ACIT 18(1), MUMBAI V. HITESH S. BHAGAT, MUMBAI

ITA 6586/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3767 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: C PAWAN VED
• Keywords: Capital asset; Business income; Speculative transactions

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL F FF F BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , '# , '$ BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI . VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & SHRI RAJENDRA, AM & SHRI RAJENDRA, AM & SHRI RAJENDRA, AM & SHRI RAJENDRA, AM ./ I.T.A. NO.6586/MUM/2010 I.T.A. NO.6586/MUM/2010 I.T.A. NO.6586/MUM/2010 I.T.A. NO.6586/MUM/2010 ( % % % % & & & & / ASSESSMENT YEAR : 2007-08 ) THE ASST COMMR OF INCOME THE ASST COMMR OF INCOME THE ASST COMMR OF INCOME THE ASST COMMR OF INCOME TAX TAX TAX TAX 18(1), MUMBAI 18(1), MUMBAI 18(1), MUMBAI 18(1), MUMBAI % % % % / VS. VS. VS. VS. HITESH S BHAGAT HITESH S BHAGAT HITESH S BHAGAT HITESH S BHAGAT 14/A JAYANT VILLA 14/A JAYANT VILLA 14/A JAYANT VILLA 14/A JAYANT VILLA C S RANE MARG C S RANE MARG C S RANE MARG C S RANE MARG WORLI NAKA WORLI NAKA WORLI NAKA WORLI NAKA MUMBAI 400 01 MUMBAI 400 01 MUMBAI 400 01 MUMBAI 400 013 33 3 ' ' ' ' '$ '$ '$ '$ ./ ( ( ( ( ./ PAN/GIR NO. : ADIPB155 PAN/GIR NO. : ADIPB155 PAN/GIR NO. : ADIPB155 PAN/GIR NO. : ADIPB1557C 7C 7C 7C ( (( ( ') ') ') ') / APPELLANT) APPELLANT) APPELLANT) APPELLANT) .. .. .. .. ( (( ( *+') *+') *+') *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) )) ) ITA NO. 5711/MUM/2011 ITA NO. 5711/MUM/2011 ITA NO. 5711/MUM/2011 ITA NO. 5711/MUM/2011 (ASSESSMENT YEAR 2008 (ASSESSMENT YEAR 2008 (ASSESSMENT YEAR 2008 (ASSESSMENT YEAR 2008- -- -09) 09) 09) 09) HITESH S BHAGAT HITESH S BHAGAT HITESH S BHAGAT HITESH S BHAGAT 14/A JAYANT VILLA 14/A JAYANT VILLA 14/A JAYANT VILLA 14/A JAYANT VILLA C S RANE MARG C S RANE MARG C S RANE MARG C S RANE MARG WORLI NAKA WORLI NAKA WORLI NAKA WORLI NAKA MUMBAI 400 01 MUMBAI 400 01 MUMBAI 400 01 MUMBAI 400 013 33 3 % % % % / VS. VS. VS. VS. THE ASST COMMR OF INCOME TAX THE ASST COMMR OF INCOME TAX THE ASST COMMR OF INCOME TAX THE ASST COMMR OF INCOME TAX 18(1), MUMBAI 18(1), MUMBAI 18(1), MUMBAI 18(1), MUMBAI ( ') / APP APP APP APPELLANT ELLANT ELLANT ELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , ' '' ' / APPELLANT BY : APPELLANT BY : APPELLANT BY : APPELLANT BY : SHRI C PAWAN VED *+') *+') *+') *+') - -- - , , , , ' '' ' /RESPONDENT BY /RESPONDENT BY /RESPONDENT BY /RESPONDENT BY : : : : SHRI BHUPENDRA SHAH % % % % - -- - .$ .$ .$ .$ / DT. OF HEARING : DT. OF HEARING : DT. OF HEARING : DT. OF HEARING : 7 TH MAY 2013 /0& /0& /0& /0& -.$ -.$ -.$ -.$ / // / DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: 15 TH MAY 2013 '1 '1 '1 '1 / O R D E R O R D E R O R D E R O R D E R PER : PER : PER : PER : , . . / VIJAY PAL RAO, JM THESE APPEALS, ONE BY THE REVENUE AND ANOTHER BY TH E ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 26.4.2010 A ND 3.6.2011 OF THE ITA NO. 6586 & 5711/M/2010-11 2 COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSMENT YEA RS 2007-08 AND 2008-09 RESPECTIVELY. 2 THE REVENUE IN APPEAL ITA NO. 6586/MUM/2010 HAS RA ISED THE FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN TREATING AN INCOME OF ` 3,44,93,842/- AS SHORT TERM CAPITAL GAIN INSTEAD OF I NCOME FROM BUSINESS WITHOUT APPRECIATING THE FACT THAT THE INCOME OF THE ASSESSEE WAS CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFIT & GAIN OF BUSINESS OR PROFESSION AS HE WAS ENGAGED IN THE BUSINESS OF DEALIN G IN SHARES. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN NOT APPRE CIATING THE FACT THAT TILL ASSESSMENT YEAR 2005-06, THE ASSESSEE HAS BE EN SHOWING HIS INCOME FROM DEALING IN SHARES UNDER THE HEAD BUSINE SS INCOME ONLY. 3 THE ASSESSEE HAS CLAIMED SHORT TERM CAPITAL GAINS (STCG ) OF RS. 3,44,93,842/- U/S 111A ARISING FROM TRANSFER OF SHARES. THE ASSESSING OFFICER NOTED THAT THERE IS A HUGE FREQUENCY OF TRANSACTIONS IN SHARES THROUGHOUT THE YEAR AND HOLDING PERIOD OF THESE SHARES WAS VERY SHORT. ACCORDINGLY, THE ASSESSEE WAS ASKED AS TO WHY IT SHOULD NOT BE CONSIDERED AS BUSINESS INCOME INSTEAD OF STCG CLAIMED BY THE ASSESSEE. 3.1 AFTER CONSIDERING THE MAGNITUDE AND FREQUENCY OF TRANSACTIONS AS WELL AS THE RATIO OF SALES TO PURCHASES AND THE TOTAL HOLDING S, THE ASSESSING OFFICER HELD THAT THE PURCHASES HAVE BEEN MADE SOLELY AND EXCLUSIVELY WITH ITA NO. 6586 & 5711/M/2010-11 3 THE INTENTION TO RESALE TO EARN PROFITS AND THE ASSESSEE HAD NO INTENTION OF HOLDING THE SHARES OR OTHERWISE ENJOYING OR USING THE SA ME. HENCE, THE ASSESSING OFFICER TREATED THE GAINS ARISING FROM SALE OF SHARE AS BUSINESS INCOME INSTEAD OF STCG CLAIMED BY THE ASSESSEE. 3.2 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME OF RS. 3,44,93,842/- ARISING FROM SALE AND PURC HASE OF SHARES AS STCG. 4 BEFORE US, THE LD DR HAS REFERRED THE DETAILS OF PUR CHASE AND SALE OF SHARES DURING THE YEAR AS GIVEN IN THE ASSESSMENT ORDER AN D SUBMITTED THAT IN THE MAJORITY OF THE TRANSACTIONS, THE HOLDING PERI OD IS LESS THAN A WEEK AND EVEN ONLY ONE DAY WHICH CLEARLY SHOWS THAT THE INTENT ION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES FOR EARNING THE DIVIDEND INCOM E OR APPRECIATION IN THE VALUE IN DUE COURSE OF TIME BUT THE ASSESSEE PURCHASED T HE SHARES WITH THE INTENTION TO RESALE THE SAME FOR BOOKING THE PROFIT A T THE EARLIEST POSSIBLE OCCASION. HE HAS FURTHER CONTENDED THAT THE ASSESSEE IS C ARRYING OUT THE PURCHASE AND SALE OF THE SHARES ON REGULAR BASIS AND IN FREQUENT MANNER. EVEN IN SOME OF THE SCRIPS, THERE ARE REPETITIVE TRANSA CTIONS WHICH CLEARLY SHOW THE INTENTION OF THE ASSESSEE AS TRADING IN PURCHASE OF SHARES AND NOT ITA NO. 6586 & 5711/M/2010-11 4 AS INVESTMENT. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT FOR THE ASSESSME NT YEAR 2005-06, THE ASSESSING OFFICER ACCEPTED THE CAPITAL GAIN DISCLOSED BY THE ASSESSEE ON PURCHASE AND SALE OF SHARES. THE LD DR HAS SUBMITTED THA T THE ACTION OF THE ASSESSING OFFICER IN ONE YEAR CANNOT BINDING THE ASSESSING OFFICER IN THE SUBSEQUENT YEAR AND THE RULE OF RES-JUDICATA IS NOT APP LICABLE IN THE MATTER OF TAXATION AND SPECIFICALLY ON THE FACTUAL ISSUE. H E HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NEW JEHANGIR VAKIL MILLS CO. LTD. V. COMMISSIONER OF INCOME-TAX REPORTED IN 49 ITR 137(SC) AND SUBMITTED THAT AS OBSERVED BY THE HONBLE SUPREME COU RT THAT THE ITO IS NOT BOUND BY THE RULE OF RESJUDICATA OR ESTOPPEL BY RECORD, HE CAN REOPEN A QUESTION PREVIOUSLY DECIDED ONLY IF FRESH FACTS COME TO LIGHT. IN THE SAID DECISION, THE ASSESSMENT RELATING TO THE ASSESSMENT YEAR 194 3 WAS NOT REOPENED AND THE SAME STANDS; HOWEVER, WHAT WAS BEING D ONE IS TO COMPUTE THE PROFIT OF 1944 WHICH THE ASSESSING AUTHORIT IES COULD DO BY FINDING OUT WHEN THE TRADING ACTIVITY IN SHARES BEGAN . THE QUESTION OF PROFIT IN 1944 WAS NOT AND WOULD NOT BE THE SUBJECT OF ANY A SSESSMENT PROCEEDINGS RELATING TO 1943 FOR SUCH PROFIT AROSE ONL Y ON THE SALE OF THE SHARES IN 1944. THUS, EVEN THE ASSESSEE IN THE EARLIER A SSESSMENT YEAR WAS TREATED AS INVESTOR, WOULD NOT STOP THE ASSESSING OFFICER FROM CONSIDERING FOR THE PURPOSE OF COMPUTATION OF PROFIT IN THE SUBSEQUENT ASSESSMENT YEAR. ITA NO. 6586 & 5711/M/2010-11 5 4.1 THE LD DR HAS FURTHER SUBMITTED THAT THE COMMISSIO NER OF INCOME TAX(APPEALS) HAS RELIED UPON THE DECISION OF THE TRIBU NAL IN THE CASE OF GOPAL PUROHIT WHICH HAS BEEN CONFIRMED BY THE HONBL E JURISDICTIONAL HIGH COURT. HOWEVER, IN THE CASE OF GOPAL PUROHIT, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NEW JEHANGIR VAKIL MILL S CO. LTD. (SUPRA) HAS NOT BEEN CONSIDERED; THEREFORE, THE DECISION OF THE HONBLE SUPREME COURT HAS TO BE FOLLOWED ON THE POINT. HE HAS FURTHER SUBMI TTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN THE FIN DING BY CONSIDERING INCORRECT FACTS REGARDING NO EMPLOYEES EMPLOYED BY T HE ASSESSEE WHEREAS IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS RECORDED THAT THE ACCOUNTANT OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDI NGS ON BEHALF OF THE ASSESSEE. THEREFORE, THE ASSESSEE EMPLOYED AN ACCOU NTANT WHICH HAS NOT BEEN DISPUTED. HE HAS FURTHER SUBMITTED THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF SHARE TRADING; WHEREAS THE ASSESSEE IS CARRYING O UT SPECULATIVE TRANSACTIONS AND ALSO OFFERED INCOME FROM PROFIT ON S PECULATIVE TRANSACTIONS. THUS, THE FINDING OF THE COMMISSIONER OF INCOME TAX ( APPEALS) IS CONTRADICTORY TO THE FACTS. 4.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HAS SUBM ITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RECORDED THE R ELEVANT FACTS AND ASPECTS OF THE CASE THAT THE ASSESSEE HAS DISCLOSED THE SHARE S AS INVESTMENT ITA NO. 6586 & 5711/M/2010-11 6 AND NOT AS STOCK-IN-TRADE FOR THE ASSESSMENT YEAR 2005-06 . THE LTCG AND STCG DISCLOSED BY THE ASSESSEE WERE ACCEPTED BY THE ASSESSIN G OFFICER. THE ENTIRE STCG IS ON PURCHASE AND SALE OF 41 SCRIPS ONLY ON WHICH STT HAS BEEN DULY PAID. THE AVERAGE HOLDING PERIOD FOR THE SHARE YIELDING OF STCG IS 69 DAYS. HE HAS FURTHER SUBMITTED THAT IN THE CASE OF THE MOTHER OF THE ASSESSEE SMT JAYA TALKSHI CHHEDA, THE TRIBUNAL VIDE ORDE R DATED 27.11.2012 HAS DISMISSED THE APPEAL OF THE REVENUE ON IDENTICAL ISSU E. THEREFORE, THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE MOTHER OF THE ASSESSEE. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHI T REPORTED IN 228 CTR 582 AND SUBMITTED THAT WHEN THE CLAIM OF THE CAPITAL GAI N HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE EARLIER YEARS, THEN WITHOU T DISTINGUISHING THE FACT THE ASSESSING OFFICER CANNOT TAKE A DIFFERENCE VI EW AND DISALLOW THE CLAIM OF THE ASSESSEE. 4.3 AS REGARDS THE SPECULATIVE TRANSACTIONS, THE LD COUN SEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE CAN HAVE TWO PORTF OLIOS AS HAS BEEN HELD BY THE TRIBUNAL AS WELL AS THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHIT. THEREFORE, MERELY BECAUSE THE ASSESSEE HAS CARRIED OUT THE SPECULATIVE TRANSACTIONS, WOULD NOT CH ANGE THE NATURE OF INVESTMENT IN SHARES. HE HAS SUPPORTED THE IMPUGNED ORDE R OF THE CIT(A). ITA NO. 6586 & 5711/M/2010-11 7 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL AS T HE RELEVANT MATERIAL ON RECORD. THE QUESTION BEFORE US IS REGARDIN G THE NATURE OF TRANSACTION OF PURCHASE AND SALE OF SHARES CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFIC ER HAS GIVEN THE DETAILS OF THE TRANSACTION CARRIED OUT BY THE ASSESSEE A T PAGES 5 TO 7 OF THE ASSESSMENT ORDER AS UNDER; ITA NO. 6586 & 5711/M/2010-11 8 ITA NO. 6586 & 5711/M/2010-11 9 5.1 THERE ARE 86 TRANSACTIONS OF SALE CARRIED BY THE ASSESSEE DURING THE YEAR. THE HOLDING PERIOD OF THE TRANSACTIONS VARIES FR OM ONE DAY TO 244 DAYS. OUT OF 86 TRANSACTIONS, THE HOLDING PERIOD IN RESPECT OF 42 TRANSACTIONS IS UPTO 7 DAYS. THUS, IT IS CLEAR THAT ABOUT 50% OF THE TOTAL TRANSACTIONS OF SALE OF SHARE DURING THE YEAR, THE HOLDING PERIOD IS ONLY UPTO 7 DAYS. FURTHER, AS POINTED OUT BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS C ARRIED OUT REPETITIVE TRANSACTIONS OF PURCHASE AND SALE IN THE SA ME SCRIPS E.G THE SHARES OF AUROBINDO PHARMA WERE PURCHASED ON 21.4.2006 AND THEN SOLD ON 27.4.2006 AND THEREAFTER AGAIN PURCHASED ON 22.5.200 6 AND RESOLD ON ITA NO. 6586 & 5711/M/2010-11 10 24.5.2006. THUS, THE REPETITIVE TRANSACTIONS IN THE SA ME SCRIP SHOWS THE ASSESSEES INTENTION OF PURCHASE OF THE SHARES FOR RESALE PURPOSES AND BOOK PROFITS AT THE EARLIEST OCCASION. THE HOLDING PERIOD IS UPTO ONE WEEK AS FAR AS 42 TRANSACTIONS OUT OF 86 TRANSACTIONS CLEARLY SHOW THAT THE ASSESSEE IS EARNING PROFIT BY TAKING ADVANTAGE OF THE VOLATILE MARKET CONDITION AND THUS IT CANNOT BE SAID THAT THE TRANSACTIONS CARRIED ON 42 OCCASION WERE WITH THE INTENTION TO HOLD THESE SHARES FOR ENJOYING OF THE OWN ERSHIP AND YIELDING OF DIVIDEND INCOME. FURTHER, THE ASSESSEE IS ALSO ENGAGED IN THE SPECULATIVE TRANSACTIONS AND OFFERED THE INCOME OF RS. 4,70.553/ AS BUSINESS INCOME ON ACCOUNT OF SPECULATIVE TRANSACTIONS OUT OF THE TOTAL BUSINESS INCOME OFFERED BY THE ASSESSEE AT RS 9,52,507/-. THEREFORE, THE OBSERVAT IONS OF THE CIT(A) IS THAT THE ASSESSEE IS NOT IN THE BUSINESS OF TRADING OF SHA RES IS CONTRADICTORY TO THE FACTS. FURTHER, THE CIT(A) HAS ALSO OBSERVED TH AT THE ASSESSEE HAS NOT EMPLOYED ANY PERSON FOR THE PURCHASE OF SALE OF THE SHARES WHICH IS ALSO APPARENTLY NOT CORRECT BECAUSE BEFORE THE ASSESSING OFFI CER ONE SHRI JAYESH SANGOI, ACCOUNTANT OF THE ASSESSEE COMPANY APPEARED FRO M TIME TO TIME AND PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. 5.2 THE ASSESSEES CASE IS MAINLY BASED ON THE PLEA THAT TH E CLAIM OF LTCG AND STCG WAS ACCEPTED BY THE ASSESSING OFFICER IN THE AY 2005-06 AND 2006-07. THEREFORE, THE ASSESSING OFFICER CANNOT DENY THE SAME IN THE YEAR UNDER CONSIDERATION. THE CIT(A) HAS ALSO GIVEN MUCH EMPHASIS ON THIS POINT ITA NO. 6586 & 5711/M/2010-11 11 AND RELIED UPON THE DECISION OF THIS TRIBUNAL AS WELL AS THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHI T. 5.3 IT IS SETTLED PROPOSITION OF LAW THAT THE PRINCIPL ES OF RESJUDICATA AS WELL AS ESTOPELL IS NOT APPLICABLE IN THE MATTER OF TAXATI ON BECAUSE EACH ASSESSMENT YEAR IS A SEPARATE UNIT AND HAS TO BE ASSESSED AS PER THE PECULIAR FACTS OF THE CASE IN THE SAID ASSESSMENT YEAR. T HE DECISION IN THE CASE OF GOPAL PUROHIT HAS REASSERTED THE PRINCIPLES OF CONSISTENCY, IF THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. THE CIT(A) HAS SIMPLY OBSERVED THAT THE CLAIM OF THE ASSESSEE WAS ACCEPTED FOR THE AY 2005-0 6 AND 2006-07; THEREFORE, THE ASSESSING OFFICER CANNOT DISTURB THE SAME IN THE YEAR UNDER CONSIDERATION WITHOUT ANALYSING THE FACTS AND PARTICUL ARLY THE DETAILS OF PURCHASE AND SALE OF SHARE TRANSACTIONS BY COMPARING T HE EARLIER ASSESSMENT YEARS WITH THE ASSESSMENT YEAR UNDER CONSIDERATI ON. EVEN BEFORE US, IT HAS NOT BEEN BROUGHT OUT THAT THE FACTS ARE IDENTICAL IN THE EARLIER YEARS AS WELL AS IN THE YEAR UNDER CONSIDERATIO N. ONCE THE DISTINGUISHING FACT HAS BEEN BROUGHT TO OUR NOTICE RE GARDING THE HOLDING PERIOD IN THE CASE OF ABOUT 50% OF THE TRANSACTION IS WITHIN 7 DAYS AND THERE ARE REPETITIVE TRANSACTIONS IN THE SAME SCRIPS AS WELL AS THE ASSESSEE HAS ALSO CARRIED OUT SPECULATIVE TRANSACTIONS; THEN THE I SSUE OF NATURE OF TRANSACTION WHETHER TRADING OR INVESTMENT HAS TO BE DE CIDED ON THE BASIS OF PECULIAR FACTS OF PARTICULAR CASE. IN ORDER TO DETERM INE THE NATURE OF ITA NO. 6586 & 5711/M/2010-11 12 TRANSACTION, NO SINGLE FACTOR CAN BE SAID TO BE A DECI SIVE AND THE ISSUES CAN BE ADJUDICATED ONLY BY TAKING INTO ACCOUNT ALL RELE VANT FACTS, FACTORS, CRITERIA AND PRINCIPLES, WHICH ARE RELEVANT AND DECISIVE A ND CAN BE APPLIED AS GUIDELINES. THUS, THERE IS NO SINGLE OR STRICT JACKET FO RMULA TO DECIDE THE NATURE OF TRANSACTION OF PURCHASE AND SALE OF SHARES WHE THER TRADE OR INVESTMENT. 5.4 IN THE CASE OF MOTHER OF THE ASSESSEE MRS JAYA TALAK SHI CHHEDA (SUPRA) THE TRIBUNAL HAS CONSCIOUSLY OBSERVED THAT EACH ISSUE HAS TO BE BASED ON ITS OWN FACTUAL SITUATION AND THE ISSUE IN THE SAID CASE WAS DECIDED ON THE BASIS OF THE FACTS EXITS IN THAT CASE. THEREFORE, THE FINDING OF FACT GIVEN BY THE TRIBUNAL AND BASED ON THE SPECIFIC FACT OF THE CASE CANNOT BE STRAIGHTAWAY APPLIED ON THE FACTS OF THE OTHER CASE. E VEN THE CLAIM OF THE ASSESSEE ACCEPTED BY THE ASSESSING OFFICER IN THE EARLIER YEAR CANNOT BE BINDING ON THE ASSESSING OFFICER BEING RULE OF RESJUDI CATA OR ESTOPPEL AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF NEW JEHA NGIR VAKIL MILLS CO. LTD. (SUPRA) AT PAGE 143 & 144 AS UNDER: ON THE PRINCIPLE STATED ABOVE, IT SEEMS TO US THAT IT WAS OPEN TO THE TAXING AUTHORITIES TO CONSIDER THE POSITION OF THE ASSESSE E IN 1943 FOR THE PURPOSE OF DETERMINING HOW THE GAINS MADE IN 194 4 SHOULD BE COMPUTED, EVEN THOUGH THE SUBJECT OF THE ASSESSMENT PROC EEDINGS WAS THE COMPUTATION OF THE PROFITS MADE IN 1944. THE CIRCUMSTANCE THAT IN AN EARLIER ASSESSMENT RELATING TO 1943, THE ASSESSE E WAS TREATED AS AN INVESTOR WOULD NOT IN OUR OPINION ESTOP THE ASSESSING AUTHORITIES FROM CONSIDERING, FOR THE PURPOSE OF COMPU TATION OF THE PROFITS OF 1944, AS TO WHEN THE TRADING ACTIVITY OF THE ASSESSEE IN ITA NO. 6586 & 5711/M/2010-11 13 SHARES BEGAN. THE ASSESSING AUTHORITIES FOUND THAT IT BEGA N IN 1943. ON THAT FINDING THE PROFITS WERE CORRECTLY COMPUTED AND THE ANSWER GIVEN BY THE HIGH COURT TO THE QUESTION OF THE COMPU TATION OF THE PROFITS WAS CORRECTLY GIVEN. 5.5 THE QUESTION BEFORE THE HONBLE SUPREME COURT C OMPRISES THE BENCH OF THREE JUDGES, WAS WHETHER THERE WAS ANY EVIDENCE TO JUSTIFY THE JUDGEMENT OF THE TRIBUNAL AND CONFIRMATION OF THE H ONBLE HIGH COURT THAT THE ASSESSEE COMPANY WAS ALSO IN DEALING IN SHARE NOT ONLY IN THE YEAR UNDER CONSIDERATION BUT ALSO IN THE PAST. THIS QUESTION WAS DECIDED BY THE HONBLE SUPREME COURT AFTER CONSIDERING THE FACT TH AT IN THE EARLIER YEAR, THE ASSESSING OFFICER ACCEPTED THAT THE ASSESSEE AS AN INVESTOR IN SHARES; BUT SUBSEQUENTLY THE ASSESSING OFFICER TREATED THE INCOME AR ISING FROM SALE OF SHARES AS BUSINESS INCOME AND THE ACTIVITY OF TRADING COMMENCES IN THE YEAR WHEN THE SHARES WERE PURCHASED. THEREFORE, DESPI TE THE FACT THAT IN THE EARLIER YEAR, THE ASSESSING OFFICER ACCEPTED THE A SSESSEE AS AN INVESTOR IN SHARES, THE FINDING OF THE AUTHORITIES BELOW AND TH E HONBLE HIGH COURT WAS UPHELD BY THE HONBLE SUPREME COURT AND HELD THA T THE PROFITS WERE CORRECTLY COMPUTED IN THE YEAR UNDER CONSIDERATION. 5.6 FOLLOWING THE DECISION OF THE HONBLE SUPREME, W E ARE OF THE VIEW THAT THE ACCEPTANCE OF THE CLAIM FOR THE EARLIER YEAR WO ULD NOT OPERATE RESJUDICATA OR ESTOPPEL ON THE ASSESSING OFFICER FOR DE CIDING THE ISSUE FOR ITA NO. 6586 & 5711/M/2010-11 14 THE YEAR UNDER CONSIDERATION WHEN THE FACTS ARE NOT ST RICTLY IDENTICAL. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE C IT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER WHEREIN THE INCOME ARI SING FROM SALE OF SHARES HAS BEEN RIGHTLY ASSESSED AS BUSINESS INCOME. 6 FOR THE AY 2008-09, THE ASSESSEE IN ITA NO. 5711/MUM/ 2011 HAS RAISED THE FOLLOWING GROUNDS: I) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE OF YOUR APPELLANT, THE ASSESSING OFFICER HAS ERRED IN TREATING ST GAIN OF ` 25,88,046/- EARNED FROM SHARE TRANSACTIONS HELD LESS TH AN 30 DAYS AS BUSINESS INCOME WHICH CONFIRMED BY THE COMMISSIONE R OF INCOME TAX(APPEALS). II) YOUR APPELLANT, THEREFORE, PRAYS THAT ST GAIN EA RNED FROM SHARES TRANSACTIONS OF WHICH PERIOD OF HOLDING IS LESS TH AN 30 DAYS SHOULD BE TREATED AS ST GAIN ONLY AS DONE BY APPE LLANT AND NOT BUSINESS INCOME AS TR5ETED BY THE ASSESSING OFFICER WHI CH CONFIR4MED B Y THE COMMISSIONER OF INCOME TAX(APPEALS) . 7 RELEVANT FACTS LEADING TO CONTROVERSY FOR THIS YEAR ARE THAT THE ASSESSEE HAS DISCLOSED STCG OF RS. 1,34,62,760/- ARISING FRO M SALE OF SHARES. THE ASSESSING OFFICER HAS BIFURCATED THE STCG AS DISCLOSED BY THE ASSESSEE IN TWO CATEGORIES. THE FIRST CATEGORY RELATED TO THE TRANSACTION IN SHARES, THE HOLDING PERIOD IS LESS THAN 30 DAYS AND ACCORDINGLY TRE ATED THE SAME AS BUSINESS INCOME. THE SECOND CATEGORY OF TRANSACTION IN SH ARES HELD FOR MORE THAN 30 DAYS WERE TREATED BY THE ASSESSING OFFICER AS S TCG. THUS, THE ASSESSING OFFICER HAS ASSESSED THE STCG ON SALE OF SHARES AT RS. ITA NO. 6586 & 5711/M/2010-11 15 1,08,74,670/- IN REGARD TO THE TRANSACTION WHERE HO LDING PERIOD IS MORE THAN 30 DAYS AND THE BALANCE OF THE INCOME OF RS. 25,88,04 6/- ARISING FROM SALE OF SHARES WHERE HOLDING PERIOD WAS LESS THAN 30 DAYS WAS TREA TED AS BUSINESS INCOME. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER. 8 WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE OBSERVE THAT THERE IS NO SUCH CATEGORY OF 30 DAYS PROVIDED IN THE PROVISIONS OF INCO ME TAX ACT. SECTION 2(42A) DEFINED THE SHORT TERM CAPITAL ASSET AS CAPITAL ASSET HELD BY THE ASSESSEE FOR NOT MORE THAN 12 MONTHS IN THE CASE OF SHAR ES AND SECURITIES. FURTHER, SECTION 2(42B) DEFINES THE STCG MEANS THE CAP ITAL GAIN ARISING FROM TRANSFER OF STC ASSET. THEREFORE, THE STATUTE PRESCRIB ED THE CATEGORY FOR TREATING THE CAPITAL ASSET EITHER AS LTCG OR STCG ON T HE BASIS OF HOLDING PERIOD OF 12 MONTHS. 8.1 EVEN OTHERWISE, WHEN THE ASSESSEE HAS NOT BIFURCATED ITS PORTFOLIOS ON THE BASIS OF HOLDING PERIOD, THEN 30 DAYS HOLDING PERI OD CANNOT BE TAKEN AS FIXED CRITERIA FOR DETERMINING THE NATURE OF TRANSAC TION WHEN THE QUESTION OF NATURE OF TRANSACTION CAN BE DETERMINED AFTER TAKIN G INTO CONSIDERATION VARIOUS FACTORS AND CRITERIAS AND THE HOLDING PERIOD IS ONE OF THE SEVERAL CRITERIAS. THEREFORE, ON PRINCIPLE, WE DO NOT APPR OVE THE ACTION OF THE ITA NO. 6586 & 5711/M/2010-11 16 AUTHORITIES BELOW IN BIFURCATING THE TRANSACTIONS ON T HE BASIS OF 30 DAYS HOLDING PERIOD; HOWEVER, SINCE THE CLAIM OF THE ASSESSEE IN RESPECT OF STCG OF RS. 1,08,74,670/- HAS BEEN ACCEPTED BY THE ASSESSING O FFICER, WHICH HAS BEEN CONFIRMED BY THE CIT(A) REMAINS UNDISTURBED, DESP ITE OUR VIEW ON THE NATURE OF TRANSACTION AS TRADING AND NOT AS INVESTMENT. 8 IN VIEW OF OUR FINDING AND THE DISCUSSION IN THE APP EAL OF THE REVENUE FOR THE AY 2007-08, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE; ACCORDINGLY, THE SAME IS DISMISSED. 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED WH EREAS THE APPEAL OF THE REVENUE IS ALLOWED. 2 .3 % 2. - 4 $2 - . 56 - 4 . 7 - . 56 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5 TH MAY 2013 . '1 - /0& $' 4 8%3 15 TH 6 0 - 9 SD/- SD/ ( (( ( '# ) )) ) '$ ( (( ( RAJENDRA RAJENDRA RAJENDRA RAJENDRA ) ) ) ) ACCOUNTANT MEMBER ( (( ( ) (VIJAY PAL RAO ) (VIJAY PAL RAO ) (VIJAY PAL RAO ) (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 15 TH MAY 2013 RAJ* RAJ* RAJ* RAJ* ITA NO. 6586 & 5711/M/2010-11 17 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI