APOLLO FINVEST INDIA LTD., MUMBAI V. DCIT 9(1), MUMBAI

ITA 674/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3452 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 674 / / 2011 A.Y. 2007-08 ITA NO. : 674/MUM/2011 (ASSESSMENT YEAR: 2007-08) . : 7273 / / 2011 A.Y. 2008-09 ITA NO. :7273/MUM/2011 (ASSESSMENT YEAR: 2008-09) M/S. APPOLLO FINVEST (INDIA) LTD., C/O. SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265, PRINCESS STREET, MUMBAI -400 002 .: PAN: AAACA 0952 A VS THE ASST. CIT RG. 9(1), MUMBAI - (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L. JAIN RESPONDENT BY : SHRI MANOJ KUMAR /DATE OF HEARING : 06-06-2013 !' / DATE OF PRONOUNCEMENT : 12-06-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE TWO APPEALS ARISE FROM THE ORDERS OF CIT(A) 19, MUMBA I, DATED 10.12.2012 AND 05.09.2011, IN THE CONCERNED ASSESSM ENT YEARS. AT THE TIME OF HEARING, THE AR, POINTED OUT OF THE TWO APP EALS UNDER CONSIDERATION, DETAILED DISCUSSIONS ON THE ISSUE HAS BEEN MADE IN ASSESSMENT YEAR 2008-09. WE, THEREFORE, PROCEED IN ASSES SMENT YEAR 2008-09. $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 2 ITA NO. 7273/MUM/2011 : ASSESSMENT YEAR: 2008-09 : 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN HOLDING LONG TERM CAPITA L GAINS EARNED BY THE APPELLANT OF RS. 1,43,28,592/- ENTITLED TO EXEMPTIO N U/S 10(38) BEING CAPITAL GAIN ON REALIZATION OF SHARES OF RS. 42,22, 252/- AND ON REALIZATION OF MUTUAL FUNDS OF RS. 1,01,06,336/- AS BUSINESS INCOME WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THAT SAID INVESTMENTS WERE HELD BY THE APPELLANT FROM YEAR TO YEAR AS INVESTMENTS AND WERE DULY REFLECTED AS SUCH IN THE AUDITED ACCOUNTS. 2. THE LD. CIT(A) ERRED IN CONFIRMING ASSESSMENT OF SHORT TERM CAPITAL GAIN AS BUSINESS INCOME BEING SHORT TERM CAPITAL GAIN EA RNED ON SALE OF SHARES OF RS. 51,53,685/- AND ON REALIZATION OF MUT UAL FUNDS OF RS. 14,54,752/- AS INCOME FROM BUSINESS WITHOUT PROPERL Y APPRECIATING THE FACT THAT INVESTMENTS ARE BEING REFLECTED IN THE AU DITED ACCOUNTS AS INVESTMENTS VALUED AT COST ARE BEING HELD FOR SUFFI CIENTLY LONG TIME AND ACQUIRED WITH AN INTENTION TO HOLD AS INVESTMENT. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT A SUBST ANTIAL PORTION OF REALIZATION OF INVESTMENTS HAS BEEN CARRIED THROUGH PMS ORGANIZERS. HENCE, ACTIVITY OF THE APPELLANT SHOULD HAVE BEEN H ELD TO BE OF INVESTMENT. 4. THE LD. CIT(A) ERRED IN ALLOWING THE EXPENSES AS CLAIMED MERELY AS THE APPELLANTS ACTIVITY OF INVESTMENTS AND ARE BEING H ELD AS BUSINESS ACTIVITY WITHOUT APPRECIATING THE FACT THAT THE APP ELLANT IS A FINANCE COMPANY AND IS ENGAGED IN THE BUSINESS OF LEASING, EARNING OF INTEREST ETC. 5. THE APPELLANT PRAY THAT PROFIT REALIZED ON REALI ZATION OF INVESTMENTS BE DIRECTED TO BE ASSESSED AS CAPITAL GAIN AND EXPENSE S AS CLAIMED IN P&L ACCOUNT BE ALLOWED AS DEDUCTION FOR CARRYING ON THE BUSINESS OF THE APPELLANT AS FINANCE COMPANY. 3. THE SOLITARY ISSUE PERTAINS TO THE TREATMENT ACCORDE D TO THE INCOME/LOSS OR SHORT-TERM CAPITAL GAINS ON THE SALE OF SHARES AND SECURITIES HELD BY THE ASSESSEE. 4. THE FACTS ARE THAT THE ASSESSEE CLAIMED RS. 2,09,37,02 9/- AS CAPITAL GAINS IN THE FOLLOWING MANNER: ON SHARES (RS.) ON MUTUAL FUND(RS.) TOTAL (RS.) LONG TERM CAPITAL GAIN 42,22,252 1,01,06,336 1,43,28,592 SHORT TERM CAPITAL GAIN 51,53,685 14,54,752 66,08,437 TOTAL CAPITAL GAIN 93,75,937 1,15,61,088 2,09,37,029 $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 3 5. FROM THE TABLE, IT IS SEEN THAT IN THE CAPITAL GAINS, AS CLAIMED, THE ASSESSEE HAD INCLUDED SHORT TERM CAPITAL GAINS, LONG T ERM CAPITAL GAINS ON SHARES AS WELL AS SECURITIES HELD IN MUTUAL FUNDS. O N BEING CALLED TO EXPLAIN THE CONTENTS OF THE ABOVE TABLE, THE ASS ESSEE VIDE ITS LETTER DATED 09.10.2010 EXPLAINED THAT IT HAD EARNED STCG OF RS. 51,53,685/- ON THE FOLLOWING CATEGORIZATION OF HOLDING PERIODS: SHARES HELD CAPITAL GAINS UPTO 3 MONTHS 16,08,334 UPTO 6 MONTHS 5,42,233 ABOVE 6 MONTHS 30,03,118 BESIDES THE ABOVE, IT HAD SOLD CERTAIN MUTUAL FUNDS ON W HICH IT HAD EARNED LTCG OF RS. 14,54,752/-. 6. BESIDES THIS, THE ASSESSEE EARNED LTCG OF RS. 42,22,252 /- ON SHARES AND RS. 1,01,06,336/- ON MUTUAL FUNDS, AGGREGATING T O RS. 1,43,28,592/-. 7. THE EXPLANATION GIVEN BY THE ASSESSEE, DID NOT FIND FAVO UR WITH THE AO, WHO HELD, THE ASSESSEES OWN CONVENIENT AND SELF SERVING CATEGORIZATION OF PORTFOLIOS INTO INVESTMENT WILL NOT AFFECT THE REALITY OF THE SITUATION. CONVERSELY, JUST BECAUSE INVESTMENT PORT FOLIO IS BEING MAINTAINED DOES NOT IN ANY MANNER PRECLUDE FROM ASCE RTAINING THE REAL POSITION . THE AO PLACED RELIANCE ON CIRCULAR NO. 4/2007 DATED 15.06.2007 LAYING DOWN TESTS FOR DISTINCTION AND GUIDING P RINCIPLES FOR THE AO IN DECIDING IN ISSUE. WHETHER THE TRANSACTION E NTERED INTO BY THE ASSESSEE IN SHARES & SECURITIES AMOUNTS TO TRAD ING OR ARE IN THE NATURE OF INVESTMENTS. HE ALSO CITED THE DECISIONS OF CIT, C ALCUTTA VS ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY, REPORTED IN 82 ITR 586 AND CIT, BOMBAY VS HOLCK LARSON, REPORTED IN 160 ITR 67, WHEREIN TH E FOLLOWING PRINCIPLES HAVE BEEN LAID DOWN, 1. THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE MA NNER OF MAINTAINING OF ACCOUNTS, THE MAGNITUDE OF PURCHASES AND SALES AND THE RATIO BETWEEN $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 4 THE PURCHASES AND SALES AND THE HOLDING WOULD FURNI SH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTIONS. 2. ORDINARILY THE PURCHASE AND SALE OF SHARES WITH THE MOTIVE OF EARNING / PROFIT, WOULD RESULT IN THE TRANSACTION BEING IN TH E NATURE OF TRADE! ADVENTURE IN THE NATURE OF TRADE; BUT WHERE THE OBJ ECT OF THE INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY O F DIVIDEND, ETC. THEN THE PROFITS ACCRUING BY CHANGE IN SUCH INVESTMENT ( BY SALE OF SHARES) WILL YIELD CAPITAL GAINS AND NOT REVENUE RECEIPT. 8. THE AO, TO EXPLAIN HIS ARGUMENTS, OBSERVED IN THE ASSE SSMENT ORDER, BY NO MEANS, THIS ASSESSEE IS A SMALL SCALE RETAIL INVE STOR. IT HAS DEALT IN NUMBER OF SCRIPTS OF SECURITIES DURING THE YEAR. MAJORITY OF SHARES AND MUTUAL FUNDS TRANSACTIONS WHICH THE ASSES SEE HAS ENTERED PURCHASE AND SALE OF SHARES AND MUTUAL FUNDS RESULTED IN SHORT TERM CAPITAL GAINS OR LOSS. OUT OF A TOTAL NET GAIN OF RS. 2,0 9,37,029 AN AMOUNT OF RS. 51,53,685/- PERTAIN TO SHORT TERM GAINS. THIS REPRESENTS AND OUT OF THE TOTAL GAINS 25% OF THE GAINS HAVE AC CRUED WITHIN THE PERIOD OF HOLDING OF LESS THAN ONE YEAR. IN OTHER WOR DS, IN MAJORITY OF THE TRANSACTIONS THE ASSESSEE HAD SOLD THEM WITHIN A PERI OD OF 12 MONTHS OF THEIR ACQUISITION. BY NO STRETCH OF IMAGINATION, THE ASSESSEE CAN BE CALLED A SMALL SCALE RETAIL INVESTOR, AS ITS ONLY INTEREST W AS TO EARN PROFIT BASED ON THE STOCK MARKET TREND. IN THESE TRANSACTI ONS, THERE WERE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS. IF THE ASSESSEE WERE AN INVESTOR, IT WOULDNT HAVE BOOKED SHORT TERM OR LO NG TERM CAPITAL LOSS AND INSTEAD WOULD HAVE PREFERRED TO WAIT FOR AN APPROPRIATE TIME. DURING THE RELEVANT ASSESSMENT YEAR, HUGE VOLUMES OF T RANSACTIONS WERE CARRIED OUT FOR BUYING AND SELLING OF SECURITIE S RESPECTIVELY. WHEN THE QUANTITY OF SECURITIES PURCHASED AND SOLD WAS ANA LYZED IT TURNED OUT TO BE VERY VOLUMINOUS. DURING THE RELEVANT ASSESSM ENT YEAR, THE ASSESSEE HAS PURCHASED AND SOLD 1,58,816 SHARES, WHICH RESULTED IN SHORT TERM CAPITAL GAIN. BESIDES, THE ASSESSEE HAS ALSO SOLD 33,605 SHARES WHICH RESULTED IN LONG TERM CAPITAL GAINS. THE ABOVE STATISTICS ILLUSTRATES THE MAGNITUDE OF TRANSACTIONS AND THE VOLU ME OF SHARES TRADED BY THE ASSESSEE AND PROVE THE POINT THAT THE ASSESSEE WAS NOT AN INVESTOR BUT WAS A DEALER IN SHARES AS UNDER: $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 5 SHORT TERM CAPITAL GAINS ON SHARES - RS. 66,08,437 & MUTUAL FUND LONG TERM CAPITAL GAINS ON SHARES - RS.1 ,43,28,592 & MUTUAL FUND THE STATISTICS PRESENTED ABOVE ESTABLISHES THE POIN T THAT THE ASSESSEE EARNED HUGE PROFIT WHICH IT HAS OFFERED UNDER THE HE AD CAPITAL GAINS WITH A SOLE INTENTION TO REDUCE LOWER ITS TAX LIABILITY. THE SUBMISSION OF THE ASSESSEE ARE NOT TENABLE IN LIGHT OF CIRCULAR NO . 4 OF 2007 AND RELYING ON VARIOUS JUDICIAL PRONOUNCEMENTS. THE AO, ALSO COMMENTED ON THE MOTIVE OF THE ASSESSEE, WHEREIN AFTER ANALYSIS, HE CONCLUDED, IN THIS CASE CUMULATIVELY TRANSACTIONS OF MORE THAN 120 SCRIPS HAVE BEEN CARRIED OUT. IT IS THUS CLEA R THAT THE SWEEP AND SPECTRUM OF THE ASSESSEE IS RATHER WIDE WHICH IS AGAIN INDICATIVE THAT THE SCRIPTS ARE NOT INTENDED TO BE HELD AS ASSE TS FOR ANY STEADY APPRECIATION. THIS CLEARLY SHOWS THAT STAYING INVESTED AND EARNING DIVIDEND WAS NOT THE INTENTION OF THE ASSESSEE. REL IANCE IS PLACED ON THE DECISION OF THE APEX COURT IN THE CASE OF G. VENKAT ASWAMI NAIDU & CO. VS. CIT [1959] 35 ITR 594 [SC] WHERE THE SUPREME COU RT HELD THAT IN CASES, WHERE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIV ELY WITH INTENTION TO RESELL AT A PROFIT AND THE PURCHASER HAS NO INTENTION OF HOLDING PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, PRESENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY PRESENCE OF OTHER FACTORS, WOULD RAISE A STRONG PRESU MPTION THAT TRANSACTION IS IN THE NATURE OF TRADE. THE AO PLACED RELIANCE ON THE DECISIONS OF SARDAR INDER SINGH & SONS VS CIT, REPORTED IN 24 ITR 415 (SC) AND DALHOUSIE INVESTMENT TRUST CO. LTD. VS CIT, REPOR TED IN 68 ITR 486, WHEREIN, PRIMARILY IT WAS HELD THAT THE SHARES WE RE SOLD WITH THE PURPOSE OF EARNING PROFIT, SO THAT THE TRANSACTIONS AMOUNTED TO AN ADVENTURE IN TRADE, AND CONCLUDED THAT, ..LOOKING AT THE ASSESSEES BUSINESS INTENTION, THE ASSESSEE IS TREATED AS TRADE R IN SHARES AND THE ENTIRE CAPITAL GAINS OF RS. 2,09,37,029/- ON SECURITIES TR ANSACTION ARE ASSESSED AS BUSINESS INCOMES . $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 6 9. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHOM, THE ASSESSEE REITERATED ITS CASE AND FACTS. 10. THE CIT(A), AFTER TAKING INTO CONSIDERATION THE SUBMISS IONS OF THE ASSESSEE, HELD, HIGH FREQUENCY, HIGH VOLUME AND REGULARITY OF TRA NSACTIONS ARE, THEREFORE, THE BASIC FEATURES OF A TRADING TRANSACT ION. AN INVESTOR ON THE OTHER HAND MAKES PURCHASES WITH A VIEW TO EARNING I NCOME FORM THE INVESTMENTS. HE IS NOT TEMPTED TO SELL THE COMMODIT Y TO EARN QUICK PROFIT ON EACH AND EVERY RISE IN THE VALUE AND HOLDS THE C OMMODITY FOR A LONGER PERIOD SO AS TO HAVE INCOME AS WELL AS APPRE CIATION IN VALUE. THE TRUE NATURE OF TRANSACTION CAN BE UNDERSTOOD FROM T HE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE. THE VARIOUS FACTO RS WHICH NEED TO BE CONSIDERED IN UNDERSTANDING THE INTENTION OR THE NA TURE OF TRANSACTION ARE : FREQUENCY AND VOLUME OF TRANSACTIONS; NATURE OF ENTRY IN THE BOOKS OF ACCOUNT; THE OBJECT CLAUSE IN THE MEMORANDUM OF ASSOCIATION AUTHORIZING SUCH TRANSACTION; CIRCUMSTANCES SUCH AS ORGANIZED EFFORTS MADE TO EARN INCOME AS WELL AS LOANS AND BORROWINGS WHICH ARE NORMALLY ASSOCIATED WITH A BUSINESS ACTIVITY; PROFI T MOTIVE, ETC. HOWEVER, NO SINGLE FACTOR IS CONCLUSIVE AND TOTALIT Y OF THE FACTS AND CIRCUMSTANCES HAVE TO BE CONSIDERED IN ARRIVING AT A FAIR CONCLUSION IN THE MATTER. NORMALLY INVESTMENT PRESUPPOSES A TIME FRAME OF HOLDING OF SECURITIES AND FREQUENT SHUFFLING OF THE PORTFOLIO COULD INDICATE APPLICATION OF MIND TO BOOK THE PROFIT THE REASON T HAT THE INCOME TAX ACT PROVIDE FOR TERMING TRANSACTION AS STCG EVEN IF THE HOLDING PERIOD IS ONE DAY DOES NOT IMPLY THAT ALL SUCH TRANSACTIONS W OULD NECESSARILY FALL UNDER CATEGORY OF CAPITAL GAIN. IF THE ASSESSEE PUR CHASES SHARES DURING THE YEAR AND SELLS THEM FREQUENTLY IN SHORT SPELL I T MAY INDICATE BUSINESS MOTIVE UNLESS EVIDENCES ARE ADDUCED IN SUP PORT THAT THESE WERE ACTUALLY UNDERTAKEN FOR COMPELLING REASONS E.G . PRESSING NEEDS FOR FUND ,A BETTER OPTION FOR REINVESTMENT. THE ASSESSE E IS REQUIRED TO EXPLAIN THE REASONS IN RESPECT OF EACH OF THE TRANS ACTIONS AND A LARGE FREQUENCY OF TRANSACTION COULD BE A POINTER TOWARDS BUSINESS MOTIVE .FURTHER WHERE THE TRANSACTIONS ARE SQUARED UP DURI NG THE YEAR AND THE FUNDS ARE EMPLOYED N NEW PORTFOLIOS AND THE SAME PA TTERN IS FOLLOWED YEAR AFTER YEAR IT COULD LEAD TO INFERENCE THAT THE RE WAS TRADING MOTIVE. THERE IS NO DOUBT THAT WITH INSERTION OF SECTION 11 1-A IN IT ACT A FAVORABLE TAX TREATMENT HAS BEEN PROVIDED IN RELATI ON TO SHORT TERM CAPITAL GAIN BUT IT CANNOT BE CONCLUDED THAT THE AS SESSEE CAN SEEK THE BENEFIT BY SIMPLY CATEGORIZING SOCK IN TRADE AS INV ESTMENT IN THE INSTANT CASE THE INCOME FROM DELIVERY BASED TRANSACTIONS ARE SOUGHT TO BE PROJECTED AS STCG ONLY BECAUSE THERE W AS ACTUAL DELIVERY AND BECAUSE THEY WERE SHOWN AS INVESTMENTS IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. I AM OF THE VIEW THAT THE ABOVE TW O ASPECTS WILL NOT MAKE ANY DIFFERENCE CONSIDERING THAT THE APPELLANT HAS DEALT IN SHARES OF MORE THAN 120 COMPANIES WITH HOLDING PERIODS IN MAJORITY OF THE CASES UPTO 3 MONTHS. THE MAGNITUDE OF THE TRANSACTI ONS INDICATE THAT THE SCRIPTS WERE NOT INTENDED TO BE HELD AS AN ASSE T FOR STEADY APPRECIATION BUT THE SHARES WERE PURCHASED AND SOLD SO AS TO EARN PROFIT. THE A.O. HAS POINTED OUT THAT, OUT OF L22SC RIPS, IN THE CASE OF 79 SCRIPS THE HOLDING PERIOD IS LESS THAN THREE MONTHS . HIGH FREQUENCY OF TRANSACTIONS AND LOW PERIOD OF HOLDING INDICATE THA T THE INTENTION OF THE APPELLANT COMPANY WAS TO PURCHASE AND SELL AS A TRA DER. THERE IS $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 7 FREQUENT DEALING IN SHARES ON A LARGE SCALE. THE SU BSTANTIAL TIME AND EFFORT IS DEVOTED TOWARDS THIS ACTIVITY. IN THESE C IRCUMSTANCES, AND FROM THE FACTS OF THE CASE IT IS TO BE HELD THAT THE APP ELLANT HAS BEEN ACTING AS A TRADER IN SECURITIES AND NOT AS AN INVESTOR. T HEREFORE, THE ACTION OF THE A.O. IN TREATING LTCG AND STCG OF RS. 20937029 AS BUSINESS INCOME ARISING FROM TRADING OF SECURITIES IS CONFIR MED. 11. THE CIT(A), THUS, CONFIRMED THE ORDER OF THE AO & DISALLO WED THE CAPITAL GAINS AND TREATED THE ENTIRE CAPITAL GAINS AS INCOM E OF THE ASSESSEE. 12. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 13. BEFORE US, THE AR, POINTED OUT THAT THE ISSUE WAS IN DISPUTE IN ASSESSMENT YEAR 2006-07 AS WELL, WHEREIN IN ITA NO. 1314/MUM/2010, IN THE CASE OF THE ASSESSEE, COORDINATE BENCH HELD, WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND ALSO PERUSED THE MATERIAL ON RECORD. FROM THE DETAILS OF TRANSAC TIONS, IT IS SEEN THAT, UNDER THE HEAD LONG TERM CAPITAL GAINS, THE ASSES SEE HAD SHOWN SALE OF MUTUAL FUNDS AT RS.76,56,553/- AND ON SHARES 4,5 2,098/- WHEREAS IN SHORT TERM CAPITAL GAINS, MUTUAL FUNDS HAD BEE N SHOWN AT RS. 14,29,925/- AND SALE OF SHARES AT RS. 32,94,562/-. ASSESSEE HAS ALSO EARNED SUBSTANTIAL DIVIDEND INCOME WHICH IS EVIDENT FROM THE FACT THAT OF RS. 52,87,206/- HAD BEEN SHOWN AS DIVIDEND. FURT HER, IT IS ALSO UNDISPUTED FACT THAT ASSESSEE HAS MAINTAINED TWO SE PARATE ACCOUNTS AND HAS CLASSIFIED HIS ACQUISITION OF SHARE INVESTM ENTS UNDER TWO HEADS. IT IS VERY PERTINENT TO NOTE THAT IN THE CAS E OF THE ASSESSEE, SALE OF SHARES UNDER THE HEAD INVESTMENT HAS ALWAYS BE EN CONSIDERED AS CAPITAL GAIN IN THE EARLIER YEARS, WHICH IS EVIDENT FROM THE FACT THAT THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN SCRUTINY PROCEEDINGS RIGHT FROM ASSESSMENT YEAR 2002-2003 TO 2005-2006. NOT ONLY THE ASSESSEE HAS FOLLOWED THIS CONSISTENT APPR OACH WITH REGARD TO THE TREATMENT OF SHARES ONE AS INVESTMENTS AND OTHE R AS STOCK IN TRADE SEPARATELY, BUT THE SAME HAS ALSO BEEN CONSISTENTLY ALLOWED BY THE DEPARTMENT. IN VIEW OF THESE FACTS, THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GO PAL PUROHIT REPORTED IN (2010) 228 CTR 582 (BOM.) GETS SQUARELY APPLICABLE, WHEREIN THE DECISION OF ITAT, MUMBAI BENCH AS HAS BEEN RELIED O N BY THE LEARNED AR HAS BEEN AFFIRMED. IN A RECENT DECISION BY THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SURESH R SHAW VID E ORDER DATED 5TH JULY, 2012 HAS UPHELD THE PROPOSITION OF GOPAL PURO HIT DECISION HAS BEEN UPHELD, THAT THERE IS NO BAR FOR AN ASSESSEE T O MAINTAIN TWO SEPARATE PORTFOLIOS I.E. ONE IN RELATION TO INVESTM ENT IN SHARES AND OTHER RELATING TO BUSINESS ACTIVITIES INVOLVED IN DEALING OF SHARES. IT IS ALSO NOTICED THAT, IN THE CASE OF ASSESSEE, UNDER THE HE AD SHORT TERM CAPITAL GAINS MOST OF THE SHARES HAVE BEEN HELD FOR A PERI OD OF MORE THAN THREE MONTHS AND SIX MONTHS AND THERE ARE NO INTRA-DAY TR ANSACTIONS OF SHARES UNDER THIS HEAD. ON THESE FACTS AND CIRCUMST ANCES OF THE CASE, WE HOLD THAT ON THE SHARES HELD AS INVESTMENT BY TH E ASSESSEE, THE $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 8 INCOME ARISING ON SALE OF SUCH SHARES IS ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GA IN AND NOT BUSINESS INCOME AS HELD BY AO AND CIT(A). ACCORDINGLY, THE ORDER OF THE CIT(A) IS REVERSED AND THE ASSESSEES GROUNDS ARE ALLOWED. THE AR, THEREFORE, SUBMITTED THAT SINCE THE ISSUE IS COVE RED BY THE ASSESSEES OWN CASE IN THE PRECEDING YEAR, AND THERE B EING NO CHANGE IN FACTS THE ORDER OF THE COORDINATE BENCH, MUST BE FOLLOWED. 14. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORIT IES, ACCEPTING THAT THE ISSUE IS IDENTICAL, AS THAT IN ASSESSMENT YEAR 2006-07. 15. WE HAVE GONE THROUGH THE ORDERS OF THE REVENUE A UTHORITIES AND HAVE ALSO PERUSED THE DETAILS, AS FILED BY THE ASSESSEE, WH ICH WERE PLACED BEFORE THE REVENUE AUTHORITIES AND HAVE ALSO PER USED THE ORDER OF THE COORDINATE BENCH. WE FIND THAT THE FACTS ARE IDENTIC AL, AS ACCEPTED BY THE DR. IN THESE CIRCUMSTANCES, AS PER JU DICIAL PROPRIETY, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE DECISION TA KEN ON SAME FACTS BY THE COORDINATE BENCH IN ITA NO. 1314/MUM/2010. 16. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BEN CH IN ITA NO. 1314/MUM/2010, IN THE ASSESSEES OWN CASE, WE S ET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT THE AO TO ALLOW THE CLAIM OF CAPITAL GAINS, BOTH LTCG & STCG, AS CLAIMED BY THE ASSESSEE. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 674/MUM/2009 : ASSESSMENT YEAR: 2007-08 : 18. SINCE THE DEPARTMENT ACCEPTS THAT THE FACTS ARE S IMILAR, TO THE FACTS COMING FROM 2006-07, WHERE THE COORDINATE BENCH IN ITA NO. 1314/MUM/2010 HAS TAKEN THE VIEW IN FAVOUR OF THE ASSES SEE, SIMILAR DECISION MAY BE TAKEN. $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 9 19. WE HAVE, TAKING INTO ACCOUNT THE DECISION OF THE COOR DINATE BENCH IN ITA NO. 1314/MUM/2010, TAKEN A SIMILAR DECISION IN ITA NO. 7273/MUM/2011 IN THE ORDER ITSELF. 20. IN THE LIGHT OF OUR DECISION IN THE ITA NO. 7273/MUM/ 2011, BASED ON IDENTICAL FACTS, WE SET ASIDE THE ORDER OF THE REVENUE AUTHORITIES & DIRECT THE AO TO ALLOW THE CLAIM OF CAPITAL GA INS, BOTH LTCG & STCG, AS CLAIMED BY THE ASSESSEE.. 21. IN THE RESULT: ITA NO. 674/MUM/2011 FOR ASSESSMENT YEAR 2007-08 AND ITA NO. 7273/MUM/2011 FOR ASSESSMENT YEAR 2008-09, APP EALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH JUNE, 2013. SD/- SD/- ( .. ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 12TH JUNE, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) $ $ ( ( ) - 19 MUMBAI / THE CIT (A)-19, MUMBAI. 4) $ $ ( 9, MUMBAI / THE CIT9, MUMBAI, 5) *+, - . , $ - , %/ / THE D.R. A BENCH, MUMBAI. 6) ,0 1 COPY TO GUARD FILE. $ . . . 674 /%% / 2011 $ . . . 7273 /%% / 2011 M/S. APOLLO FINVEST (INDIA) LTD. ITA NO.674/MUM/2011 ITA NO. 7273MUM/2011 10 $23 / BY ORDER / / TRUE COPY / / [ 4 / 5 6 $ - , %/ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *895 . . * CHAVAN, SR. PS