Baldevsingh Santsingh Wahi, Ahmednagar V. DCIT, Ahmednagar, Ahmednagar

ITA 81/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1991 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPUTHAMA
• Assessee Lawyers: SUNIL GANUS N PURANIK
• Keywords: Capital asset; Business income; Rule of consistency; Transactions in derivatives; Question of law; Date of conversion; Capital receipt; Futures and options; Speculative transactions
• Section: 45(2); 143(3)

Judgement Text

1 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.80 & 1331/PN/2011 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 BALDEVSINGH SANTSINGH WAHI (HUF), B-34, RAJ CHAMBERS, NEAR KOTHALA ROAD, AHMEDNAGAR VS. DCIT, AHMEDNAGAR (APPELLANT) (RESPONDENT) PAN NO. AADHB5922R ITA NOS.82 & 1332/PN/2011 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 GURUCHARANKAUR B. WAHI, B-34, RAJ CHAMBERS, NEAR KOTHALA ROAD, AHMEDNAGAR VS. DCIT, AHMEDNAGAR (APPELLANT) (RESPONDENT) PAN NO. AA MPW0454E ITA NO.81/PN/2011 ASSESSMENT YEAR : 2006 - 07 BALDEVSINGH SANTSINGH WAHI, B-34, RAJ CHAMBERS, NEAR KOTHALA ROAD, AHMEDNAGAR VS. DCIT, AHMEDNAGAR (APPELLANT) (RESPON DENT) PAN NO. AADHB5922R APPELLANT BY: SHRI SUNIL GANU/S.N. PURANIK RESPONDENT BY: MS. ANN KAPUTHAMA DATE OF HEARING : 27-02-2013 DATE OF PRONOUNCEMENT : 22-03-2013 ORDER PER R.S. PADVEKAR, JM:- THIS BATCH OF FIVE (5) APPEALS OF THREE DIFFERENT ASSESSEES ARE DISPOSED OF BY THIS CONSOLIDATED ORDER AS THE FACT AND ISSUES ARE IDENTICAL IN ALL THE A.YS. 2006-07 AND 2007-08. 2. THESE APPEALS ARE FILED BY THE THREE DIFFERENT ASSESSE ES CHALLENGING RESPECTIVE IMPUGNED ORDERS OF THE LD.CIT(A)-I, PUNE IN WHICH THE LD.CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT THE SHARE 2 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 TRANSACTIONS SHOWN AND CLAIMED BY THE ASSESSEES AS INVE STMENT ARE IN FACT TO BE ASSESSED UNDER THE HEAD BUSINESS. 3. WE FIRST DECIDE APPEALS BEING ITA NOS. 80 AND 1331 . THESE TWO APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDERS OF THE LD.CIT(A) OF THE A.Y. 2006-07. THE CORE ISSUE IN CONTROVERS IES IS WHETHER THE ASSESSING OFFICER AS WELL AS LD.CIT(A) JUSTIFIED IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE THAT IN RESPECT OF THE SHARE TRANSACTIO NS AS SAME ARE HELD AS THE INVESTMENT AND HENCE, THE ASSESSEE HAS RIGHTLY OFFER ED CAPITAL GAIN FROM THOSE TRANSACTIONS UNDER THE HEAD CAPITAL GAIN AND NOT AS A BUSINESS INCOME IN THE A.Y.2006-07 AND A.Y. 2007-08. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL WHICH ARE IDENTICAL IN BOTH T HE ASSESSMENT YEARS: 1. LOWER AUTHORITIES HAVE ERRED BOTH ON FACTS AS WELL AS IN LAW IN ASSESSING INCOME FROM LONG TERM AND SHORT TERM CAPIT AL GAIN ON SALE OF SHARES AS INCOME FROM BUSINESS. APPELLANT P RAYS THAT INCOME SHOULD BE ASSESSED AS INCOME FROM LONG TERM C APITAL AND SHORT TERM CAPITAL GAIN AS RETURNED. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, AS ASSESS ING OFFICER HAS GIVEN SPECIFIC FINDING IN THE ASSESSMENT ORDER U/S. 143(3) THAT THE ASSESSEE WAS INVESTOR FOR AND UPTO ASSESSM ENT YEAR 2005-06 AND THEREFORE THE SHARES HELD BY THE ASSESSEE AS ON 01.04.2005 ARE SHARES HELD AS INVESTMENT. APPELLANT THE REFORE PRAYS THAT PROFIT OR LOSS ON THE SHARES HELD ON 01.04.2 005 BE DECLARED TO BE ASSESSED AS INCOME FROM LONG TERM/SH ORT TERM CAPITAL GAIN AS THE CASE MAY BE. 3. WITHOUT PREJUDICE TO GROUND NO. 1 & 2 ABOVE LOWER AUTHORITIES HAVE ERRED IN NOT COMPUTING THE COST OF CONVERSION OF INVESTMENT INTO TRADING IN TERMS OF SEC. 45(2) I.E. THE FAIR MARKE T VALUE OF ASSET ON THE DATE OF CONVERSION INTO STOCK-IN-TRADE AND THEN ASSESSING THE INCOME AS LONG TERM/SHORT TERM CAPITAL GAI N AND BUSINESS INCOME. AND FURTHER, NOT TAKING THE VALUAT ION OF STOCK- IN-TRADE AT COST OR MARKET VALUE WHICHEVER IS LESS. 4. THE LOWER AUTHORITIES HAVE ERRED BOTH ON FACTS AS WELL AS IN LAW IN NOT FOLLOWING JURISDICTION HIGH COURT DECISION IN CASE OF GOPAL PUROHIT OF BOMBAY HIGH COURT. 5. CIT(A) HAS ERRED IN DATING THE ORDER AS PASSED ON 30.04.2010 WHICH IS SERVED ON ASSESSEES REPRESENTATIVE ON 24.11 .2010. THE APPEAL WAS HEARD IN FEBRUARY 2010. 4. THE FACTS AS NOTED BY THE AUTHORITY ARE AS UNDER. THE ASSESSEE DERIVED INCOME FROM THE TRANSPORT BUSINESS AS WELL AS DEA LING IN THE SHARES IN THE A.YS. 2006-07 AND 2007-08. THE ASSESSEE HAS DEC LARED THE CAPITAL GAIN FROM SHARE TRANSACTION AS UNDER: 3 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 ASSESSMENT YEAR LONG TERM CAPITAL GAIN SHORT TERM CAPITAL GAIN 2006 - 07 0 1,07,40,390 / - 2007 - 08 33,91,140 / - 53 , 71 , 455 / - 5. THE ASSESSEE IS DEALING WITH THE SHARE THROUGH THE BROKERS AND THIS FACT IS NOT DISPUTED BY BOTH THE AUTHORITIES BELOW. THE S HARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE CAN BE SUMMARIZED AS UNDER: PARTICULARS RS. OPENING STOCK OF THE SHARES 85,08,739/ - PURCHASES 10,16,56,897/ - SHORT TERM SALE OF THE SHARES 9,30,60,978/ - CLOSING STOCK 1,71,04,659/ - 6. THE ASSESSEE FILED THE BROKERS WISE DETAILS OF THE SHAR E TRANSACTIONS DURING THE ASSESSMENT PROCEEDINGS. IN OPINION OF THE ASS ESSING OFFICER, THE ASSESSEE HAS CARRIED OUT ENORMOUS TRANSACTIONS DURING THE YEAR AS PER THE DETAILS FILED IN RESPECT OF BROKERS WISE TRANSACTIONS AND TH AT IS INDICATIVE OF THE FACT THAT THE ASSESSEE WAS NOT ENGAGED IN THE SAID ACTIVITY AS A N INVESTOR BUT AS TRADER WITH A MOTIVE TO EARN PROFIT. THE ASSESS ING OFFICER ALSO NOTED THAT MOTIVE OF EARNING DIVIDEND IN THE SHARE TRANSACTIONS WAS MISSING THEN IT WOULD FALL IN THE CATEGORY OF TRADING OR BUSINESS TRANSAC TIONS. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE WAS EN GAGED IN SYSTEMATIC ACTIVITY OF TRADING IN SHARES WITH PROFIT MOTIVE. THE ASSE SSING OFFICER THEREFORE PROCEEDED TO ASSESS THE SHORT TERM CAPITAL GAIN (STCG) AS WELL AS LONG TERM CAPITAL GAIN (LTCG) DECLARED BY THE ASSES SEE UNDER THE HEAD BUSINESS INCOME. THE ASSESSING OFFICER TOOK THE SUP PORT FOR HIS ACTION BY RELYING ON THE FOLLOWING DECISIONS: 1. LAXMINARAYAN RAM GOPAL VS. GOVERNMENT OF HYDERABAD 25 ITR 449 (SC) 2. WERLE & CO. VS. COLQUHOUN 2 TC 402 3. RAJA BAHADUR VISHESHWARA SINGH (DECEASED) AND OTHER VS. CIT 41 ITR 685 (SC) 4 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 4. CIT VS. MOTILAL HIRABHAI SPINNING AND WEAVING CO. LIMIT ED 113 ITR 173 5. BHARAT DEVELOPMENT (P) LDT. VS. CIT 4 TAXMAN 58 (DEL.) 6. PUNJAB CO-OPERATIVE BANK LTD. VS. CIT, (1940) 8 ITR 635 (PC) 7. SARDAR INDRA SINGH & SONS LTD. VS. CIT, 24 ITR 415 (SC) 7. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFIC ER FOR TREATING THE ENTIRE SHARE TRANSACTIONS AS ORGANIZED BUSINESS AC TIVITY BY TAKING THE CONTENTION THAT THE ASSESSEE IS MAINTAINING TWO SEPARATE PORTFOLIOS AND THAT TWO SEPARATE ACCOUNTS HAVE BEEN MAINTAINED FOR THE INVE STMENT AS WELL AS TRADING PORTFOLIOS. THE ASSESSEE ALSO DISTINGUISHED THE DE CISIONS RELIED ON BY THE ASSESSING OFFICER BY STATING THAT SAID DECISIONS ARE IN RESPECT OF COMPANIES AND NOT OF THE INDIVIDUAL AND HENCE, THE PRINCIPLES LAID DOWN IN THOSE DECISIONS CANNOT BE APPLIED TO THE ASSESSEES CAS E. THE ASSESSEE FURTHER CONTENDED BEFORE THE ASSESSING OFFICER THAT HE HIMS ELF IS NOT DIRECTLY DOING THE SHARE TRADING BUT ALL TRANSACTIONS ARE CARRIED OUT THROUGH REGISTERED BROKER AND SECURITY TRANSACTIONS TAX (STT) H AS ALSO BEEN PAID. THE ASSESSEE ALSO CLAIMED THAT ALL THE SHARE TRANSACTIONS CARRIED OUT ARE WITHIN THE PURVIEW OF SECTION 111A AND THEREFORE GAINS ARIS ING OUT OF SAME ARE TO BE TREATED UNDER THE CAPITAL GAINS. THE ASSESS ING OFFICER HAS NOT ACCEPTED THE ARGUMENTS ADVANCED BY THE ASSESSEE AS IN HIS OPINION THE ACTIVITY OF THE SHARE TRANSACTIONS IS IN A SYSTEMATIC AND ORGANIZED MANNER LIKE A TRADING IN SHARES/SECURITIES WITH PROFIT MOTIVE. THE A SSESSING OFFICER ALSO NOTED THAT THE PROCEEDS OUT OF THE SALE OF SHARES WERE RED EPLOYED BY THE ASSESSEE FOR ACQUISITION OF FRESH SHARES/SECURITIES. THE AS SESSING OFFICER ALSO PLACED HIS RELIANCE IN THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS. SATLEJ COTTON MILLS SUPPLY AGENCY 100 ITR 706. THE ASSESSING OFFICER HAS OBSERVED THAT MAGNITUDE OF TRANSAC TIONS ARE NOT SOLELY DEPENDENT ON THE VOLUME, AND FREQUENCY BUT ALSO O N THE VALUATION OF THE CONSIDERATION THAT WAS INVOLVED IN THE TRANSACTIONS. THE ASSESSING OFFICER ALSO REJECTED THE CONTENTION OF THE ASSESSEE THA T THE SHARES ARE SHOWN AS INVESTMENT IN HIS BOOK OF ACCOUNT AND HENCE, NO SEPARATE TREATMENT CAN BE GIVEN OTHER THAN CONSIDERING TAXABILITY OF GAINS ON SAID TRANSACTIONS UNDER THE HEAD CAPITAL GAINS. THE ASSESSIN G OFFICER ALSO CONSIDERED CIRCULAR NO. 4/2007 DATED 15.06.2007 OF THE CBD T AND BY REPRODUCING THE CRITERIA LAID DOWN IN THE SAID CIRCULAR, THE ASSESSING OFFICER MADE OUT A CASE THAT TRANSACTIONS UNDERTAKEN BY THE ASSESSEE THROUGH THE BROKERS ARE FOR EARNING THE PROFITS AS IN SOME OF THE CA SES THE ASSESSEE SOLD OUT THE SHARES IN VERY SHORT SPAN OF TIME I.E. THE HOLDING PERIOD WAS 5 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 MINIMUM AND THAT SUGGEST THAT ASSESSEE WAS INTERESTED IN MAKING THE PROFIT. THE ASSESSING OFFICER FINALLY CONCLUDED THAT THE ACTIV ITY OF THE SHARE TRANSACTIONS IS A WELL SYSTEMATIC AND ORGANIZED ACTIVITY WIT H PROFIT MOTIVE AND HENCE, THE SHORT TERM CAPITAL GAIN AS WELL AS LO NG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE ARE TO BE TREATED AS IN COME FROM BUSINESS. ACCORDINGLY IN THE BOTH ASSESSMENT YEARS THE ASSESSING OFFICER BROUGHT TO TAX THE CAPITAL GAIN ON THE SHARE TRANSACTIONS AS A BU SINESS INCOME. SO FAR AS LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN THE A.Y. 2007- 08 THE ASSESSEE WAS DEPRIVED OF THE CLAIM OF THE EXEMPT ION. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) BUT WITHOUT SUCCE SS. THE LD.CIT(A) PUT HIS STAMP OF APPROVAL ON THE FINDINGS OF THE ASSESSING OFFICER THAT THE INCOME/PROFIT/GAIN DERIVED FROM THE SHARE TRANSACTIONS ARE TO BE ASSESSED AS A BUSINESS INCOME. 8. THE FINDING AND REASONING OF THE LD.CIT(A) HAS GIVEN IN TH E A.Y.2006- 07 ARE AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APP ELLANT, PERUSED THE ORDER OF THE ASSESSING OFFICER AND MATE RIAL PLACED ON RECORD. THE POINT CHART FALLS FOR DETERMINATION IS WH ETHER THE PROFIT ON SALE OF SHARES AND SECURITIES IN QUESTION IS TO BE A SSESSED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR CAPITAL GAINS AS CLAIMED BY THE APPELLANT. IN DETERMINING WHETHER THE TRANSACTIO N OF PURCHASE AND SALE OF SHARES IN THE GIVEN CASE IS AN INVESTMENT AS SUCH OR A BUSINESS ACTIVITY OR AN ADVENTURE IN THE NATURE OF TRADE, IT IS WELL-SETTLED THAT NO UNIVERSAL RULE OR PRINCIPLE CAN BE APPLIED BUT EACH CASE HAS TO BE DECIDED BY TAKING INTO ACCOUNT THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. 5.1. IN THE PRESENT CASE, ON VERIFICATION OF THE DETA ILS OF TRANSACTIONS IN TRADING OF SHARES FURNISHED BY THE APPELLANT, IT IS FOUND THAT THE PURCHASE VALUE OF SHARES PURCHASED, SALE CONSIDERATION RECEIVED IN THE LAST THREE YEARS THE PROFIT FROM WHICH WAS SHOWN AS TRADING PROFIT/ LOSS, ARE AS FOLLOWS :- *INCLUDES FUTURES & OPTIONS, TRADING IN COMMODITIES . A.Y. OPENING STOCK PURCHASE VALUE OF SHARES (RS.) SALE CONSIDERATION OF SHARES SOLD (RS.) CLOSING STOCK TRADING PROFIT/ LOSS 2004 - 05 18,73,143 2,87,05,179 3,14,67,499 29,53,59 7 33,21,155 2005 - 06 29,53,597 10,46,84,870 10,76,92,254 0 ( - ) 4,69,333 2006 - 07 0 14,23,62,926 14,25,75,395* 0 ( - ) 35,217 6 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 IN ADDITION TO THE ABOVE TRADING ACTIVITY IN SHARES AND SECURITIES, FUTURES AND OPTIONS AND COMMODITIES, THE INCOME SHOWN BY WAY OF SPECULATION PROFITS, SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS FOR THE ABOVE YEARS ARE AS FOLLOWS :- ASSESSMENT YEAR SPECULATION P ROFIT SHORT TERM CAPITAL GAINS LONG TERM CAPITAL GAINS 2004 - 05 3,57,814 1,14,746 (-) 66,881 2005 - 06 - 54,98,132 ( - )41,746 2006 - 07 FORMS PART OF THE TRADING A/C INCLUDING F&OS 1,03,18,740 - 5.2 FROM THE DETAILS TABULATED ABOVE AND THE DETAILS OF SHARES AND SECURITIES DEALT WITH BY THE APPELLANT DURING THE YEA R, THE INCOME FROM WHICH IS SHOWN AS SHORT TERM CAPITAL GAINS, ATTACHED TO TH E ASSESSMENT ORDER AS ANNEXURE, IT COULD BE SEEN THAT THE MAGNITUDE AND FREQUENCY OF THE TRANSACTIONS IN SHARES OF VARIOUS COMPANIES I N THE LAST THREE YEARS ARE QUITE SUBSTANTIAL. THE SALE AND PURCHASE OF S HARES OF SUCH MAGNITUDE REGULARLY INDICATES A SYSTEMATIC ACTIVITY B Y THE APPELLANT WITH A MOTIVE TO MAKE PROFITS FROM DEALING IN SHARES AND SECURITIES. THE APPELLANT IS NOT A MERE INVESTOR IN SHARES OF A FEW COMPANIES. THE APPELLANT HAS DEALT IN SHARES OF SEVERAL COMPANIES A ND THERE WAS A SYSTEMATIC, ORGANIZED ACTIVITY EVERY YEAR WITH A SET PURPOSE OR CONDUCT IN THE MATTER OF ACQUIRING, HOLDING AND SELLING OF SHO RES. THE CONDUCT OF THE APPELLANT ALL ALONG AND THE PATTERN OF PURCHASES AN D SALE OF SHARES OF DIFFERENT COMPANIES CLEARLY INDICATE THAT THIS IS NOT A CASE WHERE THE APPELLANT CONTENTED ITSELF WITH MERELY MAKING AN INVE STMENT AND LOOKING FOR DIVIDEND AND MAXIMIZATION OF INVESTMENTS. IF THE TRANSACTIONS ARE ADJUDGED FROM THE POINT OF VIEW OF VOLUME, FREQUENCY, CONTINUITY AND REGULARITY, IT LEADS TO AN INFERENCE THAT THE INTENTION OF THE APPELLANT COMPANY WAS TO DEAL IN SHARES AND SECURITIES . 5.3 AS HELD BY HON'BLE SUPREME COURT, IN THE CASE OF MAZAGON DOCK LTD (34 ITR 368) AND IN VARIOUS OTHER DECISIONS, THE WORD 'BUSINESS' MUST BE CONSTRUED IN 'A BROAD MANNER RATHER THAN IN A RESTRICTED SENSE IN FISCAL STATUTES AND AS DEFINED IN SEC. 2(13), IT CONN OTES SOME REAL, SUBSTANTIAL, SYSTEMATIC OR ORGANIZED COURSE OF ACTIVITY OR COND UCT WITH A SET PURPOSE. THE DEFINITION OF 'BUSINESS' CONNOTES T HE FUNDAMENTAL IDEA OF CONTINUOUS EXERCISE OF AN ACTIVITY. IT IS ALSO JUDI CIALLY HELD THAT IT IS NOT ESSENTIAL THAT THERE SHOULD BE A SERIES OF TRANSAC TIONS TO REGARD A, PARTICULAR ACTIVITY AS 'BUSINESS' AND EVEN A SINGLE O R ISOLATED TRANSACTION MAY CONSTITUTE BUSINESS. TO FIND OUT WHET HER THE ACTIVITY OF THE APPELLANT IS FOR THE PURPOSE OF INVESTMENT OR IN NATURE OF BUSINESS, THE TEST IS WHETHER THE SUM OF GAIN THAT HAS BEEN M ADE WAS A MERE ENHANCEMENT OF VALUE BY REALIZING A SECURITY OR WAS IT A GAIN MADE IN OPERATION OF BUSINESS. FROM THE VOLUME AND CONTINUITY OF TRANSACTIONS ENTERED INTO BY THE APPELLANT IN SHARES OF VARIOUS C OMPANIES IN A SYSTEMATIC AND ORGANIZED MANNER OVER THE YEARS, IT I S ABSOLUTELY CLEAR THAT THE GAIN IS MADE BY ASSESSEE IN AN OPERATION O F BUSINESS WHILE CARRYING OUT A SCHEME FOR PROFIT MAKING. THE MAJO R INCOME EARNED BY THE APPELLANT IS OUT OF TRANSACTIONS OF SALE AND PURCHASE O F SHARES ONLY, WHICH INDICATES THAT THE APPELLANT HAS EARNED INCOME FROM THE SINGLE MAJOR ACTIVITY OF SALE AND PURCHASE OF SHARES. BUT T HE APPELLANT IS ARTIFICIALLY SPLITTING THE INCOME FROM THE PURCHASE A ND SALE OF SHARES AS 7 ITA NOS. 80, 81, 82, 1331, 1332/PN/2011 TRADING PROFIT, SPECULATION PROFIT, SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL' GAIN ONLY WITH A VIEW TO TAKE THE ADVANTAGE O F CONCESSIONAL RATE OF TAX APPLICABLE IN CASE OF INCOME ASSESSABLE UNDER THE HEAD 'CAPITAL GAINS'. BUT FOR SUCH A MOTIVE, THERE IS NO JU STIFICATION, EITHER FACTUAL OR LEGAL, FOR CLAIMING THE PURCHASE AND SALE OF S HARES CARRIED OUT IN AN ORGANIZED MANNER AND REGULARLY AS AN INVE STMENT ACTIVITY. IT IS NOT A MERE CHANGE IN THE FORM OF INVESTMENTS OR SHUFFLE IN THE PORTFOLIO O~ INVESTMENTS FOR A BETTER INVESTMENT DUR ING THE YEAR AND IN THE LAST TWO YEARS AS CONTENDED BY THE APPELLANT. THE APPELLANT ACTED WITH A SET PURPOSE! IN ACQUIRING AND SELLING THE SHA RES I.E. EARNING QUICK PROFITS TO HIS ADVANTAGE AND NOT WITH THE OBJ ECT OF INVESTING ITS CAPITAL IN THESE SHARES IN ORDER TO (DERIVE INCOME FRO M THAT INVESTMENT AND THEREFORE THE TRANSACTIONS IN QUESTION IS AN AD VENTURE IN THE NATURE OF TRADE. IN THIS CONNECTION, IT IS NECESSARY T O REFER TO THE FOLLOWING DECISIONS, WHEREIN CERTAIN PRINCIPLES WERE L AID DOWN IN RESPECT OF THIS MATTER. (I) IN THE CASE OF DALHOUSIE INVESTMENT TRUST CO. L TD. VS. CIT (68 ITR 486), THE HON'BLE SUPREME COURT OBSERVED THAT 'IT APPEARS TO US THAT THE FACTS AND CIRCUMSTANCES IR THIS CASE CA N LEAD TO NO OTHER CONCLUSION EXCEPT THAT THESE; SHARES WERE PURCH ASED AND SOLD BY THE ASSESSEE WITH A MOTIVE OF EARNING A PROFI T BY SUCH PURCHASES AND SALES AND NOT WITH THE OBJECT OF INVEST ING ITS CAPITAL IN THESE SHARES IN ORDER TO DERIVE INCOME FRO M THAT INVESTMENT. IT IS TRUE THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE WAS TO INVEST CAPITAL AND TO DERIVE INCOME FROM DIVID ENDS ON SHARES AND INTEREST ON OTHER INVESTMENTS; BUT, AT TH E SAME TIME, THE OBJECT CONTAINED IN THE MEMORANDUM OF ASSOCIATIO N OF THE ASSESSEE COMPANY CLEARLY SHOWED THAT ONE OF THE OBJE CTS WAS ALSO TO DEAL N SHARES, STOCKS, DEBENTURES ETC., BY ACQUI RING, HOLDING, SELLING AN