SUM OF RS.60,28,2 09/- ASSESSED AS BUSINESS INCOME AND THE REST OF RS.2,65,49,414/- BY TREATED AS INCOME FROM CAPITAL GAIN. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) ERRED IN DIRECTING THAT THE INCOME DECLARED BY THE ASSESSEE COMPANY MAY NOT BE TREATED AS INCOME FROM SPECULATIVE TRANS ACTION AS PER SECTION 43(5) OF THE ACT. 3. THE APPELLANT CRAVES, LEAVE OR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD, OR FOREGO ANY GROUND(S) OF APPEAL AT AN Y TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TR IBUNAL VIDE ITA NOS. 2558/DEL/2011 (A.Y 2006-07), ITA NO. 2894/DEL/2011 (A.Y 2007-08) AND ITA 2662/DEL/2012 (A.Y 2008-09) VIDE CONSOLIDATED ORDER DATED 6 TH APRIL 2015, A COPY OF WHICH HAS BEEN FILED IN THE PAPER BOOK. 7. LD. DR. DID NOT DISPUTE THAT THE ISSUE UNDER CON SIDERATION IS COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE NOTED S UPRA. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE RECORD OF THE CASE. TRIBUNAL HAS, INTER-ALIA HELD A S UNDER:- 3. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 WAS FILED DECLARING INCOME AT RS.1,33,77,935/- ON 23.10.2006 WHICH WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE HAS CLAIM ED THAT INVESTMENTS REALIZED DURING THE RELEVANT PERIOD TO THE ASSESSME NT YEAR 2006-07 WERE HELD AS INVESTMENT PORTFOLIO AT THE CL OSE OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06. THESE INVESTME NTS WERE ALSO REFLECTED AS INVESTMENT AT THE BEGINNING OF PREVIOU S YEAR RELEVANT TO ASSESSMENT YEAR 2006-07. THESE INVESTMENTS HAVE BEE N REFLECTED AS INVESTMENTS IN THE BOOKS OF ACCOUNTS. IT WAS ALSO C LAIMED THAT EARLIER 5 ITA NO . 6461/DEL/13 ASSESSING OFFICER HAS ACCEPTED THIS POSITION OF INV ESTMENTS IN THE BOOKS OF ACCOUNTS. SHARES AND SECURITIES HELD AS INVESTMENTS WERE VALUED AT COST SUBJECT TO PROVISION FOR DIMINUTION IN THEIR VALUE. THE SHARES HELD AS TRADING STOCK-IN-TRADE WERE VALUED AT COST OR MARKET VALUE WHICHEVER IS LOWER. SUCH TREATMENT WAS BEING ACCEPTED BY REVENUE SINCE LONG. IT WAS ALSO CLAIMED THAT MOST OF THESE INVESTMENTS REALIZED DURING THE YEAR WERE HELD AS INVESTMENT FOR MORE THAN A YEAR. EVEN SOME OF THEM WERE HELD FOR MORE THAN 2 TO 4 YEARS. THUS, ASSESSEES INTENTION ALWAY S WAS TO KEEP INVESTMENT IN SHARES AND EARN DIVIDEND. DURING THE YEAR, ASSESSEE HAS EARNED DIVIDEND OF RS.3,51,49,900/-. THE ASSESSEE S UBMITTED COMPLETE DETAILS TOWARDS EACH INVESTMENT REALIZED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. THE ASSESSING OFFICER HELD THESE TRANSACT IONS OF PURCHASE AND SALE OF SHARES AS BUSINESS INCOME AND NOT AS CAPITA L GAIN. AGGRIEVED BY THISORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE CIT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UN DER :- 4.4 I HAVE GONE THROUGH THE SUBMISSION OF THE ASSES SEE, FINDING OF THE AO IN THE ASSESSMENT ORDER AND REMAND REPORT. IN MY CO NSIDERED OPINION, THERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS FROM VARI OUS APPELLATE AUTHORITIES PROPOSING DIFFERENT PROPOSITION WHICH W ERE PERUSED BY ME. AFTER GOING THROUGH ALL THE JUDGMENTS MADE AVAILABLE TO M E BY APPELLANT AND BY MY OWN EFFORTS. I PUT MY RELIANCE ON THE JUDGMENT O F HONOURABLE DELHI HIGH COURT IN THE CASE OF CIT VS. ROHIT ANAND REPORTED AT 327 ITR PAGE 445, THE HON'BLE DEL HI HIGH COURT HAS HELD AS UNDER:- 'THERE IS NO DOUBT THAT EVEN A SINGLE TRANSACTION C AN BE IN THE NATURE OF TRADE BUT THE ASSESSEE HAS DEMONSTRATED THAT HIS IN TENTION WAS NEVER TO TRADE IN SHARES. THE INTENTION IS MANIFESTED BY TRE ATMENT GIVEN TO SUCH INVESTMENT THAT THE INVESTMENT IS OUT OF OWN FUND A ND NOT BORROWED THAT THE INVESTMENT IS NOT ROTATED FREQUENTLY, THAT THE TOTA L NUMBER OF TRANSACTIONS ARE VERY FEW, THAT ALL THE SHARES PURCHASED ARE NOT SOLD AND RATHER HELD FOR QUITE NUMBER OF DAYS. IT IS TO BE NOTED THE INCOME TAX ACT ITSELF HAS PROVIDED THAT WHEN THE SHARES ARE HELD FOR A PERIOD OF ONE YEAR OR MORE WILL BE TREATED AS LONG TERM CAPITAL ASSET CONTRARY TO O THER ASSETS WHERE THE HOLDING PERIOD TO TREAT SUCH ASSET A LONG TERM IS M ORE THAN 36 MONTHS. THUS, EVEN AFTER HOLDING THE SHARES FOR MORE THAN 1 2 MONTHS AND SHOWING SUCH INTENTION FROM THE CONDUCT, THE ASSESSING OFFICER CANNOT REPLACE HIS OPINION FOR TH AT OF THE ASSESSEE IN HOLDING THAT THE SHARES ARE HELD AS STOCK IN TRADE AND PROFIT FROM WHICH IS TO BE ASSESSED AS BUSINESS INCOME. IN ALL SUCH CASES T HE INTENTION IS 6 ITA NO . 6461/DEL/13 MANIFESTED BY THE ASSESSEE HIMSELF BY HIS CONDUCT A ND OTHER RELEVANT FACTORS AS CONSIDERED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS). IT IS ALSO SEEN THAT THE SHARES WERE TRE ATED AS INVESTMENT IN EARLIER YEAR AND WHICH FACT HAS BEEN ACCEPTED BY TH E ASSESSING OFFICER. THE ASSESSEE HAS ALSO EARNED HUGE DIVIDEND INCOME F ROM SUCH SHARES. THE ASSESSING OFFICER MERELY BECAUSE OF THE TOTAL V OLUME OF TRANSACTION IS SUBSTANTIAL, IS GUIDED TO HOLD THE INCOME AS BUSINE SS INCOME. HOWEVER, HE FAILED TO RECOGNIZE THAT THE VOLUME OF TRANSACTION INCLUDES THE APPRECIATION IN SHARES ALSO AND SUCH APPRECIATION HAS BEEN OFFER ED FOR TAX. IF VOLUME OF TRANSACTION IS THE CRITERIA, WHAT IS TO BE EXAMINED IS HOW FREQUENTLY THE TRANSACTION IS DONE, WHETHER THE TRANSACTION IS SET TLED IN THE COURSE OF THE DAY OF TRADING ITSELF OR IN THE SETTLEMENT PERIOD I TSELF SO AS TO AVOID PAYMENT OF FULL PURCHASE PRICE. HERE THE ASSESSEE HAS BEEN HOLDING THE SHARES BY TA KING DELIVERY AND MAKING FULL PAYMENT FOR SUCH INVESTMENT. IN SUCH CIRCUMSTANCES, THE TRANSACTIONS ARE TO BE T REATED AS GIVING RISE TO THE CAPITAL GAIN AND CANNOT BE BRANDED AS TRADING O F MAKING INVESTMENT SO AS TO DETERMINE WHETHER THE TRANSACTION WAS FOR DEA LING IN SHARES OR MAKING INVESTMENT FOR EARNING DIVIDEND AND APPRECIA TION FROM SUCH INVESTMENT. ' AS PER HON'BLE DELHI HIGH COURT FOUR BASIC ELEMENTS TO DECIDE THE ISSUE ARE AS UNDER.- 1. VOLUME OF TRANSACTION 2. MODE OF DELIVERY 3. FREQUENCY OF TRANSACTION 4. SOURCE OF PAYMENT EITHER FROM OWN FUND OR BORROW ED FUND. 4.5 AFTER TAKING INTO CONSIDERATION THE VARIOUS ASP ECTS AS MENTIONED ABOVE, THE HON'BLE DELHI HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE THAT IT SHOULD BE TREATED AS CAPITAL GAIN. IN THE A BOVE MENTIONED CASE, THOUGH, THE HON'BLE DELHI HIGH COURT HAS DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE BUT THE HON'BLE HIGH COURT HAS LAID DOWN T HE PRINCIPLE THAT EVEN A SINGLE TRANSACTION CAN BE IN THE NATURE OF TRADE. TAKING INTO CONSIDERATION THE RATIO OF THE ABOVE SAID JUDGMENT OF THE HON'BLE DELHI HIGH COURT, I HAD GOT THE OCCASION TO GO THROUGH THE JUDGMENT OF THE HON'BLE ITAT, MUMBAI IN THE CASE OF MANAGEMENT STRUCTURE & SYSTEMS PVT. LTD. VS. ITO, WARD 6(3)(2), MUMBAI, REPORTED AT 201OTIOL-254-ITAT-MUM, WHEREIN, HON'BLE ITA T VIDE ORDER DATED 30-4-2010 HAS DECIDED THE IS SUE VIDE PARA 15 OF THE ORDER AS UNDER:- 7 ITA NO . 6461/DEL/13 'WE HAVE GIVEN OUR SERIOUS CONSIDERATIONS TO THE DI FFERENT PRECEDENTS RELIED ON BY THE AO IN THE ASSESSMENT ORDER BUT IN OUR OPINION, THE PRINCIPLES LAID DOWN IN THOSE DECISIONS CANNOT BE A PPLIED TO THE ASSESSEE'S CASE TO SAY THAT THE ACTIVITY OF THE ASS ESSEE BUYING AND SELLING OF THE SHARES AMOUNT TO TRADING ACTIVITY. IT IS WEL L SETTLED PRINCIPLE AS HAS HELD IN THE CASE OF H. HOLSCK LARZEN (SUPRA) THAT W HETHER THE LAW AND FACT. IN THIS CASE, WE HAVE PERUSED THE BALANCE SHEET FIL ED BY THE ASSESSEE AND AS PER THE BOOKS OF ACCOUNT THE ASSESSEE HAS TREATE D THE ENTIRE INVESTMENT IN THE SHARES AS AN INVESTMENT ONLY AND NOT AS A ST OCK IN TRADE. ANOTHER IMPORTANT ASPECT TO BE CONSIDERED HERE IS THE ASSES SEE IS NOT A SHARE BROKER NOR HE IS HAVING A REGISTRATION WITH ANY STO CK EXCHANGE. MOREOVER, SOME SCRIPTS ARE HELD FOR MORE THAN FIVE YEARS AND IT IS NOT A CASE OF THE AO THAT THERE WERE ANY DERIVATIVE TRANS ACTIONS BY THE ASSESSEE NOR IS IT A CASE OF THE AO THAT THERE WERE TRANSACT IONS WITHOUT ANY DELIVERY. IN THE PRESENT CASE, BOTH THE AUTHORITIES HAVE NOT DISPUTED THAT THE TRANSACTIONS ARE COMPLETED WITH THE DELIVERY. THE I NTENTION OF THE ASSESSEE CANNOT BE READ FROM HIS MIND BUT IT REFLECTS IN ITS CONDUCT, THE WAY HE TREATS THE TRANSACTIONS. THE ASSESSEE HAS NOT BORROWED ANY MONEY FOR INVESTING IN SHARES AND USED HIS OWN SURPLUS FUNDS AND THESE FACTS HAVE NOT BEEN DISPUTED BY THE AO. THE PROPOSITION HAS BEEN ACCEPT ED BY THE BOARD ALSO IN CIRCULAR NO.4/2007 THAT THE ASSESSEE IS ENTITLED TO MAINTAIN TWO PORTFOLIOS. IN THE CASE OF THE ASSESSEE, IN THE PRECEDING YEARS, THE ASSESSEE IS CONSISTENTL Y DECLARING THE GAIN/PROFIT ON THE SALE OF THE SHARES UNDER THE HEA D 'CAPITAL GAIN' EITHER LONG TERM AND SHORT TERM AND THE SAME HAS BEEN ACCE PTED BY THE AO. IT IS TRUE THAT THE RULE OF RES JUDICATA IS NOT APPLIC ABLE TO THE INCOME TAX PROCEEDINGS, BUT AT THE SAME TIME, IT IS ALSO WELL SETTLED PRINCIPLES THAT IF THERE IS NO CHANGE IN THE FACTS, THEN, THERE SHOULD BE CONSISTENCY IN THE APPROACH OF THE REVENUE AUTHORITIES WHILE DECIDING THE TAX LIABILIT Y OF THE ASSESSEE.' 4.6. THE PROPOSITION LAID DOWN BY THE HON'BE MUMBAI ITAT IN THE ABOVE MENTIONED CASE INSISTS ON CONSIST ENCY AS WELL AS IT HAS ALSO RELIED ON CIRCULAR NO.4/2007 OF THE C.B.D.T., WHICH IS AN IMPORTANT FACTOR TO DECIDE TH E ISSUE. I HAVE ALSO GONE THROUGH THE LATEST JUDGMENT OF HON'BLE DELHI IT AT DATED 28.1.2011 IN THE CASE OF ACIT VS. M/S. BULLS & BEARS PORTFOLIOS LTD., REPORTED AT 2011-TIOL-1 09-I TA TDEL, WHEREIN IN PARA 6 OF THE ORDER HON'BLE TRIBUNAL HAS HELD AS UN DER:- 'WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF TH E MATERIAL PRODUCED AND DECISION RELIED UPON. WE NOTETHAT THE ASSESSEE IS A BROKER AS WELL AS 8 ITA NO . 6461/DEL/13 INVESTOR. IT HAS MAINTAINED THE INVESTMENT PORTFOLI O SEPARATELY INCOME FOR WHICH WAS LIABLE TO BE TAXED AS CAPITAL GAINS, AS T HE INTENTION IN RESPECT OF THIS WAS TO HOLD THE INVESTMENT AS INVESTMENT ONLY AND WERE SHOWN AS SUCH IN THE BOOKS OF ACCOUNTS AND INCOME THEREFORE WAS SHOWN AND TREATED AS CAPITAL GAINS IN THE SUCCESSIVE ASSESSME NTS. ASSESSMENT YEAR 2002-03 AND 2004-05 WERE CONDUCTED U/S.143(3) AND 1423( 1) IN WHICH CAPITAL GAIN WAS ASSESSED AS CAPI TAL GAIN. SCHEDULE OF INVESTMENT WAS DULY APPEARING IN THE BALANCE SHEET AS 31.3.2002, 31.3.2003, 31.2.2004, 31.3.2006. THE SCHEDULE OF IN VESTMENT WERE DULY APPENDED IN THE BALANCE SHEET. ASSESSEE HAS ALSO MA INTAINED SEPARATE D- MAT ACCOUNT FOR INVESTMENT AND FOR TRADING. IN THES E CIRCUMSTANCES, WE NOTE THAT ASSESSEE HAS DISTINCTLY MAINTAINED INV ESTMENT ACCOUNT AND TRADING ACCOUNT.' 4.7 AFTER ANALYZING THE ISSUE AND CONSIDERING THE V ARIOUS CASE LAWS AS RELIED UPON BY THE ID. AR, I FIND THAT HOLDING PERI OD IS THE MOST APPROPRIATE FACTOR TO DECIDE THE ISSUE, WHETHER IT SHOULD BE TR EATED AS STOCK IN TRADE TREATING IT AS A BUSINESS .INCOME OR INVESTMENT SO AS TO TREAT IT AS CAPITAL GAIN. MY VIEW GETS STRENGTH FROM THE ORDER OF HON'BLE AHM EDABAD TRIBUNAL IN THE CASE OF SHRI SHUGAM CHAND C. SHAH V S. ACIT, ITA NO.3554/AHD/2008 VIDE ORDER DATED 29.L.20 10 HON'BLE TRIBUNAL HAS LAID DOWN THE CRITERIA OF DECI DING THE SHARE TO BE TAXED AS CAPITAL GAIN OR BUSINESS INCOME. VIDE PARA 19 OF THE ABOVE SAID ORDER THE HON'BLE TRIBUNAL HAS HELD AS UNDER:- 'CONSIDERING THE TOTALITY AND PECULIARITY OF THE FA CTS OF THIS CASE, WE FIND THAT ASSESSEE IS NEITHER FULLY ACTING AS A TRADER N OR AS FULLY INVESTOR. DEMARCATION IS QUITE HAZY; THOUGH IN THE BOOKS HE I S SHOWING ALL THE PURCHASES AS INVESTMENT BUT FREQUENCY OF TRANSACTIO N IN SEVERAL CASES IS SO LARGE AND HOLDING PERIOD IN MANY CASES IS SO SMA LL - FROM 0 TO A WEEK OR SO THAT ASSESSEE IS DE FACTO SELLING AND PURCHASING SHARES AS TRADER. HE IS ALSO HOLDING SHARES FOR LONG PERIOD - INDICATING TH AT THEY ARE HELD AS INVESTMENT. THEREFORE, A CRITERIA HAS TO BE FIXED F OR DETERMINING AS TO WHEN HE IS ACTING AS TRADER AND WHEN AS INVESTOR. ACCORD INGLY, WE DECIDE FOLLOWING CRITERIA TO HOLD WHEN GAINS ARE TO BE TAX ED AS PROFIT TO BE EARNED UNDER THE BUSINESS OR TO BE TAXED AS SHORT TERM CAP ITAL GAIN, WE HOLD THAT IF SHARES ARE NOT HELD EVEN SAY FOR A MONTH, THEN THE INTENTION IS CLEARLY TO REAP PROFIT BY ACTING AS A TRADER AND HE DID NOT IN TEND TO HOLD THEM IN INVESTMENT PORT-FOLIO. WE BELIEVE THAT IF A PERSON INTENDS TO HOLD HIS PURCHASES OF SHARES AS INVESTMENT HE WOULD WATCH TH E FLUCTUATION OF RATES IN THE MARKET FOR WHICH A MINIMUM TIME IS NECESSARY , WHICH WE ESTIMATE AT 9 ITA NO . 6461/DEL/13 ONE MONTH. WHERE SHARES ARE HELD FOR MORE THAN A MO NTH, THEY SHOULD BE TREATED AS INVESTMENT AND ON THEIR SALE SHORT TERM CAPITAL GAIN SHOULD BE CHARGED. WHEN SHARES ARE HELD FOR LESS THAN A MONTH , GAIN ON THEM SHOULD BE TREATED AS PROFIT FROM BUSINESS.' THE CRITERIA LAID DOWN BY THE HON'BLE TRIBUNAL IS V ERY MUCH APPROPRIATE SO AS TO DECIDE THE ISSUE IN THIS REGARD. ACCORDINGLY, IT IS HELD THAT SHARES WHICH WERE HELD FOR LESS THAN THIRTY DAYS WILL BE T REATED AS TRADING INCOME AND REMAINING SHARES WILL AUTOMATICALLY COME UNDER THE CATEGORY OF INVESTMENT TO BE TREATED AS CAPITAL GAINS.' 4.8 IN VIEW OF THE ABOVE DISCUSSION THE BIFURCATION OF THE SHARES HELD FOR LESS THAN 30 DAYS ON THE BASIS OF WORKING GIVEN BY MANAGING DIRE CTOR OF ASSESSEE COMPANY VIDE LETTER DATED 6.12.2010, WHICH IS ENCLOSED AS ANNEXURE-A OF THIS ORDER, IS AS UNDER :- PARTICULARS. AMOUNT SHORT-TERM CAPITAL GAIN @ 30% 10,96,774/- SHORT TERM CAPITAL GAIN @ 10% OWN SHARES(BONUS SHARES AND/OR 21,53,221/- RIGHT ISSUE SHARES. OWN SHARES (OTHERS) 3,34,881/- PMS SHARES LOSS. 16,54,669/- TOTAL GAIN. 19,30,207/- THUS, THE GAIN ON SHARES HELD UP TO 30 DAYS COMES T O RS.19,30,207/-, WHICH WILL BE TREATED AS 'BUSINESS INCOME'. ALL THE OTHER GAINS WHICH HAVE BEEN HELD BY THE AO IN THE OWN SHARES (OTHERS) PMS SHARES BODY OF ORDER AS 'BUSINESS INCOME' IS ALLOWED AS CAPITAL GA IN WHETHER LONG TERM OR SHORT TERM. AO IS DIRECTED TO VERIFY THE CLAIM OF A SSESSEE WITH REGARD TO HOLDING PERIOD LESS THAN 30 DAYS AND GAIN OUT OF IT AFTER PROPER VERIFICATION AND TO ALLOW THE CLAIM OF APPELLANT. IN VIEW OF ABOVE DISCUSSION GROUNDS NO.2 TO 5 ARE P ARTLY ALLOWED. 4. NOW, THE REVENUE IS IN APPEAL BY TAKING THE FOLL OWING GROUND ON THIS ISSUE:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT OUT OF THE INCOME OF RS.38,72 ,78,020/- FROM TRANSACTIONS IN SHARES AND SECURITIES HELD BY THE A .O. AS BUSINESS INCOME, LONELY AN AMOUNT OF RS.19,30,207/- WOULD COMPRISE B USINESS INCOME AND THE REMAINING RS.38,53,47,813/- WOULD COMPRISE CAPI TAL GAINS. 5. ASSESSEE HAS ALSO FILED CROSS OBJECTION BY TAKIN G THE FOLLOWING GROUND ON THIS ISSUE :- 10 ITA N O. 6461/DEL/13 THAT THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDIN G THAT INTEREST EARNED BY THE ASSESSEE COMPANY IS INCOME FROM OTHER SOURCES A ND NOT INCOME FROM BUSINESS. 6. WHILE PLEADING ON BEHALF OF THE REVENUE THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR PART OF THE STOCK -IN-TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO H OLDS IT AND IT IS ON THE ASSESSEE TO PRODUCE NECESSARY EVIDENCES TO ESTABLIS H THE CLAIM. LD. DR SUBMITTED THAT CIT (A) HAS ADMITTED VITAL INFORM ATION AT THE BACK OF ASSESSING OFFICER. IT WAS ALSO PLEADED THAT NO SEPA RATE DEMAT ACCOUNT WAS MAINTAINED. THE COPY OF AGREEMENT WITH PORTFOLI O MANAGEMENT SERVICE PROVIDER/BROKER WAS NOT PRODUCED. IT WAS ALSO SUBMI TTED THAT BORROWED FUND WAS UTILIZED. HE PLEADED THAT THERE WAS TRANSFER OF SHARES FROM INVESTMENT TO TRADING ACCOUNT. IT WAS ALSO PLEADED THAT THERE WAS HIGH VOLUME OF PURCHASE AND SALES OF SHARES. 7. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF THE CIT (A). LD. AR HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY P VT. LTD. 82 ITR 586. HE HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJA BAHADUR VISHESHWAR SINGH VS. CIT - 41 ITR 685 FOR THE PROPOSITION THAT AN INVESTMENT MADE BY A PE RSON IN SHARES WITH THE INTENTION TO RESELL THEM IN FUTURE BRINGING IN A HI GHER PRICE, THOUGH MOTIVATED FOR A POSSIBILITY OF ENHANCED VALUE, WILL NOT NECES SARILY RENDER THE INVESTMENT OF TRANSACTION IN THE NATURE OF TRADE. I T WAS ALSO SUBMITTED THAT THE GAIN REALIZED ALSO INCLUDE GAINS REALIZED ON SA LE OF BONUS SHARES OF TATA IRON & STEEL CO. LTD., FEDERAL BANK AND K.E.C. INFRASTRUCTURE LTD. IT WAS ALSO SUBMITTED THAT THE ACCOUNTS MAINTAINED BY THE ASSESSEE COMPANY AND IN THE LIGHT OF RATIO LAID DOWN BY HONBLE SUPR EME COURT IN THE CASES OF CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY P VT. LTD. - 82 ITR 586 AND RAJA BAHADUR VISHESHWAR SINGH VS. CIT - 41 ITR 685, THE INVESTMENTS WERE REALIZED DURING THE ASSESSMENT YEA R AND THE ASSESSEE HAS RIGHTLY CONSIDERED THE SURPLUS AS A LONG TERM C APITAL GAIN. THE LD. AR ALSO PLEADED THAT CIT (A) WAS EVEN NOT JUSTIFIED FO R TREATING THE SHORT TERM CAPITAL GAIN ARISING FROM THE SHARES SOLD WITHIN A PERIOD OF 30 DAYS. IT WAS ALSO SUBMITTED THAT WHERE SHARES WERE HELD AS INVES TMENT AS ON 31.03.2005 THEN THERE SHOULD NOT BE A BASIS OF 30 D AYS FOR TRADING THE SALE OF THE SAME AS TRADING. LD. AR ALSO SUBMITTED THAT THE CBDT CIRCULAR NO.4 OF 2007 DATED 15 TH JUNE, 2007 HAS ALSO CLARIFIED THE POSITION THAT A T AXPAYER CAN HAVE TWO PORTFOLIOS I.E. ONE INVESTMENT PORTFOL IO COMPRISING SECURITIES 11 ITA N O. 6461/DEL/13 WHICH ARE TO BE TREATED AS ITS CAPITAL ASSETS AND A NOTHER, A TRADING PORTFOLIO COMPRISING OF STOCK-IN-TRADE WHICH ARE TO BE TREATE D AS TRADING ASSET. THE ASSESSEE WAS HAVING TWO PORTFOLIOS AND HAS INCOME U NDER BOTH THE HEADS, I.E., CAPITAL GAINS AS WELL AS BUSINESS INCOME. THE LD. AR ALSO SUBMITTED THAT HONBLE SUPREME COURT IN THE CASE OF DALHAUSIE INVESTMENT TRUST COMPANY LTD. VS. CIT - 68 ITR 486 HAS HELD THAT PRI NCIPAL CONSIDERATION IN DETERMINING WHETHER INCOME FROM SALE OF SHARES IS R EVENUE INCOME OR CAPITAL GAIN IS TO FIND OUT WHAT WAS THE PURPOSE OF PURCHASE OF THESE SHARES AND, IF THE PURPOSE WAS INVESTMENT, THE FACT THAT I N VARYING THE INVESTMENT, THE SALE OF THOSE SHARES RESULTED IN A PROFIT WILL NOT MAKE REVENUE INCOME. IT WAS ALSO SUBMITTED BEFORE US THAT WHAT IS THE IN TENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES IS VERY RELEVANT FAC TOR IN DETERMINING WHETHER IT WAS AN INVESTMENT IN SHARES OR THE SHARE S WERE HELD AS TRADING ASSETS. THIS CAN BE FOUND FROM THE TREATMENT GIVEN TO SUCH PURCHASES IN THE BOOKS OF ACCOUNTS. IN ASSESSEES CASE, THESE PU RCHASES WERE HELD AS INVESTMENT IN THE PREVIOUS YEAR AS WELL AS DURING T HE YEAR AND IN THE SUBSEQUENT YEARS. SECONDLY, THESE PURCHASES WERE NO T MADE FROM THE BORROWED FUNDS ON WHICH INTEREST WAS TO BE PAYABLE. NORMALLY, WHEN THE PURCHASES ARE MADE FROM BORROWED FUNDS THEN SUCH PU RCHASES ARE NOT FOR INVESTMENT AS NOBODY WILL INVEST BY TAKING BORROWED FUNDS AND PAY INTEREST. IN ASSESSEES CASE, THE FUNDS WERE NOT BORROWED FOR MAKING THE INVESTMENT. THE THIRD ISSUE IS THE PERIOD OF RETENT ION WHERE THE SURPLUS HAS BEEN REALIZED. IN ASSESSEES CASE, THE SHARES WERE HELD FOR A LONG PERIOD OF MORE THAN A YEAR AND SOMETIMES 2 TO 4 YEARS. THI S FACT ITSELF SHOWS THAT ASSESSEE WAS NOT HAVING A TRADING MOTIVE WHICH IS E SSENTIAL INGREDIENT FOR A TRADE. HE ALSO SUBMITTED THAT THE VALUATION OF TH ESE SHARES AT THE END OF THE YEAR WHETHER THESE WERE VALUED AT COST OR MARKE T VALUE OR NET REALIZABLE VALUE WHICHEVER IS LESS IS ALSO AN ASPEC T TO DETERMINE WHETHER THE ASSETS HAVE BEEN HELD AS INVESTMENT OR STOCK-IN -TRADE. THE LD. AR ALSO SUBMITTED THAT CBDT HAS ALREADY CLARIFIED IN ITS CI RCULAR THAT ASSESSEE CAN HAVE TWO PORTFOLIOS OF SHARES, ONE IS TRADING AND A NOTHER IS INVESTMENT. IT WAS ALSO PLEADED THAT NONE OF THE FACTOR ALONE ARE SUFFICIENT TO COME ON A DEFINITE CONCLUSION BUT IT IS THE CUMULATIVE EFFECT OF THESE FACTORS WHICH WILL DETERMINE THE CHARACTER OF THE HOLDING OF THE SHARE S. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND AL SO CONSIDERED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDER ED THE CASE LAWS RELIED UPON BY BOTH THE SIDES. IT IS A FACT THAT ASSESSEE IS SHOWING THESE SHARES IN ITS INVESTMENT PORTFOLIO IN THE BOOKS OF ACCOUNTS. SHARES SOLD WERE SHOWN 12 ITA N O. 6461/DEL/13 IN THE BALANCE SHEET FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06 AS INVESTMENT AND THE SAME HAS BEEN CARRIED FORWARD AS INVESTMENT IN THE BEGINNING OF THE FINANCIAL YEAR RELEVANT TO ASS ESSMENT YEAR 2006-07. IN THE EARLIER YEARS, THE REVENUE HAS ACCEPTED THE POS ITION OF INVESTMENTS AS IT IS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS ALSO A FACT THAT MOST OF THE INVESTMENTS REALIZED DURING THE YEAR WERE HELD AS INVESTMENT FOR MORE THAN A YEAR EVEN, IN SOME OF THE CASES, THESE INVES TMENTS WERE HELD FOR MORE THAN 2 TO 4 YEARS. THE ASSESSEE SUBMITTED DETA ILS OF THESE TRANSACTIONS BEFORE THE ASSESSING OFFICER. IT IS AL SO A FACT THAT DURING THE YEAR, THE ASSESSEE HAS EARNED SUBSTANTIAL DIVIDEND INCOME OF RS.3,51,49,900/-. THE CIT (A) HAS GIVEN THE RELIEF TO THE ASSESSEE RELYING ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ROHIT ANAND REPORTED IN 327 ITR 445 WHEREIN THE HONBLE J URISDICTIONAL HIGH COURT HAS HELD THAT ALTHOUGH EVEN A SINGLE TRANSACT ION CAN BE IN THE NATURE OF TRADE, HOWEVER, WHERE THE ASSESSEE HAS DEMONSTRA TED THAT HIS INTENTION WAS NEVER TO TRADE IN SHARES. THEN, REVENUE CANNOT CHANGE THE POSITION OTHERWISE. THE INVESTMENTS HAVE BEEN MADE BY THE AS SESSEE OUT OF HIS OWN FUND AND THE SHARES WERE HELD QUITE FOR A LONG PERIOD. THE INCOME-TAX ACT ITSELF PROVIDES THAT WHEN THE SHARES ARE HELD F OR A PERIOD OF MORE THAN A YEAR OR MORE WILL BE TREATED AS LONG TERM CAPITAL A SSET, CONTRARY TO THE FACT THAT OTHER ASSETS TO BE CALLED AS LONG TERM ASSET H AVE TO BE HELD FOR MORE THAN 36 MONTHS. THESE SHARES WERE BEING TREATED AS INVESTMENT IN EARLIER YEARS AND THIS FACT HAS BEEN ACCEPTED BY THE ASSESS ING OFFICER. SUBSTANTIAL DIVIDEND INCOME WAS BEING EARNED ON THESE INVESTMEN TS. ALL THESE FACTS SHOW THAT FACTS OF THE ASSESSEE ARE SIMILAR TO THE FACTS OF CASE OF CIT VS. ROHIT ANAND, CITED SUPRA. THE ASSESSEE IS HOLDING T HE SHARES BY TAKING THE DELIVERY BY MAKING FULL PAYMENT ON SUCH INVESTMENTS . ALL THESE CIRCUMSTANCES SUGGEST THAT REALIZATION OF THESE INV ESTMENTS SHALL GIVE A RISE TO THE CAPITAL GAINS AND IT CANNOT BE TERMED A S TRADING OF SHARES. SIMILARLY, THE ITAT, MUMBAI BENCH IN THE CASE OF MA NAGEMENT STRUCTURE & SYSTEMS PVT. LTD. VS. ITO REPORTED IN 2010-TIOL-254 -ITAT-MUM HAD ALSO HELD THAT ALTHOUGH RULE OF RES JUDICATA IS NOT APPL ICABLE TO THE INCOME-TAX PROCEEDINGS, HOWEVER, AT THE SAME TIME, IT IS ALSO WELL SETTLED PRINCIPLE THAT IF THERE IS NO CHANGE IN THE FACTS, THEN, THERE SHO ULD BE CONSISTENCY IN THE APPROACH OF INCOME-TAX AUTHORITIES WHILE DECIDING T HE TAX LIABILITIES OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE WAS CONSISTENT LY DECLARING GAIN ON SALE OF INVESTMENTS OF SHARES UNDER THE HEAD LONG T ERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN AND THIS POSITION WAS BEING ACCEP TED. THE CIT (A) HAS ALSO RELIED UPON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF ACIT 13 ITA N O. 6461/DEL/13 VS. M/S. BULLS & BEARS PORTFOLIOS LTD. REPORTED IN 2011-TIOL-109-ITAT-DEL WHEREIN WHEN THE ASSESSEE HAS DECLARED INVESTMENT I N THE BALANCE SHEET THEN THE REALIZATION OF THE SAME HAS HELD TO BE CAP ITAL GAIN. AFTER ANALYZING THE FACTS OF THE CASE AND CONSIDERING VARIOUS CASE LAWS IN TERMS OF FACTS UNDER CONSIDERATION, WE ARE OF THE VIEW THAT CIT (A ) HAS RIGHTLY GRANTED THE RELIEF TO THE ASSESSEE. WE UPHOLD THE ORDER OF THE CIT (A) ON THIS ISSUE. AT PAGE 194 OF THE PAPER BOOK ASSESSEES ANNUAL REP ORT FOR FINANCIAL YEAR 2008-09 IS CONTAINED IN WHICH AT INTERNAL PAGE 23 TO 26, TH E DETAILS OF INVESTMENTS IN EQUITY SHARES IS CONTAINED. THESE SHARES HAVE BEEN VALUED AT COST. AT PAGE 130 OF THE PAPER BOOK, COPY OF FORM NO. 3CD-TAX AUDIT REPORT I S CONTAINED IN WHICH AT SERIAL N. 8A IN REGARD TO NATURE OF BUSINESS OR PROFESSION , IT IS STATED THAT, ASSESSEE IS IN THE BUSINESS OF SHARE TRADING INVESTMENTS, FINANCIN G AND POWER GENERATION AND IN COLUMN NO. 8B,IT IS STATED THAT THERE IS NO CHANGE IN THE ASSESSEES BUSINESS FROM EARLIER YEAR. THE ASSESSEE HAS GIVEN DETAILS OF LO NG TERM CAPITAL GAIN (STT) EXEMPT U/ 10(38) (OWN) AT PAGE 159 TO 165 OF PAPER BOOK TO DEMONSTRATE THAT THE PERIOD OF HOLDING OF THE SHARES WAS MORE THAN ONE. THE DETAIL S OF SHORT TERM CAPITAL GAINS ARE GIVEN AT PAGES 168 TO 178 OF PAPER BOOK. FROM THE ABOVE DETAILS IT IS EVIDENT THAT THERE IS NO CHANGE IN THE FACTS OBTAINING IN THE CU RRENT YEAR AS COMPARED TO EARLIER YEARS AND, THEREFORE, THE DECISION OF TRIBUNAL IN E ARLIER YEARS APPLIES MUTATIS MUTANDIS TO THE FACTS IN THE PRESENT ASSESSMENT YE AR, PARTICULARLY BECAUSE ASSESSEE HAS PRIMARILY SOLD THE SHARES WHICH HAVE BEEN TREAT ED AS INVESTMENTS IN EARLIER YEAR. IT IS PERTINENT TO OBSERVE THAT ASSESSING OF FICER HAS ALSO FOLLOWED THE REASONING FOR A.YS 2006 & 2007-08 IN ARRIVING AT HI S CONCLUSION THAT THE SHARES WERE HELD AS BUSINESS ASSET AND NOT AS INVESTMENT W HICH HAS NOT BEEN ACCEPTED BY TRIBUNAL AS NOTED EARLIER. HOWEVER, ONE ASPECT WHICH NEEDS CLARIFICATION IS IN REGARD TO LD. CIT(A)S FINDING IN EARLIER YEARS THA T GAIN ARISING OUT OF SALE OF SHARES WITHIN 30 DAYS IS TO BE TREATED AS BUSINESS INCOME WHICH FINDING HAS BEEN CONFIRMED BY TRIBUNAL IN EARLIER YEARS. HOWEVER, I N THE CURRENT YEAR THERE IS NO 14 ITA N O. 6461/DEL/13 SUCH FINDING BY LD. CIT(A). THEREFORE, SALE FROM A LL SHARES HELD AS INVESTMENT IS TO BE ASSESSED AS SHORT TERM OR LONG TERM CAPITAL G AIN. ACCORDINGLY GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 9. APROPOS GROUND NO. 2, THE ASSESSING OFFICER HAS INTER ALIA OBSERVED AS UNDER. WITHOUT PREJUDICE TO THE ABOVE, THE FACTS AND CIR CUMSTANCES OF THE ASSESSEE CASE IS SQUARELY FALLS UNDER SPECULATIVE TRANSACTIO NS AS DEFINED IN SUB SECTION (5) OF SECTION 43. ON PERUSAL OF BROKER NO TES IT SUGGESTS THAT TRANSACTIONS ARE SPECULATIVE IN NATURE. IN THIS RE GARD, A FEW SAMPLES OF BROKERS NOTES ARE REPRODUCED AS UNDER NEEDLESS TO SAY THAT THE TRANSACTIONS SHOWN IN THE BROKERS NOTES ARE SPECULATIVE IN NATURE AS ASSESSEE COMPANY AND THE B ROKER HAVE SETTLED THE ACCOUNTS AS PER THE SETTLEMENT DATES WITH REGARD TO AMOUNT IS DUE TO THE BROKER OR VICE A VERSA IS ON THE SETTLEMENT DATE. THUS, THE TRANSACTION PERTAIN TO VALAN(SETTLEMENT PERIOD) IS CLOSED AND F RESH BEGINNING IS MADE IN ANOTHER SETTLEMENT DATE AND SO ON SO FORTH. THEREF ORE, THE QUESTION OF DELIVERY DOES NOT ARISE. SUBMISSIONS MADE BY THE A SSESSEE IN THIS REGARD ARE WITHOUT ANY SUBSTANCE AS NO SUPPORTIVE EVIDENCE HAS BEEN ADDUCED TO TREAT SHARE TRANSACTIONS AS NON-SPECULATIVE. THEREFORE, I HOLD THAT ASSESSEE HAS INDULGED IN SPECULATIVE TRANSACTIONS AND TREATED AS SUCH. 10. WE FIND THAT TRIBUNAL, IN ITS ORDER HAS OBSERV ED FROM PARA 9 TO PARA 11 AS UNDER: 9. THE REVENUE HAS ALSO TAKEN A GROUND WITH REGARD TO THE HOLDING THAT THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND INCOME FROM TRANSACTIO NS IN SHARES AND SECURITIES BY THE ASSESSEE IS NOT TO BE HELD AS INC OME FROM SPECULATIVE BUSINESS. 10. THE CIT(A) HAS DEALT THIS ISSUE IN ITS ORDER AT PARA 5 WHICH IS REPRODUCED AS UNDER:- 5. GROUND NO. 6 IN THIS REGARD AGAINST THE ACTION OF AO TREATING IT AS A SPECULATIVE PROFIT, LD. AR OF THE ASSESSEE HAS SUBM ITTED A PAPER BOOK, IN THE RELEVANT PARA OF WHICH IT HAS BEEN CONTENDED AS UNDER:- IT IS SUBMITTED THAT EXPLANATION TO SECTION 73 DOES NOT APPLY9 TO THE ASSESSEE AS THE ASSESSEE FALLS IN THE EXCEPTION IN AS MUCH AS IT IS A COMPANY , THE PRINCIPAL BUSINESS OF WHICH WAS GRANTING OF LOANS OR ADVANCES AS EVIDENT FROM BALANCE SHEET AND AS PER PLEADING MADE VIDE PB 116 WHICH HAS NOT BEEN REBUTT ED BY LD. A.O. 15 ITA N O. 6461/DEL/13 SECOND EXCEPTION ALSO APPLIES TO THE ASSESSEE AS IT IS A COMPANY WHOSE GTI (GROSS TOTAL INCOME) CONSISTS MAINLY OF INCOME WHICH IS CHARGEAB LE UNDER THE HEAD CAPITAL GAINS AND INCOME FROM OTHER SOURCES AS IS EVIDENT FROM COMPUTATION OF INCOME. THUS, WHEN THE APPELLANT FALLS IN BOTH THE EXCEPTIO NS OF EXPLANATION TO SECTION 73, THERE IS NO QUESTION OF TREATING THE GAINS AS FROM SPECUL ATIVE BUSINESS. 5.1 AS ALREADY HELD WHILE DECIDING GROUNDS NO. 2 TO 5 THAT ASSESSEES INCOME WHICH IS CHARGEABLE TO TAX IS MAINLY FROM CAPITAL GAIN, THEN ITS INCOME CANNOT BE TREATED AS SPECULATIVE BUSINESS IN VIEW OF EXCEPTION PROVIDED IN EXPLANATION 73 ITSELF. GROUND NO. 6 IS ALLOWED. 11. SINCE WE HAVE DISMISSED THE GROUND OF THE REVEN UE ON THE CHARGEABILITY OF THE TAX AS TRADING PROFIT AGAINST THE CAPITAL GAIN DECLARED BY THE ASSESSEE, THEREFORE, WE ARE ALSO NOT INCLINED T O ACCEPT THIS GROUND OF REVENUES APPEAL AND THE SAME IS DISMISSED. 11. IT IS EVIDENT FROM THE BALANCE SHEET THAT LOA NS AND ADVANCES GRANTED BY ASSESSEE AGGREGATED TO RS.292,189,865/-ON WHICH ASS ESSEE EARNED INTEREST AMOUNTING TO RS.40,56,653/- WHICH IS THE MAIN SOURC E OF ASSESSEES INCOME. THUS, THE PRINCIPAL BUSINESS OF THE ASSESSEE WAS GR ANTING OF LOANS AND ADVANCES. FURTHER, WE FIND FROM THE COMPUTATION CONTAINED AT PAGES 126 THAT THE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABL E UNDER THE HEAD CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THEREFORE, RESPECTF ULLY FOLLOWING THE DECISION OF TRIBUNAL FOR EARLIER YEARS, WE UPHOLD THE ORDER OF LD. CIT(A) IN HOLDING THAT THE ASSESSEES INCOME WAS NOT ASSESSABLE AS SPECULATIO N PROFIT EITHER. 12. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH OF JUNE 2015. SD/- SD/- (H. S. DIDHU) (S. V . MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:- 30 /06/2015 *R. NAHEED* 16 ITA N O. 6461/DEL/13 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 23.06.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 24.06.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .06.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .06.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 17 ITA N O. 6461/DEL/13