M/s Palresha Trading Ltd., Bangalore V. DCIT, Bangalore

ITA 778/BANG/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5164 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-01-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KANNAN NARAYANAN J
• Keywords: Business income; Capital receipt; Capital Gains
• Section: 143(3); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A, BANGALORE BEFORE SHRI GEORGE GEORGE K, JM & SHRI B.R.BASKARAN, AM ITA NO.778/BANG/2016 : ASST.YEAR 2010-2011 M/S. PALRESHA TRADING LIMITED NO.203, 2 ND FLOOR, BATAVIA CHAMBERS, KUMARA KRUPA ROAD NEAR SHIVANANDA CIRCLE BANGALORE 560 001. PAN : AACCP3696A. V. THE DY .COMMISSIONER OF INCOME-TAX, CIRCLE 12(2) BANGALORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.SHEETHAL BORKAR, ADVOCATE RESPONDENT BY : SRI.KANNAN NARAYANAN, JCIT-DR DATE OF HEARING : 27.01.2021 DATE OF PRONOUNCEMENT : 08.02.2021 O R D E R PER GEORGE GEORGE K, JM : THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST CIT(A)S ORDER DATED 28.01.2016. THE RELEVANT ASSESSMENT YEAR IS 2010-2011. 2. THE SOLITARY ISSUE RAISED IS REGARDING INCOME ARISING FROM THE SALE OF SHARES WHETHER IT SHOULD BE ASSESSED AS INCOME FROM CAPITAL GAINS OR BUSINESS INCOME. THE ASSESSEE HAD ALSO RAISED ADDITIONAL GROUND. THE ISSUE RAISED IN THE ADDITIONAL GROUND IS WHETHER THE CIT(A) IS JUSTIFIED IN NOT SETTING OFF BUSINESS LOSS OF THE PREVIOUS ASSESSMENT YEAR AGAINST THE INCOME ARISING FROM THE SALE OF SHARES, WHICH WAS ASSESSED UNDER THE HEAD BUSINESS. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOW: ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 2 THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRADING AND CONSULTANCY. FOR THE ASSESSMENT YEAR 2010-2011, THE RETURN OF INCOME WAS FILED ON 29.03.2011 DECLARING TOTAL INCOME OF RS.41,12,140. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE I.T.ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN RECEIPT OF RS.1,44,70,210 FROM SALE OF SHARES AND AFTER REDUCING THE PURCHASE VALUE OF THE SHARES AMOUNTING TO RS.1,03,78,536, THE DIFFERENCE OF RS.40,91,674 WAS OFFERED TO TAX AS SHORT TERM CAPITAL GAINS U/S 111A OF THE I.T.ACT. THE ASSESSEE WAS ASKED TO PRODUCE COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION, DETAILS OF THE SHARES TRADED ETC. THE A.O. NOTICED THAT THE ASSESSEE HAD SHOWN THE SHORT TERM CAPITAL GAINS IN RESPECT OF SALE OF SHARES IN RESPECT OF ONE COMPANY, NAMELY, M/S.NAKODA TEXTILE INDUSTRIES LIMITED. THE A.O. IN THE ASSESSMENT ORDER DATED 18.03.2013 PASSED U/S 143(3) OF THE I.T.ACT, HELD THAT THE ASSESSEE WAS ESSENTIALLY TRADING IN SHARES AND THE INCOME ARISING FROM THE SALE OF SHARES SHOULD BE TREATED AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM CAPITAL GAINS. THE A.O. IN HOLDING SO, RELIED ON THE CBDT CIRCULAR NO.4/2007 DATED 15.06.2007, WHICH STATES THAT MERE CLASSIFICATION OF SHARES IN BOOKS OF ACCOUNT OF THE ASSESSEE AS `INVESTMENT OR `STOCK IN TRADE CANNOT BE THE DETERMINING FACTOR TO ARRIVE AT THE CONCLUSION AS TO WHETHER THE PROFIT HAS TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS OR CAPITAL GAINS. THE A.O. CONCLUDED THE ASSESSMENT BY HOLDING THAT IN THE FACTS AND CIRCUMSTANCES IT IS CLEAR THAT THE ASSESSEES TRANSACTION OF SHARES IS IN THE ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 3 NATURE OF TRADING AND ACCORDINGLY, THE SAME WAS BROUGHT TO TAX UNDER THE HEAD BUSINESS. 4. AGGRIEVED BY THE ORDER OF ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CONTENDED THAT THE INCOME ARISING FROM THE SALE OF SHARES IS TO BE TAXED AS CAPITAL GAINS SINCE THE PURCHASES WERE MADE AS AN INVESTMENT. HOWEVER, DUE TO SUDDEN RISE IN SHARE PRICES THE SAME WAS SOLD AND PROFITS WERE BOOKED. FURTHER, IT WAS CONTENDED THAT THE ASSESSEE HAD SUFFERED BUSINESS LOSS IN THE PAST YEARS AND THERE WOULD BE NO ADVANTAGE TO THE ASSESSEE BY DECLARING THE INCOME ON ACCOUNT OF SALE OF SHARE UNDER THE HEAD `CAPITAL GAINS. IT WAS FURTHER SUBMITTED THAT IF THE INCOME FROM SALE OF SHARES IS TO BE ASSESSED AS INCOME FROM BUSINESS, THE BUSINESS LOSS OF THE PAST YEARS SHOULD BE SET OFF AGAINST THE BUSINESS INCOME SO DETERMINED. THE CIT(A), HOWEVER, REJECTED THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. THE CIT(A) DID NOT ADJUDICATE THE ISSUE WHETHER THE ASSESSEE IS ENTITLED TO SET OFF BUSINESS LOSS OF EARLIER YEAR AGAINST BUSINESS INCOME DETERMINED. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOW:- 6.2 BE THAT AS IT MAY, ONE IS BOUND BY THE DECISIONS OF JURISDICTIONAL HIGH COURT AND TRIBUNALS. IN THE AFORESAID CASES THE JUDICIAL PRINCIPLES EVOLVED BASED ON THE FACTS THAT THE ASSESSEE SHOULD BE IN THE KNOWLEDGE OF HOLDING THE SHARES EITHER AS STOCK IN TRADE OR AS INVESTMENTS. EVEN THE CBDT CIRCULARS RELIED UPON BY THE APPELLANT SAYS THAT THE ASSESSEE SHOULD MAINTAIN TWO PORTFOLIOS ONE COMPRISING OF SECURITIES AND ANOTHER THE STOCK IN TRADE. IN THE INSTANT CASE THOUGH THE MAIN OBJECTIVE OF THE APPELLANT SEEN FROM THE MEMORANDUM OF ASSOCIATION IS THAT TO SUBSCRIBE FOR ACQUIRE SHARES STOCKS, ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 4 DEBENTURES, DEBENTURE STOCKS, BONDS MORTGAGES AND OTHER SECURITIES BY PURCHASE.THE APPELLANT NEITHER IN ITS AUDIT REPORT NOR IN THE NOTES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT HAS NOT MENTIONED WHETHER THE PURCHASE AND SALE OF THE SHARES IN NAKODA TEXTILE INDUSTRIES WERE MADE FOR THE INVESTMENT PURPOSE OTHER THAN THE SHARE TRADING ACTIVITY IN ACCORDANCE WITH THE MAIN OBJECTIVES OF THE APPELLANT. IN VIEW OF THE MATTERS AND THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT PURCHASE AND SALE OF THE SHARES OF NAKODA TEXTILE INDUSTRIES LTD WITHIN THE FINANCIAL YEAR IS IN ACCORDANCE WITH THE MAIN OBJECTIVES OF THE APPELLANT AND NOT FOR THE PURPOSE OF THE INVESTMENTS. THEREFORE, THE ACTION OF THE ASSESSING OFFICER BY TREATING THE TRADING OF THE SHARES AS BUSINESS ACTIVITY IS HEREBY UPHELD. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED TWO PAPER BOOKS, COMPRISING OF 139 PAGES. THE DETAILS ENCLOSED IN THE PAPER BOOK IS COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2010-2011, THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE, THE ARTICLES OF ASSOCIATION OF THE ASSESSEE, THE CBDT CIRCULAR NO.4/2007, COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2009-2010 AND THE JUDICIAL PRONOUNCEMENTS RELIED, ETC. THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE COMPANY WAS AN INVESTMENT COMPANY WHEN IT WAS INCORPORATED. THE OBJECTS WERE AMENDED ON 10.02.2000, WHEREBY THE OBJECT OF TRADING OF COMMODITY / SERVICES WAS INSERTED. FROM THE INCEPTION THE ASSESSEE WAS CLASSIFYING ITS INVESTMENTS IN SHARES UNDER THE HEAD ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 5 INVESTMENTS IN THE BALANCE SHEET. EVEN IN THE AMENDED MEMORANDUM AND ARTICLES OF ASSOCIATION, THE SHARES HAS NOT BEEN CLASSIFIED UNDER THE COMMODITIES OR PRODUCTS. DURING THE PREVIOUS YEAR RELEVANT TO THE CONCERNED ASSESSMENT YEAR, THE ASSESSEE HAD INVESTED ITS SURPLUS FUNDS IN PURCHASE OF QUOTED SHARES OF M/S.NAKODA TEXTILE INDUSTRIES LIMITED. THE ENTIRE LOT OF 2,33,000 SHARES WERE PURCHASED IN THE MONTH OF JULY 2009 FOR A TOTAL CONSIDERATION OF RS.1,03,78,536. SINCE THERE WAS INCREASE IN PRICES OF THE ABOVE MENTIONED SHARES, THE ASSESSEE SOLD THE SAME AND BOOKED PROFITS (MAJORITY OF SHARES WERE SOLD IN THE MONTH OF JANUARY 2010). THE AVERAGE SALE PRICE OF SHARE SOLD WAS AROUND RS.62.10. FURTHER THERE WAS FALL IN PRICES OF SHARES OF M/S.NAKODA TEXTILE INDUSTRIES LIMITED DURING THE MONTH OF MARCH 2010 TO MAY 2010. BETWEEN THE MONTHS OF MARCH AND MAY 2010, THE SHARE PRICES WERE HOVERING AROUND RS.15.28. THE PROOF WITH REGARD TO PRICES OF SHARES OF M/S.NAKODA TEXTILE INDUSTRIES LIMITED ARE PLACED ON RECORD AT PAGE 104 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE SHARES SO SOLD WERE OFFERED TO TAX UNDER THE HEAD SHORT TERM CAPITAL GAINS AND TAX WAS PAID ACCORDINGLY U/S 111A OF THE I.T.ACT. THE ASSESSEE HAD BROUGHT FORWARD LOSSES OF RS.86,56,924 PERTAINING TO ASSESSMENT YEAR 2009-2010 AND THE SAME OUGHT TO HAVE BEEN SET OFF IF THE PROFIT ON SALE OF SHARES IS ASSESSED AS BUSINESS INCOME. THE SPECIFIC PLEA OF THE ASSESSEE THAT THE BUSINESS LOSS PERTAINING TO ASSESSMENT YEAR 2009-2010 SHOULD BE SET OFF AGAINST THE PROFITS ARISING ON SALE OF SHARES IF THE SAME IS TO BE ASSESSED AS INCOME FROM BUSINESS, WAS NOT TAKEN INTO CONSIDERATION EITHER BY THE A.O. OR BY THE CIT(A). THE ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 6 COMPUTATION AND COPY OF THE INCOME-TAX RETURN FILED FOR THE ASSESSMENT YEAR 2009-2010, CLEARLY DEPICT THERE WAS A CARRIED FORWARD BUSINESS LOSS OF RS.86,43,210 (REFER PAGES 105 AND 106 OF THE PAPER BOOK FILED BY THE ASSESSEE). THE ASSESSEE HAD TRANSACTED IN PURCHASE AND SALE OF SHARES ONLY IN RESPECT OF ONE SCRIPT, VIZ., M/S.NAKODA TEXTILE INDUSTRIES LIMITED. THE PURCHASES WERE MADE IN INSTALMENTS IN THE MONTH OF JULY 2009 AND THEREAFTER, THESE SHARES WERE SOLD IN INSTALMENTS. HENCE, IT IS NOT A CASE OF REPETITIVE PURCHASE AND SALE OF SHARES. THE SHARES PURCHASED IN THE EARLIER YEARS HAVE BEEN HELD AS INVESTMENTS. AS MENTIONED EARLIER, FOR INVESTMENT OF SHARES OF M/S.NAKODA TEXTILE INDUSTRIES LIMITED, THE ASSESSEE DID NOT BORROW ANY AMOUNTS, BUT UTILIZED ONLY SURPLUS FUNDS AVAILABLE WITH IT. THE OBJECT OF THE ASSESSEE FROM BEGINNING IS ONLY AS INVESTMENT COMPANY. THE OBJECTS WERE AMENDED TO INCLUDE TRADING IN COMMODITIES. THERE IS NO MENTION OF SHARES FOR THE PURPOSE OF TRADING. THE ASSESSEE WAS HAVING CARRIED FORWARD BUSINESS LOSSES. THEREFORE, DECLARATION OF INCOME ON ACCOUNT OF SALE OF SHARE UNDER THE HEAD `BUSINESS WOULD HAVE RESULTED IN SET OFF OF BUSINESS LOSS. IN OTHER WORDS, THERE WOULD HAVE BEEN NO ADVANTAGE TO THE ASSESSEE IN CONCERNED ASSESSMENT YEAR, WHEN INCOME FROM SALE OF SHARE IS DECLARED UNDER `CAPITAL GAINS. 7.1 THE HONBLE APEX COURT IN THE CASE OF CIT V. H.HOLCK LARSEN REPORTED IN 160 ITR 67, HAD HELD WHEN TRANSACTION OF PURCHASE AND SALE OF SHARES WERE TO NURSE INVESTMENTS AND TO AVOID EROSION OF CAPITAL, SURPLUS ARISING FROM THE SALE OF SHARES IS A CAPITAL RECEIPT. THE ABOVE JUDGMENT OF HONBLE APEX COURT ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 7 HAS BEEN FOLLOWED IN THE ORDER OF THE ITAT REPORTED IN THE CASE OF DCIT V. W.G.SHARE BROKING PVT. LTD. IN ITA NOS.2559 & 2553/DEL/2011 (ORDER DATED 19.08.2015). THE ITAT AHMEDABAD BENCHES IN THE CASE OF ANKUR SCIENTIFIC ENERGY TECHNOLOGIES PVT. LTD. V. DCIT IN ITA NO.2551/AHD/2013 (ORDER DATED 18.01.2017) HAD FOLLOWED THE BROAD PRINCIPLES CULLED OUT BY THE ITAT LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE PVT. LTD. REPORTED IN 120 TTJ 216 FOR DETERMINATION OF INCOME ARISING ON SALE OF SHARES WHETHER IT IS TO BE ASSESSED AS `INCOME FROM CAPITAL GAINS OR `INCOME FROM BUSINESS. THE BROAD PRINCIPLE ENUNCIATED, READS AS FOLLOW:- (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED STOCK-IN-TRADE OR INVESTMENT. WHETHER SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVESTMENT OR NONTRADING ASSET. (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY, MONEY IS BORROWED TO PURCHASE GOODS FOR THE PURPOSE OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASE AND DISPOSAL IN THAT PARTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT, OR THERE ARE SUBSTANTIAL TRANSACTION IN THAT ITEM, IF WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PURCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTING (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROFIT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION ITS VALUE? FORMER WILL INDICATE INTENTION OF TRADES AND LATTER, AN INVESTMENT. IN THE CASE ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 8 OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIAL MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET? IF THE ITEMS IN QUESTION ARE VALUED AT COST, IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MARKET VALUE OR NET REALIZABLE VALUE (WHICHEVER IS LESS), IT WILL INDICATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEMORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION? WHETHER FOR TRADE OR FOR INVESTMENT? IF AUTHORIZED ONLY FOR TRADE, THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY? AND VICE VERSE. 7. IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHOW THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT IN THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS. IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY, STOCK-IN-TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPARENT IS NOT REAL. 8. THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHARES ( OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) FOR INVESTMENT. 9. ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISITES FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE ASSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS, IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM? WHETHER IT HAD SUCH AN INTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR WHEN PURCHASES WERE MADE? 10. IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 OF 2007 OF 15TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS, ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 9 BOTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. 11. NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EFFECT OF SEVERAL FACTORS HAS TO BE SEEN. 7.2 THE POINTS OF OUR DISCUSSION IN PARA 7 (SUPRA) ARE SUMMARIZED AS FOLLOWS:- (I) TRANSACTION OF PURCHASE AND SALE OF SHARE IS IN RESPECT OF ONE SCRIPT ONLY. (II) PURCHASES ARE MADE IN INSTALMENTS AND THEREAFTER THEY HAVE BEEN SOLD IN INSTALMENTS. HENCE, IT IS NOT A CASE OF REPETITIVE PURCHASE AND SALES. (III) SHARES PURCHASED IN EARLIER YEARS HAVE BEEN HELD AS `INVESTMENT. (IV) OWN FUNDS ARE USED FOR PURCHASE OF SHARES AND NOT BORROWED FUNDS. (V) THE MAIN OBJECT OF THE ASSESSEE IS `INVESTMENT AND THE OBJECTIVE OF TRADING IS ONLY WITH REFERENCE OF COMMODITY. (VI) ASSESSEE HAS DECLARED SHORT TERM CAPITAL GAINS AND PAID TAXES ACCORDINGLY, EVEN THOUGH IT HAS BROUGHT FORWARD BUSINESS LOSS. 7.3 IN LIGHT OF THE AFORESAID REASONING AND JUDICIAL PRONOUNCEMENTS, WE HOLD THAT PROFITS ON SALE OF SHARES IN GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, OUGHT TO BE TAXED UNDER THE HEAD `CAPITAL GAINS. IT IS ORDERED ACCORDINGLY. ITA NO.778/BANG/2016 M/S.PALRESHA TRADING LIMITED. 10 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 08 TH DAY OF FEBRUARY, 2021 . SD/- SD/- ( B.R.BASKARAN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE; DATED : 08 TH FEBRUARY, 2021. DEVADAS G* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A)-5, BANGALORE 4. THE CIT-5, BANGALORE. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE