ACIT 25(3), MUMBAI V. ANJANA SUSHIL MISHRA, MUMBAI

ITA 7789/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3528 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BEHARILAL
• Keywords: Business income; Speculative transactions

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 . : 7789 / / 2010 A.Y. 2007-08 ITA NO. : 7789/MUM/2010 (ASSESSMENT YEAR: 2007-08) ACIT 25(3), C-11, R. NO. 308, PRATYAKSH KAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI -400 051 VS MRS. ANJANA SUSHIL MISHRA, C-702, SILVER TOWER, THAKUR VILLAGE, KANDIVALI (EAST), MUMBAI -400 101 PAN: AFKPM 4172 L (APPELLANT) (RESPONDENT) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : SHRI BEHARILAL /DATE OF HEARING : 06-06-2013 / DATE OF PRONOUNCEMENT : 19 -06-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE APPEAL ARISES FROM THE ORDER OF THE CIT(A) 35, MUMB AI, DATED 16.08.2010 WHEREIN, THE DEPARTMENT HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ACCEPT THE CLAI M OF SHORT TERM CAPITAL GAIN OF RS. 22,66,873/- ON PROFIT ARRIVING FROM PUR CHASE & SALE OF SHARES INSTEAD OF BUSINESS INCOME TREATED BY THE AO WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS DEALING IN LARGE VOLUME OF SHARES, MOST OF THE SHARES ARE BOUGHT AND SOLD WITH IN SHORT PERIOD, WHILE SOME ARE NOT SOLD DUE TO MARKET CONDITIONS AN D THEIR HOLDING WITH ASSESSEE REMAINS BEYOND FEW DAYS, IT WILL NOT CHANG E THE NATURE OF TRANSACTIONS AND THE ASSESSEE IS VERY WELL ENGAGED IN THE BUSINESS OF SHARE TRADING, WHICH DENOTE THAT THE MOTIVE OF THE ASSESSEE IS TO CARRY ON BUSINESS IN SHARES TO BOOK PROFIT RATHER THAN IN VESTMENT IN SHARES. . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 2 2. THE FACTS, AS RECORDED BY THE CIT(A) ARE THAT THE AS SESSEE IS DERIVING INCOME FROM CAPITAL GAINS AND INCOME FROM OTHER SOU RCES. THE ASSESSEE IS AN INDIVIDUAL WHO DECLARED PROFIT, EARNED FROM SHARE TRANSACTIONS AT RS. 22,66,873/- UNDER THE HEAD SHORT TE RM CAPITAL GAIN AND CERTAIN INCOME, AT RS. 48,336/-, AS SPECULATION. IN TH E COURSE OF ASSESSMENT PROCEEDINGS, THE AO SOUGHT JUSTIFICATION FOR TH E CLAIM OF THE ASSESSEE WITH REGARD TO SHORT TERM CAPITAL GAIN (STG C) IN THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE, IN THE SHARE S CLAIMED TO BE HELD BY THE ASSESSEE UNDER INVESTMENTS. THE AO SOUGHT THE DETAILS OF TRANSACTIONS AND OTHER DETAILS, WITH RESPECT TO THE ACTIVITY CARRIED ON BY THE ASSESSEE. HAVING REGARD TO THE FREQUENCY OF TRANSAC TIONS, QUANTITY OF SHARES PURCHASED AND SOLD AND THE NUMBER OF TRANSAC TIONS, THE AO WAS OF THE OPINION THAT IT WAS AN ORGANIZED ACTIVITY OF PUR CHASE AND SALE OF SHARES WITH PROFIT MOTIVE AND, THEREFORE, REQUIRED TH E ASSESSEE TO FURNISH THE REASONS AS TO WHY THE SAME COULD NOT BE TREATED AS BUSINESS INCOME. THE ASSESSEE, VIDE LETTER DATED 24.12.2009 SUBMIT TED THAT THE ASSESSEE IS/WAS AN INVESTOR IN SHARES. IT WAS SUBMITTED THAT THE SHARES WERE SHOWN AS INVESTMENT IN THE BALANCE SHE ET FILED ALONG WITH THE RETURN OF INCOME. THE ASSESSEE FURTHER CONTEND ED THAT NO BORROWED FUNDS WERE UTILISED, EXCEPT FOR SOME SMALL LOANS TA KEN FROM FAMILY MEMBERS AND FRIENDS, ON WHICH NO INTEREST WAS PAID, A ND NO INTEREST EXPENDITURE WAS CLAIMED. THE ASSESSEE ALSO RELIED ON VARIOUS DECISIONS, AS CITED IN THE ASSESSMENT ORDER. THE ASSESSEE CONTENDED THAT THE VOLUME OF FREQUENCY OF TRANSACTIONS WOULD NOT D ECIDE THE NATURE OF ASSET AND FOR THIS PURPOSE RELIED ON THE DECISIO NS WOULD NOT DECIDE THE NATURE OF ASSET AND FOR THIS PURPOSE RELIED ON THE DECISION OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF JANAK S RANGWALLA (1 1 SOT 627). THE AO, DID NOT ACCEPT THE ABOVE REPLY AND ASSESS ED BOTH, THE SHORT TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN UNDER THE HEAD BUSINESS ON THE FOLLOWING GROUNDS: MERE ENTRIES IN THE BOOKS OF ACCOUNT SHOWING SHARES AS INVESTMENT IS NOT DETERMINATIVE FACTOR TO DECIDE THE REAL NATURE OF TRANSACTION. FOR THIS PROPOSITION THE AO RELIED ON VARIOUS JUDGMENTS INCL UDING THE DECISIONS OF THE SUPREME COURT IN . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 3 A) TUTICORIN ALKALI CHEMICALS CASE 227 ITR 172 B) CHOWRINGHEE SALES BUREAUS CASE 87 ITR 584 C) PUNJAB DISTILLING INDUSTRIES LTDS CASE 35 ITR 523 D) G. VENKATASWAMI NAIDU & COS CASE 35 ITR 594 E) BAZAPUR SUGAR FACTORS CASE 172 ITR 330 (I) ASSESSEE IS UNDOUBTEDLY DEALING IN LARGE NUMBER OF SHARES. IN FACT DEALING IN SHARES IS THE SOLE BUSINESS OF THE ASSESSEE. MOST OF THE SHARES ARE BOUGHT AND SOLD WITHIN SHORT PERI OD. WHILE SOME ARE NOT SOLD DUE TO MARKET CONDITIONS AND THEI R HOLDING WITH THE ASSESSEE REMAINS BEYOND FEW DAYS, IT WILL NOT CHANGE THE NATURE OF TRANSACTIONS. THE ASSESSEE IS VERY WE LL ENGAGED IN THE BUSINESS OF SHARE TRADING AND RUNS A FULL FLEDG ED OFFICE FOR THIS PURPOSE. (II) THE AO RELIED ON THE CIRCULAR NO. 4/2007 DATED 15.0 6.2007 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (III) FOR TREATING THE PROFIT ON SALE OF INVESTMENT IN SH ARES AS BUSINESS INCOME, THE AO RELIED UPON FOLLOWING JUDGM ENTS: A) LAXMINARAYAN RAM GOPAL VS. GOVT. OF HYDERABAD 25 ITR 449 (SC) B) DAMODAR SHENOY (AP) VS. CIT 26 ITR 650 (BOM) C) WERLE & CO. VS. COLQHOUN (1988) TC 402; D) CIT VS MOTILAL HIRABHAI SPG. & WVG. CO. LTD. 117 IT R 173 (GUJ); E) RAJA BAHADUR VISHESHWARA SINGH VS. CIT 41 ITR 685(SC.); F) BHARAT DEVELOPMENT (P) LTD. VS. CIT 4 TAXMAN 58 (DE L.); G) PUNJAB CO-OPERATIVE BANK LTD. VS. CIT 81 ITR 635 (P C) AND H) SARDAR INDRA SINGH & SONS LTD. VS. CIT 24 ITR 514 ( SC) (IV) THE AO HAS FURTHER NOTED THAT THE FACT THAT THE APP ELLANT HAS HELD SHARES FOR A SHORT PERIOD AND THEN SOLD THEM O FF INDICATES THAT THE ONLY INTENT OF THE APPELLANT IS TO BOOK PR OFIT ON SALE OF SHARES. THE FACT THAT THE APPELLANT HAS SOLD LARGE NUMBER OF SHARES WITHIN A SHORT PERIOD OF PURCHASE PROVES THA T THERE WAS NO INTENTION OF THE APPELLANT TO HOLD THE SHARES AS INVESTMENT AND EARN DIVIDEND ON THE SAME. THE APPELLANT HAS RE PEATEDLY BOUGHT AND SOLD SHARES AFTER HOLDING THEM FOR SHORT DURATION WITH ONLY ONE INTENT I.E. PROFIT MAKING. RELIANCE W AS PLACED BY THE AO ON THE DECISION OF THE ITAT AHMADABAD BENCH IN DCIT VS. DEEPA SHAH 99 ITD 219. (V) THE AO FURTHER HELD THAT MOST OF THE SHARES ARE BOU GHT AND SOLD IN FEW DAYS WHILE SOME OTHER SHARES WERE HELD BEYON D FEW DAYS. IN VIEW OF THE ABOVE REASONS, THE AO ASSESSED SHORT TERM CAPITAL GAIN UNDER THE HEAD BUSINESS, WHICH IS CO NTESTED IN THIS APPEAL. 3. THE AO, THEREFORE, DISALLOWED THE CAPITAL GAINS SHOWN A S STGC, AND ASSESSED THE ENTIRE INCOME FROM BUSINESS. 4. THE ASSESSEE, THEN APPROACHED THE CIT(A), BEFORE WHOM THE ASSESSEE REITERATED THE ARGUMENTS MADE BEFORE THE AO AND CONTENDED THAT THE ASSESSEE WAS ONLY AN INVESTOR IN SHARES AND THE INVESTMENT IN SHARES WAS ADMITTED UNDER THE HEAD INVESTMENT IN THE B ALANCE SHEET . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 4 FILED BY THE ASSESSEE. HE SUBMITTED THAT AS PER BALANCE S HEET AS ON 31.3.2006 THE INVESTMENT WAS ADMITTED AT RS. 28,82,455/- W HEREAS AS ON 31.3.2007 THE INVESTMENT IN SHARES STOOD AT RS. 36,61,9 19/- AND WHEN COMPARED TO THE SAME THE TOTAL PURCHASE AND SALE VALUE OF SHARES WAS RS. 1,07,25,530/- AND RS. 1,29,92,403/-. HE CONT ENDED THAT FROM THE ABOVE, IT CANNOT BE SAID THAT THE SALE RAT IO WAS HIGHER THEN THE INVESTMENT AND THE ASSESSEE DID NOT AVAIL ANY BORROWED FUNDS, ON WHICH ANY INTEREST WOULD HAVE BEEN PAID. THE FEW LOANS APPEARING IN THE BALANCE SHEET WERE TAKEN FROM FRIENDS AN D RELATIVES, ON WHICH, NO INTEREST WAS PAID. IT WAS SUBMITTED THAT TH E ASSESSEE DID SOME SPECULATIVE TRANSACTIONS IN SHARES, WHICH WERE VERY NOMINAL, BUT THAT BY ITSELF, WOULD NOT DEBAR THE ASSESSEE FROM CLAIMING T HE PROFIT ON SALE OF SHARES UNDER THE HEAD CAPITAL GAINS. HE ADMITTED THAT THE ASSESSEE SHOWED SPECULATIVE PROFIT OF RS. 66,170/- IN THE P RECEDING YEAR, I.E. ASSESSMENT YEAR 2006-07. HE FURTHER CONTENDE D THAT THE AO WAS WRONG TO HOLD THAT THE ASSESSEE HELD MOST OF THE S HARES ONLY FOR VERY FEW DAYS. ON THE OTHER HAND, THE ASSESSEE EARNED MAJOR PORT ION OF SHORT TERM CAPITAL GAIN (RS. 12,27,142/- OUT OF RS. 22,46,050/ -) FROM THE SHARES HELD FOR FAIRLY SHORT/LONG PERIOD AS SHOWN BELOW: PURCHASES SALES SECURITY NAME DATE QTY AMT. DATE QTY AMT. HOLDING PERIOD GAINS LOSS ARROW WEBTEX 6.2.06 2500 5,33,705 19.12.06 900 6,58,329 - 316 3.5.06 400 3,21,089 - 500 3,04,361 - 225 500 3,58,820 - 231 1000 7,28,482 - 232 2900 8,54,794 2900 20,49,993 11,95,199 FCI ONE CONNECTOR 17.5.05 100 32,452 3.5.06 100 42,661 10,209 351 GUJARAT GAS 20.5.05 10 10,000 3.5.06 10 12,956 2,956 348 INTERNET TRAD 23.5.05 200 24,718 23.8.06 200 32,886 8,168 457 JEYPORE SUGAR 13.4.06 50 37,174 10.1.07 200 61,219 - 272 21.4.06 50 38,882 - - - 264 18.8.06 100 42,555 - - - - 145 200 1,81,611 - 200 61,219 -57,392 - . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 5 LINC PEN 11.5.05 300 15,360 10.1.07 800 37,518 - 352 18.8.05 500 39,031 - - - - 253 200 54,391 - 800 37,518 -16,873 - W S IND 18.3.05 2000 60,256 26.4.06 3000 1,73,281 - 404 18.8,05 1000 18,790 - - - - 506 3000 79,046 - 3000 1,73,281 94,235 - BANK OF RAJASTHAN 11.5.05 500 30,559 26.4.06 600 25,862 - 352 18,8.05 100 4,663 - - - - 253 600 35,222 - 600 25,862 -9,360 - TOTAL 12,27,142 5. FROM THE ABOVE, THE ASSESSEE SUBMITTED BEFORE THE C IT(A), THAT MORE THAN 50% OF SHORT TERM CAPITAL GAIN WAS EARNED B Y HOLDING SHARES FOR MORE THAN 5 TO 6 MONTHS AND, THEREFORE, THE AO ERRED IN HOLDING THAT THE ASSESSEE HELD THE SHARES ONLY FOR FEW D AYS. HE FURTHER CONTENDED THAT ALL THE SHARES TRANSACTED WERE DELIVERY BASED, AS IS EVIDENT BY THE DEMAT ACCOUNT AND THAT THE ASSESSEE P AID STT AT A HIGHER RATE APPLICABLE TO THE INVESTOR WHICH SHOWS THAT T HE ASSESSEE WAS ONLY AN INVESTOR. HE RELIED ON THE DECISION OF HONBL E MUMBAI TRIBUNAL IN THE CASE OF GOPAL PUROHIT VS. JCIT (29 SOT 117) IN WHICH IT WAS HELD AS UNDER: WHEN WE COMPARE THE FACTS OF THE CASE, WE FIND THA T THE FACTS OF BOTH ARE ALMOST IDENTICAL. IN THE PRESENT CASE, THE ASSESSEE IS ALSO MAINTAINING SEPARATE RECORDS FOR BOTH TYPES OF TRANSACTIONS. FURTHER, IN THE PRESENT CASE, IT IS IMPORTANT TO NO TICE THAT THE ASSESSEE HAS ENTERED INTO TWO DIFFERENT TYPES OF TR ANSACTIONS, WHERE BOTH ACTIVITIES ARE ENTIRELY DIFFERENT IN NAT URE I.E. ONE ACTIVITY IS OF INVESTMENT IN NATURE ON THE BASIS OF DELIVERY AND SECOND ACTIVITY IS PURELY OF JOBBING (WITHOUT DELIV ERY) WHICH PUTS ASSESSEES CASE ON A MORE STRONG FOOTING. HENCE, IN OUR VIEW, THE RATIO OF THIS DECISION IS SQUARELY APPLIES TO T HE FATS OF THE PRESENT CASE. ACCORDINGLY, WE HOLD THAT THE DELIVER Y BASED TRANSACTION SHOULD BE TREATED AS OF THE NATURE OF I NVESTMENT TRANSACTIONS AND PROFIT THERE FROM SHOULD BE TREATE D AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL DEPENDING UP ON THE PERIOD OF HOLDING. TO CONCLUDE, WE HOLD THAT, IN THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE, THE ASSESSEES CLAIM OF SHORT TERM CA PITAL GAIN AND LONG TERM CAPITAL ON SHARE TRANSACTIONS WHERE THE D ELIVERY HAS BEEN TAKEN OR GIVEN AND SECURITIES TRANSACTION TAX HAS BEEN PAID IS LIABLE TO ACCEPTED. ACCORDINGLY, WE REVERSE THE ORDERS OF REVENUE AUTHORITIES. . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 6 6. FURTHER THE REPRESENTATIVE RELIED ON THE DECISION OF H ONBLE TRIBUNAL IN THE CASE OF JANAK S. RANGWALLA VS. ACIT (11 SOT 627) WHEREIN IT IS HELD THAT THE FREQUENCY AND MAGNITUDE OF TRA NSACTION CANNOT BE THE CRITERIA FOR DETERMINING THE HEAD OF INCOME . HE FURTHER SUBMITTED THAT RECENTLY THE HONBLE MUMBAI HIGH COURT H AS CONFIRMED THE DECISION OF THE HONBLE ITAT IN THE CASE OF SHRI GOPAL PUROHIT. 7. THE CIT(A), TAKING INTO CONSIDERATION THE SUBMISSIONS, HELD, I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESENT ATIVE AND THE STAND TAKEN BY THE AO. ADMITTEDLY, THE APPELLANT DISCLOSE D THE SHARES AS INVESTMENT IN THE BALANCE SHEET FOR AY 2006-07 AND 2007-08. IT IS SEEN FROM THE BALANCE SHEET THAT THE INVESTMENT IN SHARE S AS ON 31.3.2006 WAS RS. 28,82,919/-.THE TOTAL SALE VALUE OF SHARES ON WHICH SHORT TERM CAPITAL GAIN WAS ADMITTED BY THE APPELLANT DURING T HIS YEAR IS RS. 1,29,92,403/- AND WHEN SAME IS COMPARED TO THE INVE STMENT IN SHARES AS ON 31.3.2006 AND 31.3.2007, IT CANNOT BE SAID TH AT THE APPELLANT WAS ENGAGED IN FREQUENT TRANSACTIONS. THE RATIO OF TURNOVER TO INVESTMENT WAS AROUND THREE. IT IS TRUE THAT THE AP PELLANT UNDERTOOK SPECULATIVE TRANSACTIONS IN THE EARLIER YEAR BUT TH AT IS NO BAR FOR THE ASSESSEE TO HOLD SHARES AS INVESTMENT AND FINANCIAL CONSULTANTS PVT. LTD. VS. DY. CIT (2 SOT 371). FURTHER THE APPELLANT DID NOT CLAIM ANY PAYMENT OF INTEREST ON BORROWED FUNDS WHICH WERE UT ILIZED FOR INVESTMENT IN SHARES. A PERUSAL OF WORKING OF SHORT TERM CAPITAL GAINS SHOWS THAT THE APPELLANT EARNED SHORT TERM CAPITAL GAINS BY HOLDING SHARES AS BELOW: NO. OF DAYS NO. OF SCRIPS NO. OF BUYING TRANSACTIONS NO. OF SALE # TRANS- ACTIONS CAPITAL GAIN/LOSS % OF TOTAL GAINS/LOSS 361 & MORE 3 2 2 93044 4.10% 331-360 4 4 2 10443 0.46% 301-330 1 1 1 466195 20.57% 271-300 1 1 1 -21869 -0.96% 241-270 4 4 2 -49554 -2.19% 211-240 2 1 4 771428 34.03% 181-210 0 0 0 0 0.00% 151-180 0 0 0 0 0.00% 121-150 11 7 10 103884 4.58% 91-120 10 7 12 319495 14.09% 61-90 10 9 8 -113895 -5.02% 31-60 14 19 17 470587 20.76% 0-30 18 24 26 217114 9.58% TOTAL 2266872 100.00% FROM THE ABOVE, IT COULD BE SEEN THAT MAJOR PORTION OF SHORT TERM CAPITAL GAINS WAS EARNED BY HOLDING THE SHARES FOR MORE THA N SEVEN MONTHS AND IN FACT THE SHORT TERM CAPITAL GAINS EARNED ON SALE OF SHARES BY HOLDING THEM FOR LESS THAN FIVE MONTHS IS NOT SUBST ANTIAL. FURTHER AS . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 7 SEEN FROM THE CAPITAL ACCOUNT AND BALANCE SHEET, TH E APPELLANT HAS NOT CLAIMED ANY INTEREST PAID ON BORROWINGS AS THE SAME WERE FROM RELATIVES AND FRIENDS. CONSIDERING THE ABOVE FACTS, IT CANNOT BE SAID THAT THE APPELLANT WAS REGULARLY TRADING IN SHARES. FURTHER, THE HONBLE TRIBUNAL IN THE CASE OF GOPAL PUROHIT VS. JCIT (29 SOT 117) HELD AS UNDER: WHEN WE COMPARE THE FACTS OF THE CASE WITH THAT CA SE, WE FIND THAT THE FACTS OF BOTH ARE ALMOST IDENTICAL. IN THE PRESENT CASE, THE ASSESSEE IS ALSO MAINTAINING SEPARATE RECORDS FOR BOTH TYPES OF TRANSACTIONS FURTHER, IN THE PRESENT CASE, IT IS IMPORTANT TO NO TICE THAT THE ASSESSEE HAS ENTERED INTO TWO DIFFERENT TYPES OF TRANSACTION S, WHERE BOTH ACTIVITIES ARE ENTIRELY DIFFERENT IN NATURE I.E. ON E ACTIVITY IS OF INVESTMENT IN NATURE ON THE BASIS OF DELIVERY AND SECOND ACTIV ITY IS PURELY OF JOBBING (WITHOUT DELIVERY) WHICH PUTS ASSESSEES CA SE ON A MORE STRONG FOOTING. HENCE, IN OUR VIEW, THE RATIO OF THIS DECI SION IS SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, WE H OLD THAT THE DELIVERY BASED TRANSACTION SHOULD BE TREATED AS OF THE NATUR E OF INVESTMENT TRANSACTIONS AND PROFIT THEREFROM SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN DEPENDING UP ON THE PERIOD OF HOLDING. TO CONCLUDE, WE HOLD THAT, IN THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE, THE ASSESSEES CLAIM OF SHORT TERM CAPITAL GA IN AND LONG TERM CAPITAL ON SHARE TRANSACTIONS WHERE THE DELIVERY HA S BEEN TAKEN OR GIVEN AND SECURITIES TRANSACTION TAX HAS BEEN PAID IS LIABLE TO ACCEPTED. ACCORDINGLY, WE REVERSE THE ORDERS OF REVENUE AUTHO RITIES. FURTHER, THE HONBLE TRIBUNAL IN THE CASE OF JANAK S. RANGWALLA VS. ACIT (11 SOT 627) HELD THAT THE FREQUENCY AND MAGNI TUDE OF TRANSACTION CANNOT BE THE CRITERIA FOR DETERMINING THE HEAD OF INCOME. IT WAS HELD AS UNDER: THE MERE VOLUME OF TRANSACTION TRANSACTED BY THE A SSESSEE WOULD NOT ALTER THE NATURE OF TRANSACTION. IT IS AN ESTABLISH ED PRINCIPLE THAT INCOME IS TO BE COMPUTED WITH REGARD TO THE TRANSACTION. T HE TRANSACTION IN WHOLE HAS TO BE TAKEN INTO CONSIDERATION AND THE MA GNITUDE OF THE TRANSACTION DOES NOT ALTER THE NATURE OF TRANSACTIO N. THOUGH THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO THE INC OME-TAX PROCEEDINGS AS EACH YEAR IS AN INDEPENDENT YEAR OF THE ASSESSMENT BUT IN ORDER TO MAINTAIN CONSISTENCY, IT IS A JUDICIALLY ACCEPTED P RINCIPLE THAT SAME VIEW SHOULD BE ADOPTED FOR THE SUBSEQUENT YEARS, UNLESS THERE IS A MATERIAL CHANGE IN THE FACTS. THEIR LORDSHIPS OF HONBLE SUP REME COURT IN THE RADHASOAMI SATSANG VS CIT [1992] 193 ITR 321 HAVE C ATEGORICALLY HELD AS UNDER: STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY T O INCOME-TAX PROCEEDINGS. THOUGH, EACH ASSESSMENT YEAR BEING A U NIT, WHAT WAS DECIDED IN ONE YEAR MIGHT NOT APPLY IN THE FOLLOWIN G YEAR, WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASS ESSMENT YEARS HAS BEEN FOUND AS A FACT. ONE WAY OR THE OTHER AND PART IES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NO CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE C HANGED IN A SUBSEQUENT YEAR. THE SAME VIEW HAS BEEN TAKEN BY THE HONBLE DELHI C OURT IN CIT VS. NEO POLY PACK (P) LTD. [2000] 245 ITR 492. FURTHER THE HONBLE MUMBAI TRIBUNAL IN THE CASE OF GOPAL PUROHIT (29 SOT 117) HELD THAT THE DELIVERY BASED TRANSACTIONS ARE TO BE ASSESSED UNDER CAPITAL GAINS AND THIS DECISION HAS BEEN CONF IRMED BY THE HONBLE MUMBAI HIGH COURT BY JUDGMENT DATED 06.01.2 010. IN THE LIGHT OF THE ABOVE JURISDICTIONAL DECISIONS AND FOR THE OTHER FACTUAL FINDINGS GIVEN ABOVE, I DIRECT THE AO TO ACCEPT THE CLAIM OF THE APPELLANT BY ACCEPTING SHORT TERM CAPITAL GAIN ADMITTED BY TH E APPELLANT. . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 8 THE CIT(A), THUS, ALLOWED THE CLAIM OF THE ASSESSEE AND REV ERSED THE DECISION OF THE AO. 8. AGAINST THIS DECISION, THE DEPARTMENT IS IN APPEAL. 9. BEFORE US, THE DR STRENUOUSLY ARGUED AND DEFENDED T HE CASE OF THE AO, WHEREAS THE AR DEFENDED THE CASE OF THE CIT(A), BESIDES REFERRING TO THE DETAILED CHARTS SHOWING THE VOLUME OF BUS INESS AND FREQUENCY OF TRANSACTIONS AND HOLDING PERIOD OF SHARES HELD FOR PERIOD LESS THAN ONE YEAR. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AND CASE LAWS CITE D BEFORE US. FROM THE DETAIL AS PRODUCED AT APB 15, WE FIND THAT 60.2 5% OF INVESTMENTS TRANSACTED WERE HELD FOR MORE THAN 6 MONTH S. ONLY 26 IN 18 SCRIPS WERE HELD FOR LESS THEN 30 DAYS, WHICH RESULTED IN ONLY 9.58%, OF THE SHARES HELD AS INVESTMENTS. BASED ON THESE FACTS, WHEN WE APPLY THE DECISIONS OF GOPAL PUROHIT, WHICH NOW HAS FOU ND APPROVAL, EVEN OF THE HONBLE SUPREME COURT, THE HONBL E BOMBAY HIGH COURT HAD INSISTED UPON INTENTION AT THE TIME OF PURCHASE AND CONSISTENCY IN THE NATURE OF HOLDINGS. ON BOTH THESE GRO UNDS, THE ISSUE IS SQUARELY COVERED BY THE DECISION. COMING TO TH E CHARTS, AS REPRODUCED HERE ABOVE AND THE DETAILS IN THE BALANCE SH EET, WITH REGARD TO THE HOLDING PATTERN OF SHARES, HELD UNDER INVE STMENTS AND TRADING, IT IS EVIDENTLY CLEAR THAT THE ASSESSEE WAS MAINT AINING SEPARATE DISTINCT PORTFOLIOS. THIS FACT, NOT HAVING BEEN DENIE D BY THE AO, IS BASICALLY THE SPINE OF THE SUBMISSIONS OF THE ASSESSE E, BEFORE THE REVENUE AUTHORITIES. HENCE THE FACTS, AS NOTED ABOVE , GETS SQUARELY COVERED BY THE DECISION OF GOPAL PUROHIT (SUPRA) , WHICH, NOW HAS THE APPROVAL OF THE HONBLE APEX COURT, AS WELL. 11. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT (SUPRA), AS DONE BY TH E CIT(A), WE . . . 7789 /'' / 2010 ITA NO. 7789 / MUM / 2010 MRS. ANJANA SUSHIL MISHRA 9 DO NOT FIND ANY REASON TO DISTURB THE ORDER OF THE CIT(A ), WHICH WE SUSTAIN. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2013. SD/- SD/- ( .. ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH JUNE, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) % ( ) - 35 MUMBAI / THE CIT (A)-35, MUMBAI. 4) % 25, MUMBAI / THE CIT35, MUMBAI, 5) '() * + , * , ' , / THE D.R. A BENCH, MUMBAI. 6) )- . COPY TO GUARD FILE. /01 / BY ORDER / / TRUE COPY / / [ 2 / 3 4 * , ' , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *673 . . * CHAVAN, SR. PS