ACIT 16(3), MUMBAI V. JITENDRA K SHAH, MUMBAI

ITA 7246/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79143 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 16-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency; Assessment record

Judgement Text

, , INCOME TAX APPELLATE TRIBUNAL MUMBAI - J BENCH MUMBAI , , / , BEFORE S/SH. VIJAY PAL RAO, JUDICIAL MEMB ER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.7246/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2008-09 ACIT 16(3), MATRU MANDIR, 2 ND FLOOR, R.NO. 206, TARDEO ROAD, MUMBAI-400007 VS. SHRI JITENDRA K. SHAH 24 BANSI BHAVAN, 1 ST FLOOR, 3 RD KHETWADI LANE,MUMBAI-400004 PAN: AAIPS7178M ( #$ / APPELLANT) ( %&#$ / RESPONDENT) /. ITA NO.7305/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2008-09 SHRI JITENDRA K. SHAH D.C.BOTHRA & CO. CHARTERED ACCOUNTANTS, 297, TARDEO ROAD, WILLIE MANSION, NANACHOWK, 1 ST FLOOR, OPP. BANK OF INDIA, MUMBAI-400007 VS. DCIT 16(3), R.NO. 206, MATRU MANDIR TARDEO ROAD, MUMBAI-400007 PAN: AAIPS7178M ( #$ / APPELLANT) ( %&#$ / RESPONDENT) #$ ' / REVENUE BY : SHRI MAURYA PRATAP %&#$ ( ' / ASSESSEE BY : SHRI RAJKUMAR SINGH ! ! ! ! ( (( ( )* )* )* )* / DATE OF HEARING :04-06-2014 +,' ( )* / DATE OF PRONOUNCEMENT : 18- 06- 2014 ! ! ! ! , 1961 ( (( ( 254 )1( )-) )-) )-) )-) . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! ! ! ! PER RAJENDRA,A.M: CHALLENGING THE ORDER DT.25-09-2012 OF THE CIT(A)-2 7,MUMBAI,ASSESSEE AND ASSESSING OFFICER (AO)HAVE FILED CROSS-APPEALS FOR THE YEAR UNDER CON SIDERATION.ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.THAT ON FACTS & CIRCUMSTANCES OF THE CASE AND AL SO IN LAW THE ID. C.I.T. (APPEALS) HAS ERRED IN CONFIRMING THE ASSESSMENT OF PART SHORT-TERM CAPITA L GAIN INCOME OF RS.16,62,262/-EARNED ON SALE OF LISTED EQUITY SHARES SUBJECTED TO S.T.T. AS BUSI NESS INCOME WITHOUT PROPERLY APPRECIATING THE FACTS. 2.THAT THE APPELLANT CRAVES THE LEAVE TO AMEND, ALT ER, SUBSTITUTE AND OR TO RAISE NEW OR ADDITIONAL GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUNDS OF APPEAL,FILED BY THE AO,READ AS UNDER:. 1.THE LD. CIT(A) HAS ERRED IN HOLDING THAT RS. 10, 61,016/- WAS STCG AND NOT BUSINESS INCOME. 2.THE LD. CIT(A) HAS ERRED IN DIRECTING TO ALLOW BE NEFIT OF INDEXATION ON LTCG OF RS. 27,50, 000/- 2 ITA NOS. 7246 & 7305/MUM/2012 SHRI JITENDRA K. SHAH EVEN THOUGH THE CLAIM WAS NOT MADE WHILE FILING RET URN OF INCOME. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR AD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. ASSESSEE,AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF M ONEY LENDING AND CONSTRUCTION BUSINESS, FILED HIS RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF RS.(-)67.70 LAKHS.THE AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 3 0.12.2010,DETERMINING THE TOTAL INCOME AT RS. 70.05 LAKHS. 2.1. EFFECTIVE GROUND OF APPEAL PERTAINS TO TREATMENT GI VEN THE FIRST APPEAL AUTHORITY (FAA) TO THE SHORT TERM CAPITAL GAINS(STCG)INCOME.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE HAD EARNED STCG OF RS.27,23,278/-,THAT HE HAD UTILISED THE BORROWED FUNDS FOR THE PURPOSE OF INVESTMENT.THEREFORE,HE ASKED THE ASSESS EE AS TO WHY THE STCG OF RS.27,23,278/- SHOULD NOT BE TREATED AS BUSINESS INCOME.AFTER CONS IDERING THE EXPLANATION OF THE ASSESSEE,DATED 24-12-2010,THE AO HELD THAT THE ASSESSEE HAD A HUGE TURNOVER OF SHARES AROUND RS.8.73 CRORES DURING THE YEAR WITH LARGE NUMBER OF TRANSACTIONS,T HAT THE CONTENTION OF THE ASSESSEE REGARDING HOLDING PERIOD WAS INCORRECT. THAT THE ASSESSEE HAD HELD SHARED EVEN FOR ONE DAY,THAT THE TOTAL TURNOVER OF THE ASSESSEE WAS OF RS.4.23 CRORES BY W AY OF PURCHASE AND RS.4.50 CRORES BY WAY OF SALES ONLY,THAT CONSIDERABLE EFFORT AND TIME HAD BE EN INVESTED BY THE ASSESSEE IN THE SHARE BUSINESS,THAT THE ASSESSEE WAS SILENT ON THE ISSUE OF DERIVATIVE BUSINESS OF SHARES THAT HAD ENTAILED EFFORT ON THE PART OF ASSESSEE,THAT THE ASSESSEE HA D BORROWED AN AMOUNT OF RS.5.33 CRORES AND HAD INVESTED THE SAME IN INVESTMENTS,THAT ASSESSEE WAS INDULGING IN BUSINESS AND SHOWING THE PART OF HER BUSINESS AS INVESTMENTS TO CLAIM THE LOWER RATE OF TAXATION,THAT ENTIRE INVESTMENTS HAD BEEN FUNDED WITH BORROWINGS,THAT THE PRINCIPLE OF RES J UDICATA WAS NOT APPLICABLE TO PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION, THAT THE ASSESSEE CAN NOT TAKE BENEFIT OF THE ARGUMENT THAT EARLIER SUCH PROFITS WERE TREATED AS STCG AND NOT BUSINESS INCOME.FINALLY,HE HELD THAT THE STCG INCOME OF THE ASSESSEE WAS TO TAXED UNDER THE HEAD BUSINES S INCOME. 2.2. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FAA.THE ASSESSEE ARGUED BEFORE HIM THAT PRIOR TO YEAR UNDER APPEAL;FOR THRE E EARLIER CONSECUTIVE ASSESSMENT YEARS IN THE ORDER PASSED U/S. 143(3),STCG INCOME EARNED ON SALE OF EQUITY SHARES OF SIMILAR QUANTUM ON SIMILAR FACTS,OFFERED UNDER CAPITAL GAIN INCOME HEA D;HAD BEEN ASSESSED AS SUCH STCG TREATING THE SAID TRANSACTIONS AS INVESTMENT,THAT THERE WAS NO C HANGE IN FACTS OR LAW SINCE THEN,THAT THE TOTAL NO. OF SCRIPS DEALT WITH DURING THE YEAR ON WHICH S TCG EARNED HAD BEEN ASSESSED AS BUSINESS INCOME WERE 50 IN NUMBERS THOUGH MANY SUCH SCRIPS H AD BEEN DEALT WITH THROUGH A SINGLE CONTRACT NOTE OF THE STOCK BROKER,THAT MOST OF THE SCRIPS HAD BEEN SOLD AFTER HOLDING THE SAME FOR THE PERIOD RANGING FROM 9 MONTHS TO 30 DAYS,THAT TH ERE WERE ONLY VERY FEW NUMBERS OF TRANSACTIONS HAVING VERY NOMINAL VALUE WHEREIN TRAN SACTION OF SALE AND PURCHASE OF SHARES HAD BEEN SETTLED WITHIN VERY SHORT PERIOD,THAT THE FIND ING GIVEN BY THE AO THAT ASSESSEE HAD INVESTED BORROWED FUND IN THE SHARES WAS WITHOUT ANY EVIDENC E,THAT THE AO HAD FAILED TO BRING ANY MATERIAL ON ASSESSMENT RECORD SHOWING NEXUS BETWEEN THE BORROWED FUND AND INVESTMENT IN SHARES,THAT AGAINST THE TOTAL INVESTMENT IN SHARES AND SECURITIES AS ON 31-03-2008 ASSESSEES OWN CAPITAL AS ON THE SAID DATE WAS MORE THAN THE INVES TMENT IN SHARE AND SECURITIES,THAT THE AO HAD FAILED TO APPRECIATE THOSE FACTS DURING THE ASSESSM ENT PROCEEDINGS.IT WAS FURTHER STATED THAT IF THE 3 ITA NOS. 7246 & 7305/MUM/2012 SHRI JITENDRA K. SHAH ACTION OF THE AO ASSESSING THE STCG INCOME AS BUSIN ESS INCOME WAS TO BE UPHELD THEN THE AO SHOULD BE DIRECTED TO ALLOW THE PERMISSIBLE LAWFUL CLAIM OF REBATE U/S. 88E OF THE ACT.BEFORE THE FAA,THE ASSESSEE ALSO FILED DETAILS OF CAPITAL GAIN S OVER THE YEARS,SHORT TERM CAPITAL GAIN EARNED DURING THE YEAR UNDER CONSIDERATION,STATEMENT OF C APITAL GAINS AS % OF COST OF INVESTMENT SOLD,STATEMENT OF NO. OF TRANSACTIONS FOR STCG+LTCG DURING THE YEAR UNDER APPEAL,DETAILS OF NUMBER OF DAYS TRANSACTED PER MONTH. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER HE HELD THAT FROM THE DATA PLACED ON RECORD IT WAS CLEAR THAT THE VOLUME OF TRADING HAD INCREASED FROM YEAR TO YEAR THAT THE NUMBER OF SCRIPS PURCHASED AND SOLD DURING THE YEAR WERE 67 AND 55 RESPECTIVELY AS AGAINST 32 AND 21 IN THE IMMEDIATE PRECEDING YEAR,THAT THE PUR CHASE VALUE AND SALE TURNOVER HAD SHOWN A TREMENDOUS INCREASE FROM RS.2.07 CRORES AND RS.2.37 CRORES TO RS.5.98 CRORES AND RS. 5.39 CRORES RESPECTIVELY WHEN COMPARED TO THE EARLIER YE AR,THAT SUCH A QUANTUM JUMP OF RS. 4 CRORES IN ONE SINGLE YEAR INDICATED A HIGHER ROTATION OF T HE AVAILABLE CAPITAL,THAT IT POSSIBLE ONLY ON ACCOUNT OF CHURNING IN SHARES,THAT THE ASSESSEES C APITAL ROSE FROM RS. 1.67 CRORES TO RS. 2.62 CRORES ONLY DURING THE YEAR,THAT HE HAD EARNED A OV ERALL PROFIT OF 14.43% ON THE COST OF SHARES SOLD RESULTING IN LTCG + STCG,THAT HE EARNED ONLY 6.43% PROFIT ON COST OF SH ARES SOLD RESULTING IN STCG,THAT PROFIT RATIO OF STCG EARNED WAS MORE A KIN TO THE BUSINESS ACTIVITY THAN AN INVESTMENT ACTIVITY,THAT HE HAD INDULGED IN PURCHAS E AND SALE TRANSACTIONS ON 5L AND 62 WORKING DAYS OF THE STOCK EXCHANGE RESPECTIVELY,THAT THE AS SESSEE HAD BEEN REGULARLY TRANSACTING IN THE SHARE MARKET,THAT THE ASSESSEE HAD INDULGED IN CHUR NING OF THE SHARES WHICH COULD NOT BE CATEGORISED AS SHUFFLING OF THE PORTFOLIO IN THE CE RTAIN SCRIPS.CONSIDERING THE PRINCIPLE LAID DOWN IN THE CASE OF SARNATH INFRASTRUCTURE(P)LTD.(120 TT J 216) OF LUCKNOW BRANCH HE HELD THAT HABITUAL DEALING IN THAT PARTICULAR ITEM WAS INDICA TIVE OF INTENTION OF TRADE CARRIED OUT BY THE ASSESSEE,THAT PROFIT EARNED BY HIM ON CHURNING OF S HARES HAD TO BE ASSESSED AS TRADING PROFIT.FAA FURTHER MENTIONED THAT ALTHOUGH THE ASSESSEE HAD RE LIED UPON MANY A DECISIONS OF ITAT IN STATING THAT AS PER THE PRINCIPLE OF CONSISTENCY HIS INCOME NEEDS TO BE ASSESSED AS STCG ONLY AND NOT OTHERWISE,YET THE FACTS OF THE ASSESSEES CASE WERE TOTALLY DIFFERENT FROM THAT OF THE CASES CITED BY HIM,THAT IT WAS ALSO A SETTLED LAW THAT THE PRINCIP LE OF RES-JUDICATA WAS NOT APPLICABLE TO INCOME TAX PROCEEDINGS,THAT THE AO WAS NOT DEBARRED IN TAK ING A DIFFERENT VIEW IF THE EARLIER VIEW WAS NOT IN ACCORDANCE WITH LAW.IN THIS REGARD,FAA RELIED UP ON THE CASE OF M/S RADIALS INTERNATIONAL,DELIVERED ON 16/12/2011(ITA/ 1368/DEL /2010-AY.2006-07) BY THE ITAT DELHI BENCH,FINALLY,HE HELD THAT PART OF THE STCG INCOME WAS ACTUALLY EARNED ON CHURNING IN SHARES AND SAME WAS AKIN TO BUSINESS ACTIVITY,THAT SUCH IN COME WAS ABOUT 60% OF THE STCG,THAT AS PER THE CBDT GUIDELINES A PERSON COULD HOLD BOTH THE IN VESTMENT AND BUSINESS PORTFOLIOS, THAT THE PROFIT AVAILABLE TO THE ASSESSEEON SCRIPS INVOLVING CHURNING COULD BE ASSESSED AS BUSINESS INCOME AND THE REST COULD TREATED AS STCG. ACCORDINGLY, HE DIRECTED THE AO TO ASSESS AN INCOME OF RS. 16,62,262/- AS ASSESSEES BUSINESS INCOME ON SALE O F SHARES.HE FURTHER DIRECTED THE AO THAT REBATE U/S. 88E OF THE ACT HAD TO BE ALLOWED AS RELIEF TOW ARDS STT PAID ON THE RELEVANT TRANSACTIONS,AFTER VERIFICATION. 2.3. BEFORE US,AUTHORISED REPRESENTATIVE(AR) STATED THAT IN THE EARLIER YEARS ON SIMILAR FACTS INCOME FROM THE SHARE TRADING WAS TAXED UNDER THE H EAD STCG,THAT THERE WAS NO CHANGE IN FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER APPEAL,THAT OR DER FOR THE PREVIOUS YEARS WERE PASSED U/S.143(3)OF THE ACT,THAT NO BORROWED FUNDS WERE US ED FOR EARNING STCG,THAT HOLDING PERIOD OF 4 ITA NOS. 7246 & 7305/MUM/2012 SHRI JITENDRA K. SHAH SHARES PROVED THAT THE ASSESSEE WAS NOT INDULGING I N TRADING.HE REFERRED TO THE PAGE NO. 19,36,93 AND 99 OF THE PAPER BOOK.HE RELIED UPON THE JUDGMEN T OF RADHASOAMI SATSANG (193ITR 321)DELIVERED BY THE HONBLE APEX COURT.DEPARTMENTA L REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE ARE OF THE OPINION THAT THE QUESTION OF TREATING THE INCOME FROM SHARE TRADING IN PARTICULAR AY. HAS TO BE DECIDED ON THE BASIS OF THE FACTS RELEVANT FOR THAT PARTICULAR AY ONLY.PAST HISTORY AND ENTRIES IN THE BOOKS OF A/CS. HAVE LIMITED ROLE FOR DECIDING THE ISSUE OF T AXING A PARTICULAR ITEM OF INCOME UNDER A HEAD OF INCOME. IT IS THE INTENTION OF THE ASSESSEE AND SUR ROUNDING CIRCUMSTANCES THAT ARE THE DECIDING FACTORS FOR TAXING THE INCOME FROM SHARE-TRADING UN DER THE HEAD BUSINESS INCOME OR INCOME FROM CAPITAL GAINS.IN OTHER WORDS,RULE OF CONSISTE NCY DO NOT APPLY IN SUCH CASES,AS THE ISSUE HAS TO BE DECIDED ON PARTICULAR FACTS OF A PARTICULAR Y EAR. COURTS ARE OF THE VIEW THAT A TRADER IN SHARES IS M OTIVATED BY PROFIT IN SELLING THE SCRIPS ON EACH AND EVERY RISE IN VALUE.HE AIMS AT EARNING PROFIT B Y GENERATING VOLUME BY FREQUENTLY TURNING OVER THE STOCKS.HIGH FREQUENCY, HIGH VOLUME AND REGULARI TY OF TRANSACTIONS ARE SOME OF THE BASIC FEATURES OF A TRADING TRANSACTION.ON THE OTHER HAND AN INVESTOR WOULD MAKE PURCHASES WITH A VIEW TO EARNING INCOME FROM THE INVESTMENTS AND HE WOULD NOT BE TEMPTED TO SELL THE COMMODITY TO EARN QUICK PROFIT ON EACH AND EVERY RISE IN THE VAL UE AND WOULD HOLD THE COMMODITY FOR A LONGER PERIOD SO AS TO HAVE INCOME AS WELL AS APPRECIATION IN VALUE.IN OUR OPINION TRUE NATURE OF TRANSACTION CAN BE UNDERSTOOD FROM THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE.VARIOUS FACTORS NEEDED TO BE CONSIDERED IN UNDERSTANDING TH E INTENTION OR THE NATURE OF TRANSACTION ARE FREQUENCY AND VOLUME OF TRANSACTIONS,NATURE OF ENTR Y IN THE BOOKS OF ACCOUNTS,THE OBJECT CLAUSE IN THE MEMORANDUM OF ASSOCIATION IF THE ASSESSEE IS A CORPORATE ENTITY,ORGANISED EFFORTS MADE TO EARN INCOME,USE OF BORROWED FUND AND LOANS.IN OTHER WORDS INVESTMENT PRESUPPOSES A TIME FRAME OF HOLDING OF SECURITIES,WHEREAS FREQUENT SHUFFLING OF THE PORTFOLIO COULD INDICATE APPLICATION OF MIND TO BOOK THE PROFIT.AS A GENERAL RULE IT CAN BE SAFELY HELD THAT IF AN ASSESSEE PURCHASE SHARES DURING THE YEAR AND SELL THEM FREQUENTLY IN SHORT S PELL OF TIME IT INDICATES BUSINESS MOTIVE,UNLESS EVIDENCES ARE ADDUCED IN SUPPORT THAT SAME WERE ACT UALLY UNDERTAKEN FOR COMPELLING REASONS E.G. PRESSING NEEDS FOR FUND.IN SUCH CIRCUMSTANCES ASSES SEE IS REQUIRED TO EXPLAIN THE REASONS IN RESPECT OF EACH OF THE TRANSACTIONS BECAUSE A LARGE FREQUENCY OF TRANSACTION COULD BE A POINTER TOWARDS BUSINESS MOTIVE. FURTHER, WHERE THE TRANSA CTIONS ARE SQUARED UP DURING THE YEAR AND THE FUNDS ARE EMPLOYED IN NEW PORTFOLIOS AND THE SAME P ATTERN IS FOLLOWED YEAR AFTER YEAR IT COULD LEAD TO INFERENCE THAT THERE IS TRADING MOTIVE.AS STATED EARLIER,ALL THESE FACTORS ARE INDICATIVE ONLY. FIN AL DECISION RESTS ON THE CUMULATIVE EFFECTS OF ALL THE SE FACTORS. CBDT IN ITS CIRCULAR NO.4/2007 HAVE LAID DOWN PARAM ETERS/CRITERIA FOR JUDGING WHETHER THE ACTIVITIES OF THE ASSESSEE WAS IN THE NATURE OF AN INVESTMENT ACTIVITY OR A TRADING ACTIVITY. IT IS AL SO PERTINENT TO MENTION THAT THE VARIOUS COURTS AND TR IBUNALS AS WELL AS THE CBDT HAVE LAID DOWN THAT AN ASSESSEE CAN HAVE TWO PORTFOLIOS OF SHARES - ONE FOR TRADING AND ONE FOR INVESTMENT PURPOSES. THEREFORE, THE ASSESSEE CAN BE BOTH A DEA LER IN SHARES AS WELL AS AN INVESTOR IN SHARES AT THE SAME TIME. KEEPING IN MIND THE ABOVE MENTIONED GENERAL RULES,W E WILL LIKE TO CONCENTRATE THE FACTS OF THE PRESENT CASE.IT IS FOUND THAT THE ASSESSEE HAD INDU LGED IN REPETITIVE TRANSACTION OF 12 SCRIPS DURING THE YEAR UNDER APPEAL,THAT NUMBER OF SCRIPS PURCHAS ED AND SOLD DURING THE YEAR WAS 100% MORE 5 ITA NOS. 7246 & 7305/MUM/2012 SHRI JITENDRA K. SHAH THAN THE LAST ASSESSMENT YEAR,THAT IN THE TURNOVER OF PURCHASE VALUE AND THE SALE THERE IS HUGE INCREASE (FROM RS.2.37 CRORES TO RS.5.98 CRORES).IT IS FOUND THAT THE ASSESSEE HAD EARNED STCG OF RS.16.10 LAKHS FROM THE SHARES THAT WERE HELD BY HI M FOR A PERIOD OF ONE TO SEVEN DAYS.THUS,MAJOR PORTION OF STCG WAS OUT OF THE SALE OF SHARE THAT WERE HELD FOR A PERIOD OF ONE WEEK.FAA HAS GIVEN FINDING OF FACTS ABOUT CHURNING OF SHARES.IF THE PARAMETERS DRAWN BY THE CBDT CIRCULAR ARE TAKEN INTO CONSIDERATION AND THE CASE RELIED UPON BY THE FAA IS ANALYSED IT BECOMES CLEAR THAT ASSESSEE WAS CARRYING OUT BUSINE SS OF SHARES IN A SYSTEMATIC AND ORGANISED MANNER.SHORT HOLDING PERIOD,VOLUME OF THE SCRIPS AN D FREQUENCY OF THE TRANSACTIONS ARE MEASURE FACTORS TO DECIDE THE ISSUE AS WHETHER AN ASSESSEE IS AN INVESTOR OR DOING A BUSINESS OF SHARES AND SECURITIES. CONSIDERING THE PECULIAR FACTS OF THE Y EAR BEFORE US,WE ARE OF THE OPINION THAT ORDER OF THE FAA DOES NOT SUFFER FROM ANY INFIRMITY.HE HAS B IFURCATED THE STCG IN TWO PARTS-INVESTMENT AND TRADE. OUT OF STCG OF RS.27.23 LAKHS,RS.16.62 L AKHS HAS RIGHTLY BEEN HELD AS BUSINESS INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL BY THE AO.WE DO NOT KNOW AS HOW MANY SCRIPS WERE HELD BY THE ASSESSEE IN EARLIER YEARS FOR LESS THAN A WEEK AND WHAT WAS THE VOLUME OF SUCH SHARES IN THOSE YEARS.THEREFORE,WE WOULD NOT LIKE T O COMMENT UPON THE ORDERS OF THE EARLIER YEAR. AS FAR AS THE CASE OF RADHASOAMI SATSANG(SUPRA)WE I T IS SUFFICIENT TO SAY THAT THE HONBLE COURT HAS SPECIFICALLY MENTIONED IN THAT MATTER THAT THE DECISION WAS CONFINED TO THE FACTS OF THE CASE. WE WOULD LIKE TO REPRODUCE THE RELEVANT PART OF THE DECISION,THAT READS AS UNDER: COUNSEL FOR THE REVENUE HAD TOLD US THAT THE FACTS OF THIS CASE BEING VERY SPECIAL, NOTHING SHOULD BE SAID IN A MANNER WHICH WOULD HAVE GENERAL APPLIC ATION.WE ARE INCLINED TO ACCEPT THIS SUBMISSION AND WOULD LIKE TO STATE IN CLEAR TERMS T HAT THE DECISION IS CONFINED TO THE FACTS OF THE CASE AND MAY NOT BE TREATED AS AN AUTHORITY ON ASPE CTS WHICH HAVE BEEN DECIDED FOR GENERAL APPLICATION. THEREFORE,IN OUR OPINION ABOVE CASE IS OF NO HELP.C ONSIDERING THE PECULIAR FACTS OF THE MATTER FOR THE YEAR UNDER APPEAL WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. APPEAL FILED BY THE ASSESSEE IS REJECTED. ITA/7305/MUM/2012: 3. FIRST GROUND OF APPEAL FILED BY THE AO IS ABOUT DIR ECTION GIVEN BY THE FAA TO TREAT PART OF THE STCG(RS.10.61 LAKHS)AS INVESTMENT AND TAX IT UNDER THE HEAD STCG.WHILE DECIDING THE APPEAL OF THE ASSESSEE WE HAVE DISCUSSED THE FACTS OF THE CAS E AT LENGTH AND HAVE HELD THAT FAA HAS RIGHTLY HELD THAT PART OF THE SHARE TRANSACTION HAD TO BE T REATED STCG.CBDT HAS ALSO RECOGNISED THE PRINCIPAL THAT AN ASSESSEE CAN BE INVESTOR AND TRAD ER OF SHARES AT THE SAME TIME.SO,AFTER ANALYSING THE TRANSACTION CARRIED OUT OF THE ASSESSEE DURING THE YEAR AND AFTER CONSIDERING THE TOTALITY OF THE FACTS THE FAA HAS HELD THAT PART OF THE SHARE TRANS ACTION WAS NOT BUSINESS,THEN IN OUR OPINION,HIS ORDER HAS TO BE ENDORSED.GROUND NO.1 IS DECIDED AGA INST THE AO. 4. NEXT GROUND OF APPEAL DEALS WITH DIRECTION GIVEN BY THE FAA TO THE AO TO ALLOW BENEFIT OF INDEXATION ON LTCG OF RS.27,50,000/-. 4.1. BEFORE US,DR STATED THAT THE ASSESSEE HAD NOT MADE THE CLAIM WHILE FILING THE RETURN OF INCOME.AR ARGUED THAT THE CLAIM WAS MADE IN THE REV ISED RETURN.WE HAVE HEARD THE RIVAL SUBMISSIONS.WE ARE OF THE OPINION THAT IF A CLAIM H AS BEEN BY THE ASSESSEE EVEN BEFORE THE FAA IT HAS TO ALLOWE IF IT IS PERMISSIBLE AS PER THE PROVI SIONS OF LAW.IN THE MATTER OF PRUTHVI BROKERS AND 6 ITA NOS. 7246 & 7305/MUM/2012 SHRI JITENDRA K. SHAH SHAREHOLDERS P.LTD.,HOBLE JURISDICTIONAL HIGH COUR T HAS HELD AS UNDER : AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITI ONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONA L CLAIMS BEFORE THEM.THE APPELLATE AUTHORITIES HAVE THE DISCRETION TO PERMIT SUCH ADDITIONAL CLAIM S TO BE RAISED. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GRO UNDS, WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE WORDS 'COULD NOT HAVE BEEN RA ISED' MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FACTORS JUSTIFYING T HE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE MUST BE CONSIDERED ON ITS OWN FACTS. RESPECTFULLY,FOLLOWING THE SAME,WE DECIDE GROUND NO .2 AGAINST THE AO. AS A RESULT,APPEALS FILED BY THE AO AND THE ASSESSEE STAND DISMISSED. /)0 !2) * 3 !2) 4 5 ( - SA ! 6 ( ) 78. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2014. . ( +,' : ;! 18 TWU TWUTWU TWU , 2014 , ( - < SD/ SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;! /DATE: 18.06.2014 SK . . . . ( (( ( %) %) %) %) = ') = ') = ') = ') / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT (A) / > ? , 4. THE CONCERNED CIT / > ? 5. DR J BENCH, ITAT, MUMBAI / @- %)! , . . . 6. GUARD FILE/ - / &) &) &) &) %) %)%) %) //TRUE COPY// .! / BY ORDER, A / 7 DY./ASST. REGISTRAR , /ITAT, MUMBAI