ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI SHAMIM YAHAHA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 7189/M/2012 FOR AY 2006-07 ITA NO. 3015/M/2012 FOR AY 2008-09 DY CIT -12(2), ROOM NO.114, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20 VERSUS MRS. NEENA RAJAN MEHRA, 8, BEST ROAD, COLABA, MUMBAI-400039 PAN NO.AANPM7634D APPELLANT RESPONDENT APPELLANT/ REVENUE BY SH. SUMAN KUMAR DR RESPONDENT / ASSESSEE BY SH. HIRO RAI ADVOCATE DATE OF HEARING: 27/04/2017 DATE OF ORDER: 17/05/2017 ORDERUNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THESE TWO APPEALS BY REVENUE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE TWO SEPARATE ORDER OF COMMISSI ONER (APPEALS)-24 MUMBAI, DATED 28 SEPTEMBER 2012 AND 17 FEBRUARY 20 12 FOR ASSESSMENT YEAR 2006- 07 AND 2008- 09 RESPECTIVELY. THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS, THUS BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDED BY CONSOLIDATED ORDER. FOR APPRECIATION OF FACTS FIRST WE SHALL TAKE APPEAL FOR ASSESSMENT YEAR 2006-07(IT A NO.7189/M/2012). THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L EARNED COMMISSIONER (APPEALS) HAS ERRED IN FAILING TO UPHOLD THE ASSESS ING OFFICER ACTION FOR TREATING SHORT-TERM CAPITAL GAIN OF RS. 87,79,642/- AS INCOME ASSESSABLE UNDER THE INCOME FROM BUSINESS. (2) THE APPELLANT PRAYS THAT ORDER OF COMMISSIONER (APP EALS) BE SET ASIDE ON THE ABOVE GROUNDS AND THE ORDER OF ASSESSING OFFICE R BE RESTORED . 2. THE BRIEF FACTS RELATING TO THE GROUNDS OF APPEAL R AISED BY REVENUE ARE THAT ASSESSEE FILED RETURN OF INCOME FOR RELEVANT ASSESS MENT YEAR ON 31 OCTOBER 2006 DECLARING TOTAL INCOME AT RS. 1,20,66,873/-. I N THE RETURN OF INCOME THE ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 2 ASSESSEE OFFERED PROFIT OF RS. 87,79,642/- ON SALE OF SHARE DURING THE FINANCIAL YEAR AND OFFERED THE SAME AS SHORT-TERM CAPITAL GAI N CHARGEABLE TO TAX AT THE RATE OF 10% TO TAX. THE ASSESSMENT WAS COMPLETED ON 15 JULY 2008 UNDER SECTION 143(3) OF THE ACT AND THE PROFIT OF SALE OR SHARE OFFERED BY THE ASSESSEE AS CAPITAL GAIN WAS ACCEPTED. SUBSEQUENTLY, THE COM MISSIONER OF INCOME TAX (COMMISSIONER) INITIATED PROCEEDING UNDER SECTION 2 63 HOLDING THAT ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ON 15 JULY 2008 W AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER P ASSED BY ASSESSING OFFICER UNDER SECTION 143(3) WAS SET-ASIDE AND THE ASSESSIN G OFFICER WAS DIRECTED TO EXAMINE THE TRANSACTIONS WITH THE SUPPORTING EVIDEN CE WITH A SPECIFIC DIRECTION TO THE REFERENCE OF BOARD (CBDT) CIRCULAR NO. 4/200 7 DATED 15 JUNE 2007. THE LEARNED COMMISSIONER WHILE PASSING THE ORDER UNDER SECTION 263 DIRECTED THE ASSESSING OFFICER TO VERIFY THE DETAILS OF DERIVATI VE TRANSACTION TO ASCERTAIN AS TO WHETHER THE ANY PORTION OF THE TRANSACTION RELATE T O THE PERIOD PRIOR TO THE INSERTION OF SECTION 43 (5)(D) AND TO EXAMINE AS TO WHETHER ANY DERIVATIVE TRANSACTION IS IN THE NATURE OF SPECULATIVE TRANSAC TION. THE LD COMMISSIONER OF INCOME TAX PASSED ORDER UNDER SECTION 263 ON 25 MAR CH 2011. CONSEQUENTLY, ON THE DIRECTION OF COMMISSIONER OF INCOME TAX THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 30 DECEMBER 2011 UNDER SECTION 143(3) RWS 263 OF INCOME TAX ACT AND TREATED THE PROFIT ON SALE OF SHARES AS BUSINESS INCOME. ON APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFICER WAS REVERSE THEREBY ACCEPTING THE CLAIM OF ASSESSEE ON PROFIT OF SALE OF SHARE AS SHORT-TERM CAPITAL GAIN (STCG). HENCE, BEI NG AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE REVENUE HAS FILED PRE SENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LEARNED DR FOR REVE NUE AND THE LEARNED AR FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED DR FOR THE REVENUE SUBMIT THAT HE RELIED ON THE ORDER OF ASSESSING OFFICER AND PRAYED THAT ORDER OF ASSESSING OFFICER BE RESTORED BY REVERSING THE ORDER OF COMMISSIONER (APPEALS). IN REPLY TO THE SUBMISSION OF THE LD DR FOR REVENUE, THE LEARNED AR OF THE ASSESSEE SUBMITS THAT HE RELI ED UPON THE ORDER OF COMMISSIONER (APPEALS) AND PRAYED THAT HE HAS PLACE D ON RECORD HIS ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 3 SUBMISSION BY WAY OF WRITTEN SYNOPSIS. IN THE WRITT EN SYNOPSIS THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS A PARTN ER IN THREE FIRMS, DOING BUSINESS IN HOTEL INDUSTRY AND HAS RECEIVED INCOME HAS REMUNERATION, INTEREST AND PROFIT FROM THE BUSINESS OF RS. 1,95,26,307/-. THE ASSESSEE HAS LOSS DURING THE YEAR FROM DERIVATIVE TRADING IN SHARE AND IT IS PROPERLY REFLECTED IN BOOKS OF ACCOUNT AS LOSS FOR THE YEAR. THE INVESTMENT IN SHA RES AND GAIN THEREOF IS A PASSIVE INCOME. THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT WITH PROPER BIFURCATIONS OF SHARE HELD AS INVESTMENTS. T HE AVERAGE HOLDING PERIOD OF SHARES SOLD IS MORE THAN FOUR MONTHS FOR SHORT-TERM CAPITAL GAIN AND TWO YEARS FOR LONG-TERM CAPITAL GAIN. THE ASSESSEE HAS NOT IN VESTED IN SHARES FROM BORROWED FUNDS. THE ASSESSEE HAS SUFFICIENT INTERES T REFUND AVAILABLE WITH HER. NO MARGIN FUNDING IS USED FOR THE PURCHASE AND SALE OF SHARES. ALL INVESTMENTS ARE MADE FROM HER SAVINGS FROM THE INCOME RECEIVED FROM HOTEL BUSINESS, WHERE THE ASSESSEE THE PARTNER. THE ASSESSEE HAS PA ID STT IN RESPECT OF SHARE TRANSACTION AS APPLICABLE TO THE INVESTMENT. IN PRE CEDING YEARS THE ASSESSEE EARNED INCOME FROM CAPITAL GAIN BOTH LONG-TERM AND SHORT-TERM BASIS. THE PURCHASE OF SHARES IS THE SAME AS IN THE PRECEDING YEARS, WHICH WAS ACCEPTED BY REVENUE AS SHORT-TERM CAPITAL GAIN. THERE IS NO CHANGE IN THE PATTERN OF TRANSACTIONS. FOR ASSESSMENT YEAR 2008-09, THE CAS E OF ASSESSEE WAS TAKEN UP FOR SCRUTINY AND THE SIMILAR TREATMENT WAS TREATED AS BUSINESS INCOME, HOWEVER ON APPEAL BEFORE COMMISSIONER (APPEALS) THE INCOME FROM HEAD CAPITAL GAIN WAS TREATED AS SHORT-TERM CAPITAL GAIN AND LONG-TER M CAPITAL GAIN AND THE TREATMENT OF INCOME UNDER THE HEAD BUSINESS INCOME WAS REVERSE. THE ASSESSEE HAS NOT DEVIATED FROM THE CLASSIFICATION, WHICH SHE HAS BEEN SHOWING IN THE PAST. DURING THE YEAR UNDER CONSIDERATION TH E ASSESSEE RECEIVED DIVIDEND OF RS.23,85,102/-. FURTHER, THE LEARNED AR OF ASSES SEE BESIDES THE OTHER VARIOUS DECISION RELIED ON THE DECISION OF TRIBUNAL IN MAHE NDRA C. SHAH VS ACIT IN ITA NO. 6289 /M/2008, ACIT VERSUS MAHENDRA C. SHAH IN ITA NO. 4932/M/2009, NAGINDAS P. SHETH (HUF) VERSUS JCIT I TA NO. 961/M /2010, GOPAL PUROHIT VERSUS JCIT (ITA NO.4854/M/2008, THE DECISION OF BOMBAY ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 4 HIGH COURT IN CIT VERSUS GOPAL PUROHIT 228 CTR 582 (BOMBAY) AND CIRCULAR NUMBER 4 /20007 DATED 15 JUNE 2007. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED REPRE SENTATIVES OF THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER ON THE DIRECTION S/ ORDER OF LEARNED COMMISSIONER UNDER SECTION 263 DATED 15 JULY 2008 I SSUED NOTICE TO THE ASSESSEE TO GIVE HER SUBMISSION/EXPLANATION ALONG W ITH SUPPORTING EVIDENCE. THE ASSESSEE FILED HER WRITTEN SUBMISSION VIDE HER REPLY DATED 25 NOVEMBER 2011, 29 TH NOVEMBER 2011 AND 20 DECEMBER 2011. WE HAVE SEEN T HAT THE ASSESSEE HAS MADE THE SIMILAR CONTENTION IN HER REP LY, AS HER LEARNED AR MADE IN HIS WRITTEN SUBMISSION BEFORE US. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE ASSE SSEE IS REGULARLY AND FREQUENTLY DEALING WITH THE ACTIVITY OF SALE AND PU RCHASE OF SHARE WHICH IS EVIDENT FROM DMAT ACCOUNT, BROKERS NOTE AND THE COR RESPONDING BANK ACCOUNTS. THE ACTIVITIES OF SHARE TRADING ARE SYSTE MATIC AND ORGANISED ACTIVITY OF ASSESSEE. THERE IS CONTINUITY IN SHARE TRANSACTI ON OVER A PERIOD OF TIME WHICH IS EVIDENT FROM RETURN OF INCOME FILED BY ASSESSEE FOR EARLIER YEARS AND SUBSEQUENT YEAR WHERE INCOME FROM SHARES TRADING HA S BEEN CONTINUOUSLY APPEARING AT SOURCE OF INCOME. THE QUANTITY OF SHAR ES TRANSACTED AND THE QUANTUM OF AMOUNT INVOLVED ITS SUBSTANTIAL. HIGH-VO LUME OF TRANSACTION IS A CHARACTERISTIC FEATURE OF ANY COMMERCIAL ACTIVITY T HE INTENTION OF ASSESSEE IS TO EARN PROFIT AS THE ASSESSEE IS NOT INTERESTED IN HO LDING THE SHARE FOR LONG TIME TO EARN DIVIDEND INCOME. THE ASSESSING OFFICER FURTHER OBSERVED THAT AGAINST THE PURCHASE OF SHARES OF RS. 1.41 CRORE, THE SALE PROC EEDS FROM THE SAME IS OF RS.2.29 CRORE. THE EARNING OF DIVIDEND IS NOT THE P RIMARY MOTIVE THE FACTS INDICATE THAT ASSESSEE WAS ENGAGED IN SHARE TRANSAC TION WITH PROFIT MOTIVE AND THE SAME IS IN THE NATURE OF TRADING. WE HAVE FURTH ER SEEN THAT DURING THE ASSESSMENT PROCEEDINGS THE REPRESENTATIVE OF ASSESS EE MADE A SUBMISSION THAT THERE WAS AN ERROR IN THE FIGURES OF SHORT-TERM CAP ITAL GAIN AND THE LONG-TERM CAPITAL GAIN. THE LONG-TERM CAPITAL GAIN WAS SHOWN AT RS. 11,76,969/- AND SHORT-TERM CAPITAL GAIN WAS SHOWN AT RS. 87,79,642 /-. THUS, ASSESSEE SUBMITTED ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 5 REVISED FIGURE OF LONG-TERM CAPITAL GAINS OF RS. 42 ,40,823 /- AND SHORT-TERM CAPITAL GAIN OF RS. 57,15,788/-. THE FRESH CLAIM OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE ASSESSEE HAS NOT FILED REVISED RETURN OF INCOME. THE ASSESSING OFFICER RELIED ON THE DECISIO N OF HONBLE SUPREME COURT IN CASE OF GOETZ (INDIA) VERSUS CIT [2007] 157 TAXM AN 1(SC) AND REJECTED THE FRESH CLAIM OF ASSESSEE. THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAS OFFERED DERIVATIVE INCOME AS BUSINESS PROFIT AND NO T CLAIMED SET OFF OF ANY BUSINESS LOSS AGAINST THE INCOME FROM DERIVATIVES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ISSUE WHETHER ANY PORTION OF TRAN SACTION RELATES TO THE PERIOD PRIOR TO THE INSERTION OF SECTION 43(5) AND THE ISS UE OF NOTIFICATION DATED 25 JANUARY 2006 FOR NOTIFYING BSE AND NSE AS RECOGNISE D STOCK EXCHANGE TO DETERMINE AS TO WHETHER ANY OF DERIVATIVE TRANSACTI ON IS IN THE NATURE OF SPECULATIVE TRANSACTION. THE ASSESSING OFFICER CONC LUDED THAT NO INFIRMITY THAT REQUIRES ANY ADVERSE ACTION CAME TO HIS NOTICE. THE ASSESSING OFFICER TREATED THE SALE OF SHARES AS BUSINESS INCOME IN THE ASSESSME NT ORDER PASSED UNDER SECTION 143(3)RWS 263 OF THE ACT. BEFORE LEARNED C OMMISSIONER (APPEALS), THE ASSESSEE AGAIN URGED THE SIMILAR CONTENTION. THE LE ARNED COMMISSIONER (APPEALS) OBSERVED THAT THERE IS TWO BASIC ISSUE S BEFORE HIM TO DECIDE THE APPEAL VIZ; (I) WHETHER THE PROFIT ON SALE OF SHARE S DURING THE YEAR WHICH HAS BEEN SHOWN BY THE ASSESSEE AS A SHORT-TERM CAPITAL GAIN ARISING OUT OF INVESTMENT IN SHARES IN QUESTION AS INVESTORS IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR WHETHER THE SAME IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN AS DISCLOSED BY THE ASSESSEE IN HER RETURN OF INCOME AND (II) WHETHER THE ASSESSING OFFICER WAS RIGHT IN IGNORING THE REQUEST OF THE ASSESSEE TO TAKE CORRECT FIGURE OF SHORT-TERM CAPITAL GAIN A T RS. 39,96,286/-AGAINST SHORT- TERM CAPITAL GAIN OF RS. 87,79,642/- WRONGLY SHOWN BY ASSESSEE IN HER RETURN OF INCOME AND ALLOWING CONSEQUENTIAL REQUEST OF LONG- TERM CAPITAL GAIN FROM RS.11,76,969/- TO RS. 59,60,325/-AFTER VERIFICATION . THE LEARNED COMMISSIONER (APPEALS) FURTHER OBSERVED THAT THE VARIOUS COURTS AND CBDT HAVE LAID DOWN THE PARAMETERS FOR ASCERTAINING WHETHER THE ACTIVIT IES OF ASSESSEE WAS IN THE NATURE OF INVESTMENT ACTIVITIES OR A TRADING ACTIVI TIES. THE PARAMETER INCLUDES ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 6 INTENTION OF ASSESSEE AT THE TIME OF PURCHASE OF SH ARE, FREQUENCY OF TRANSACTION, CONTINUITY, VOLUME OF SHARES, HOLDING PERIOD, TREAT MENT IN THE BOOKS OF ACCOUNT, OWNED FUNDS OR UTILISED BORROWED FUNDS AND DEVOTION OF TIME TO THE ACTIVITIES ETC. THE COURTS/ TRIBUNALS HAVE ALSO HELD THAT SING LE PARAMETERS WOULD NOT BE DECISIVE AND IT IS THE ONLY THE CUMULATIVE EFFECT O F ALL THESE CRITERIA WHICH WOULD BE IMPORTANT TO DECIDE WHETHER ASSESSEE WAS A N INVESTOR OR TRADER. THUS, KEEPING IN THE ABOVE PARAMETER IN MIND, IT HAS TO B E DECIDED WHETHER THE ASSESSEE CAN BE TREATED AS AN INVESTOR OR HE/SHE I S TO BE TREATED AS A TRADER OR THE INCOME IN QUESTION IS TO BE TAXED UNDER THE HEA D CAPITAL GAIN OR UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. THE ASS ESSEE CAN HAVE TWO PORTFOLIOS OF SHARE ONE FOR TRADING AND ONE FOR INV ESTMENT PURPOSES. THUS, THE ASSESSEE CAN BE BOTH AS A DEALER IN SHARE AS WELL A S INVESTOR IN SHARE AT THE SAME TIME. THE ASSESSEE HAS DISCLOSED INCOME OF RS. 87,7 9,642/- UNDER THE HEAD SHORT-TERM CAPITAL GAINS WHICH WAS LATER ON REVIS ED RS.39,62,86/-IN THE COURSE OF ASSESSMENT PROCEEDING BEFORE THE ASSESSIN G OFFICER. OUT OF TOTAL 129 TRANSACTIONS, IN 16 TRANSACTIONS THE SHARES WERE SO LD WITHIN ONE MONTH OF THEIR PURCHASE. THIS REPRESENTS 12.40% OF SHORT-TERM CAPI TAL GAINS IN SUCH TRANSACTION IS TO THE TOTAL SHORT-TERM CAPITAL GAIN AND DURING THE YEAR COMES TO 9.82%, REMAINING 7.75% OF THE TRANSACTION RELATES TO SALES WHERE THE SHARES WERE SOLD AFTER HOLDING FOR A PERIOD OF MORE THAN ONE MONTH BUT BEFORE TWO MONTH OF THEIR PURCHASES. SHORT-TERM CAPITAL GAIN A ND ON SUCH TRANSACTION IS 2.63%. FURTHER, 13.18% OF SHARES WERE SOLD AFTER 2 MONTHS BUT BEFORE 3 MONTHS, 4.65% SHARE WERE SOLD AFTER THREE-MONTHS BU T BEFORE 4 MONTHS AND SUBSTANTIAL 44.19% OF THE SHARES WERE SOLD AFTER 6 MONTHS BUT BEFORE 12 MONTH OF THEIR PURCHASE. FURTHER, 54.53% OF SHORT TERM CA PITAL GAIN IS AN DURING THE YEAR IN SUCH TRANSACTION OF SHARE HELD FOR A PERIOD OF 6 MONTHS BUT LESS THAN 12 MONTHS. CERTAINLY, THERE ARE SALES OF SHARES WHICH HAVE BEEN SOLD WITHIN FEW DAYS OF THEIR PURCHASES. THE TOTAL NATURE OF TRANSA CTION AND THE CONDUCT OF ASSESSEE HAVE TO BE SEEN TO DECIDE WHETHER ASSESSEE ACTED AS A TRADER OR INVESTOR. THE LEARNED COMMISSIONER (APPEALS) CONCLU DED THAT ASSESSEE HAS BEEN CONSISTENTLY DISCLOSING HERSELF TO BE AN INVES TOR IN RESPECT OF HER ACTIVITY ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 7 IN QUESTION THE YEAR ON WHICH CAPITAL GAIN HAS BEEN DISCLOSED IS REFLECTED IN HER BOOKS OF ACCOUNT AS AN INVESTMENT. THE BALANCE-SHEE T OF ASSESSEE DISCLOSED THE SHARE WHICH WERE BOUGHT IN THE IMMEDIATELY PRECEDIN G ASSESSMENT YEAR AND WERE SOLD DURING THE RELEVANT FINANCIAL YEAR. FURTH ER, IN THE ASSESSMENT YEAR 2007- 08, THE REVENUE HAS ACCEPTED THE ASSESSEE AS INVESTOR IN SHARE IN RESPECT OF HER IDENTICAL ACTIVITIES. THE LEARNED COMMISSION ER (APPEALS) FURTHER CONCLUDED THAT MAJORITY OF SHARES WERE SOLD AFTER H OLDING FOR MORE THAN 30 DAYS, THERE ARE INSTANCES WHERE THE ASSESSEE HAS MA DE A LOSS, HOWEVER BEING INVESTORS IT DOES NOT MEAN THAT THE INVESTOR WOULD ALWAYS MAKE A PROFIT AND WILL NOT SUFFER LOSSES IN THEIR TRANSACTIONS. THE L EARNED COMMISSIONER (APPEALS) ALSO EXAMINED THE AVAILABILITY OF FUNDS A ND THE INVESTMENT MADE BY ASSESSEE FROM HER OWN FUNDS. THERE IS NO REPETITIVE TRANSACTION. THE LEARNED COMMISSIONER(APPEALS) ALSO CONSIDERED THE TREATMENT OF THE SIMILAR TRANSACTION IN ASSESSMENT YEAR 2007-08 IS CAPITAL GAIN AND T HE ORDER OF COMMISSIONER APPEALS FOR ASSESSMENT YEAR 2008-09 DATED 17/02/201 2 (WHICH IS IMPUGNED IN ITA NO.3015/M/2012 BEFORE US) AND ACCEPTED THE APPE AL OF THE ASSESSEE. 5. THE COORDINATE BENCH OF TRIBUNAL IN MAHENDRA C. SHA H VS ACIT(SUPRA) HELD THAT WHERE THE ASSESSEE HAD SHOWN SHARE AS INVESTME NT IN HIS BALANCE-SHEET AND ASSESSEES STAND THAT IN ALL EARLIER ASSESSMENT YEA RS SHARES WERE HELD AS INVESTMENT WAS ACCEPTED BY THE REVENUE AND IN THOSE YEAR A NUMBER OF COMPANIES WHOSE SHARE WERE HELD BY THE ASSESSEE REM AINED MORE OR LESS CONSTANT, ASSESSEE COULD BE SAID TO BE AN INVESTOR IN SHARE AND, THEREFORE SURPLUS ARISING ON SALE OF SHARES SHOULD BE ASSESSED AS CAP ITAL GAIN AND NOT AS BUSINESS INCOME. IN NAGINDAS P. SHETH (HUF) VERSUS JCIT (SUPRA) THE COORDINATE BENCH HELD THAT, WHEN IN EARLIER YEARS AND SUBSEQUENT YEARS TH E ASSESSING OFFICER ACCEPTED, IN THE SCRUTINY ASSESSMENT PROCEEDING, THE ASSESSE E AS AN INVESTOR. SUCH BEING THE CASE, MERELY BECAUSE THE ASSESSEE TRANSACTED IN 158 SHARES THAT SHOULD NOT BE TAKEN AS A SOLE CRITERIA TO COME TO THE CONCLUSI ON THAT ASSESSEE IS A TRADER IN SHARES. IT WAS FURTHER HELD THAT IT IS NOT IN DISPU TE THAT IN THE BOOKS OF ACCOUNT ASSESSEE HAS DECLARED THE SHARES AS AN INVESTMENT A ND THE FINDING OF LEARNED ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 8 COMMISSIONER (APPEALS) THAT ONLY OWN FUNDS WERE UTI LISED FOR THE PURPOSE OF SHARE WAS NOT CONTRADICTED BY THE REVENUE. IN GOPAL PUROHIT VERSUS JCIT (SUPRA ) HONBLE BOM BAY HIGH COURT HELD THAT WHEN THE ASSESSEE WAS AN ENGAGED IN THE ACTIVITY OF SALE AND PURCHASE OF SHARES FOR A QUITE LONG PERIOD, AND WAS NOTED THAT NON-DEL IVERY BASED TRANSACTION HAD BEEN TREATED BY ASSESSEE AS BUSINESS ACTIVITY AND D ELIVERY BASED TRANSACTION HAD BEEN TREATED AS INVESTMENT ACTIVITIES AND ACCORDING LY THE ASSESSEE HAD CLAIMED HIMSELF BOTH DEALER AS WELL AS INVESTOR AND HAD OFF ERED INCOME FOR TAXATION ACCORDINGLY, WHICH HAD BEEN CLAIM TO HAVE BEEN ACCE PTED BY THE REVENUE AUTHORITIES IN EARLIER YEARS. THE NATURE OF ACTIV ITIES, MODUS OPERANDI OF THE ASSESSEE, MANNER OF KEEPING RECORD AND PRESENTATION OF SHARES AS INVESTMENT AT THE YEARS AND WERE SAME IN ALL THE YEARS, AND, HENC E, APPARENTLY THERE APPEAR TO BE NO REASON AS TO WHY THE CLAIMS MADE BY ASSESSEE SHOULD NOT BE ACCEPTED. IT WAS FURTHER HELD THAT FOLLOWING THE PRINCIPLE OF CO NSISTENCY, THE DIFFERENT VIEW SHOULD NOT BE TAKEN, WHEN FACTS AND CIRCUMSTANCES A RE IDENTICAL, PARTICULARLY IN CASE OF ASSESSEE. THE HONBLE DELHI HIGH COURT IN CIT VS AMIT JAIN [2 015] 374 ITR 550(DELHI) ALSO HELD WHEN THAT THE VALUE AND THE FREQUENCY OF TRANSACTIONS ARE NOT CONCLUSIVE FACTOR. WHEN THE SIMILAR INCOME IN THE P AST AND IN SUBSEQUENT YEAR ACCEPTED AS CAPITAL GAIN AND THERE IS NO DISTINCTIV E MATERIAL TO DIFFERENTIATE THE ASSESSEES ACTIVITIES FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE PRINCIPLE OF CONSISTENCY MUST BE FOLLOWED. 6. CONSIDERING THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE HAVE SEEN THAT THE LEARNED COMMISSIONER (APPEALS) HAS ALREADY CONSIDER ED ALL THE RELEVANT FACTORS QUA THE FACTS OF THE CASE AND PASSED THE REASONED O RDER. THE REVENUE HAS NOT DIFFERENTIATED AS TO HOW THE FACTS OF THE YEAR UNDE R CONSIDERATION ARE DIFFERENT FROM THE YEARS WHEN THE ASSESSEE WAS ACCEPTED AS IN VESTOR. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSE D BY LEARNED COMMISSIONER (APPEALS) HENCE THE GROUNDS OF APPEAL RAISED BY REV ENUE ARE DISMISSED. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ITA N O. 7189/M/2012 FOR AY 2006-07 ITA N O. 3015/M/2012 FOR AY 2008-09 9 ITA NO. 3015/M2012 FOR AY 2008-09 7. THE REVENUE HAS RAISED IDENTICAL GROUND OF APPEAL. THE FACTS OF THE APPEAL FOR THE YEAR UNDER CONSIDERATION ARE ALMOST SIMILAR EXC EPT THE FACT THAT THE ASSESSING OFFICER TREATED THE CAPITAL GAIN AS BU SINESS INCOME. ON APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) THE TREATMENT WAS REVERSE. THUS, AGGRIEVED BY THE ORDER OF LD COMMISSIONER (APPEALS) THE REVENUE HAS FILED THE PRESENT APPEAL ON IDENTICAL GROUNDS AS RAISED IN IT A NO.7189/M/2012. CONSIDERING THE FACT THAT WE HAVE DISMISSED THE APP EAL OF REVENUE FOR ASSESSMENT YEAR 2006-07 ON SIMILAR FACTS AND IDENTI CAL ISSUE, THIS APPEAL OF THE REVENUE IS ALSO DISMISSED WITH SIMILAR OBSERVATIONS . 8. IN THE RESULT APPEAL OF REVENUE FOR BOTH THE ASSESS MENT YEAR ARE DISMISSED. NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH THIS DAY OF MAY 2017. SD/- SD/- (SHAMIM YAHAHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 17/05/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/