ACIT 25(3), MUMBAI V. LESLIE BAPTISTA, MUMBAI

ITA 884/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3684 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 01-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: NIKHIL JHAVERI
• Keywords: Capital asset; Business income; Transactions in derivatives; Question of law; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 884/MUM/2010 (ASSESSMENT YEAR: 2006-07) ACIT - 25(3) SHRI LESLIE BAPITISTA C-11, ROOM NO. 308, PRATHAKH B/407, GANPAT TOWER, T HAKUR VILLAGE KAR BHAVAN, BANDRA KURLA COMPLEX VS. KANDIVLI (E), MUMBAI 400101 BANDRA (E), MUMBAI 400051 PAN - AAEPB 8771 H APPELLANT RESPONDENT APPELLANT BY: SHRI A.K. NAYAK RESPONDENT BY: SHRI NIKHIL JHAVERI O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XXXV, MUMBAI DATED 03.11.2009. 2. ASSESSEE IS AN INDIVIDUAL AND IS DECLARING SPECULAT ION LOSS, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. DURING THE SCR UTINY PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD A SHORT TERM CAPI TAL GAIN OF ` 36,23,031/- AND ASSESSEE ALSO CLAIMED SPECULATION LOSS OF ` 45,719/- AND F&O LOSS OF ` 1,56,520/-, WHICH ARE TO BE CARRIED FORWARD. IN THE ASSESSMENT PROCEEDINGS THE A.O. HELD THAT THE ASSESSEE HAS INDULGED IN TRA DING OF SHARES. IN ARRIVING AT THAT FINDING THE A.O. ANALYSED THE QUANTUM OF NU MBER OF SHARES BOUGHT AND SOLD AND VALUE OF PURCHASE AMOUNT OF ` 3.12 CRORES AND SALES AMOUNT OF ` 3.49 CRORES AND THE NUMBER OF TRANSACTIONS 216 AND THE AVERAGE HOLDING PERIOD IN MOST OF THE TRANSACTIONS BEING LESS THAN 30 DAYS. ACCORDINGLY HE HELD THAT THE SHORT TERM CAPITAL GAIN IS TO BE TREA TED AS BUSINESS INCOME. 3. BEFORE THE CIT(A) IT WAS CONTESTED THAT THE ASSESSE E IS HAVING ONLY A SIMPLE SAVING BANK ACCOUNT AND DO NOT HAVE ANY CURR ENT ACCOUNT AS A PRE- REQUISITE FOR DOING BUSINESS AND IT IS ALSO FURTHER SUBMITTED THAT THE ASSESSEE HAD DEALT ONLY IN 55 COMPANIES OUT OF 7500 LISTED COMPANIES, WHICH IS LESS THAN 8% AND FURTHER SUBMITTED THAT AS SESSEE DOES NOT HAVE ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 2 ANY INFRASTRUCTURE SUCH AS COMPUTERS, EMPLOYEES TO WORK, ETC. IT WAS FURTHER SUBMITTED TO THE CIT(A) BY GIVING A STATEMENT THAT 54% OF THE PROFIT IN SHORT TERM CAPITAL GAIN HAS ARISEN IN THE SHARES HELD FOR MORE THAN 120 DAYS AND ACCORDINGLY IT WAS SUBMITTED THAT THE PROFIT ON SHA RE TRANSACTIONS ARE TO BE CONSIDERED AS SHORT TERM CAPITAL GAINS. THE CIT(A) UPHELD ASSESSEES CONTENTIONS HOLDING AS UNDER: - 5.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A.O. MERELY BECAUSE THE APPELLAN T WAS HAVING SPECULATIVE BUSINESS IN SHARES, THAT DOES NOT MEAN THAT EVEN THE DELIVERY BASED TRANSACTIONS OF SHARES SHOULD BE ASS ESSED UNDER THE HEAD BUSINESS. THE HON'BLE MUMBAI TRIBUNAL IN THE C ASE OF J.M. SHARE & STOCK BROKERS VS. JCIT (CITED ABOVE) HAS HELD THAT THERE IS NO BAR ON THE STOCK BROKER HOLDING SHARES AS INVESTMENT AND THE M ERE FACT THAT THE ASSESSEE IS AN EXPERT IN SHARE TRADING DOES NOT MEA N THAT HE CANNOT HOLD SHARES AS CAPITAL ASSET. FURTHER AS CONTENDED BY THE REPRESENTATIVE, THE APPELLANT HAS NOT BORROWED FUND S AS ON 31.03.2006 AS PER THE BALANCE SHEET WHEREAS THE A.O. HELD IN P AGE 6 OF THE ASSESSMENT ORDER THAT THE APPELLANT BORROWED LOANS FOR THE PURPOSE OF DOING SHARE BUSINESS WHICH IS TOTALLY INCORRECT. TH E A.O. MERELY HELD THAT THE SHARES WERE HELD FOR VERY SHORT PERIOD EXC EPT VERY FEW SHARES WHEREAS IT IS SEEN FROM THE SHORT TERM CAPITAL GAIN WORKING THAT MORE THAN 44% OF SHORT TERM CAPITAL GAIN WAS EARNED BY S ELLING SHARES AFTER 120 DAYS. FURTHER IT IS SEEN THAT THE APPELLANT HAS ADMITTED THE SHARES AS INVESTMENT IN THE BALANCE SHEET AND WHEN SUCH SH ARES WERE SOLD, THE PROFIT ON SALE OF SHARES WAS ADMITTED AS SHORT TERM CAPITAL GAIN. THE SHARES WERE TRANSFERRED IN THE NAME OF THE APPELLAN T AS EVIDENCED BY DEMAT ACCOUNT PRODUCED BEFORE THE A.O. AND FURTHER THE APPELLANT HAS PAID STT AT THE RATE APPLICABLE TO THE INVESTOR. TH US, THERE IS NO REASON TO ASSESS SHORT TERM CAPITAL GAIN UNDER THE HEAD BU SINESS. 4. HE RELIED ON THE DECISION OF THE ITAT IN THE CASE O F GOPAL PUROHIT VS. JCIT 29 SOT 117 TO SAY THAT THE ASSESSEE CONSISTENT LY OFFERING THE SHARES. REVENUE IS AGGRIEVED. 5. THE LEARNED D.R. SUBMITTED THAT THE CIT(A) WAS WRON G IN ACCEPTING ASSESSEES CONTENTIONS ABOUT NON-MAINTENANCE OF CUR RENT BANK ACCOUNT, NOT HAVING INFRASTRUCTURE, EMPLOYEES, ETC. WHICH ARE NO T MATERIAL AS THE ASSESSEE IS ALSO UNDERTAKING SPECULATION BUSINESS I N A MAJOR WAY AND ALSO FUTURE OPTIONS WHICH ARE SPECIALISED TRANSACTIONS. SINCE THE ASSESSEE IS INDULGED IN SPECULATION TRANSACTIONS/INTRA-DAY TRAN SACTIONS ON THE SAME ESTABLISHMENT IT HAS TO BE CONSIDERED THAT ASSESSEE IS INDULGING IN BUSINESS ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 3 ACTIVITY ONLY. FURTHER HE REFERRED TO THE STATEMENT FURNISHED BEFORE THE CIT(A), ENCLOSED IN THE PAPER BOOK, TO SUBMIT THAT THE CIT(A) WAS WRONG IN CONSIDERING THE PERCENTAGE OF PROFIT AT 54% IN DETE RMINING THE INCOME AS SHORT TERM CAPITAL GAIN WHEREAS THE ASSESSEE HAD TO TAL 202 TRANSACTIONS OUT OF WHICH 123 TRANSACTIONS, I.E. ABOUT 60% WAS SOLD WITHIN 30 DAYS. EVEN OUT OF THE TOTAL 1,59,500 SHARES INVOLVED THEREIN THIS COMPONENT IS ABOUT 1,17,474, THAT MEANS MORE THAN 60 TO 70% OF THE TRA NSACTIONS ARE UNDERTAKEN WITHIN 30 DAYS. THEN HE COMPARED TO THE OTHER TRANSACTIONS AND SHARES INVOLVED IN LESS THAN 120 DAYS ALMOST TO THE TUNE OF 171 TRANSACTIONS OUT OF 202 TRANSACTION. IN VIEW OF THIS IT WAS SUBM ITTED THAT RELYING ON THE PERCENTAGE OF PROFIT ALONE IS NOT CORRECT AND THE A SSESSING OFFICERS OBSERVATIONS ABOUT VOLUME OF TRANSACTION HAS TO BE UPHELD. 6. THE LEARNED D.R. RELIED ON THE DECISION OF THE ITAT IN ITA NO. 4607/MUM/2008 & ITA NO. 5710/MUM/2009 DATED 31.08.2 010 IN THE CASE OF RAKESH J SANGHVI AND ALSO IN THE CASE OF SMT. SA DHANA NABERA IN ITA NO. 2586/MUM/2009 DATED 26.03.2010 AND THE CASE OF HARS HA N. MEHTA VS. DCIT IN ITA NO. 1859/MUM/2009 DATED JULY 16, 2010 I N SUPPORT OF THE FINDINGS GIVEN THAT THE TRANSACTIONS PERTAIN TO BUS INESS INCOME. THE LEARNED DR REITERATED THAT ASSESSEES CLOSING STOCK IS ONLY FOR SHORT PERIOD AND INVESTMENTS SHOWN IN THE BALANCE SHEET DOES NOT IND ICATE WHETHER IT IS INVESTMENT OR TRADING BECAUSE UNDER INVESTMENT ONLY P.P.F., KONKAN RAILWAY AND N.S.C. WERE SHOWN WHEREAS SHARES STOCK WAS SHOWN SEPARATELY, HOWEVER, AT COST PRICE. 7. THE LEARNED COUNSEL FILED DETAILED WRITTEN SUBMISSI ON REITERATING THE SUBMISSION MADE BEFORE THE CIT(A) AND ALSO RELIED O N VARIOUS CASE LAWS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS ENCLOSE D STOCK DETAILS AS ON 31.03.2005 AT ` 21,77,543/- WHICH WAS CARRIED OVER TO NEXT YEAR TO THE EXTENT OF ` 32,57,7543/- AND SPECIFICALLY MENTIONED THE OPENING STOCK OF NAGARJUNA CONSTRUCTION CO. AT 2050 QUANTITY WHICH I NCREASED TO 4000 NUMBERS AS ON 31.03.2006. HE ALSO PLACED ON RECORD THE COMPUTATION OF TOTAL INCOME, CAPITAL GAINS AND BALANCE SHEET TO SU PPORT THAT ASSESSEE IS SHOWING THE SHARES AS INVESTMENT ONLY. ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 4 8. THE LEARNED COUNSEL REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) AND AT OUR REQUEST PLACED THE DETAILS OF SPECULATIO N PROFIT/ LOSS, WHICH ARE AS UNDER: - TRANSACTIONS PARTICULARS DEBIT CREDIT CLOSING BALANCE OPENING BALANCE APRIL 1,555.00 4,937.93 3,382.94 CR MAY 945.15 2,280.75 4,718.53 CR JUNE 26,756.98 10,835.92 11,202.53 DR JULY 15,002.11 7,783.15 18,421.49 DR AUGUST 12,001.11 6,275.25 24,148.12 DR SEPTEMBER 7,586.00 1,279.00 30,455.12 DR OCTOBER 2,410.18 0 32,865.30 DR NOVEMBER 768.10 17,334.56 16,298.84 DR DECEMBER 189.51 1,782.00 14,706.35 DR JANUARY 1,096.01 13,173.47 2,628.89 DR FEBRUARY 43,283.61 50,744.86 4,832.36 CR MARCH 73,385.65 22,834.02 54,719.27 DR GRAND TOTAL 1,84,980.18 1,39,260.91 45,719.27 DR 9. AT THIS POINT THE LEARNED COUNSEL WAS SPECIFICALLY ASKED ABOUT THE TURNOVER INVOLVED IN THE SPECULATION BUSINESS, I.E. VOLUME OF PURCHASE AND SALE OF SHARES AND THE AMOUNT INVOLVED AS ONLY THE NET DEBIT AND CREDIT, I.E. PROFIT OR LOSS WERE ACCOUNTED FOR MONTH-WISE, THE L EARNED COUNSEL EXPRESSED HIS INABILITY TO FURNISH THE DATE IMMEDIATELY BUT H AS NO OBJECTION IF THIS ISSUE IS RESTORED TO THE FILE OF THE A.O. FOR PROPE R VERIFICATION. 10. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECOR D. AS SEEN FROM THE STATEMENT OF TOTAL INCOME ASSESSEE HAS SHOWN U NDER THE HEAD INCOME FROM BUSINESS, SPECULATION LOSS IN SHARES, FUTURES & OPTIONS TO THE EXTENT OF ` 1,56,520/- AND SPECULATION LOSS IN SHARE TRADING TO THE EXTENT OF ` 45,719/- TOTALLING TO ` 2,02,239/- TO BE CARRIED FORWARD. UNDER THE HEAD CA PITAL GAIN ASSESSEE HAS OFFERED SHORT TERM CAPITAL GAIN IN SHA RES OF ` 35,67,785/- AFTER SETTING OFF SERVICE CHARGES AND OTHER CHARGES. ONE INTERESTING FACT TO BE NOTED IS THAT THERE IS NO LONG TERM CAPITAL GAIN AT ALL. 11. THE CONTENTION THAT THE ASSESSEE IS HAVING ONLY SAV ING BANK ACCOUNT AND THERE WAS NO CURRENT ACCOUNT SO AS TO TREAT IT AS A BUSINESS IS NOT A VALID CONTENTION AS THE ASSESSEE IS ALSO INDULGED I N INTRA-DAY TRANSACTIONS ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 5 AND ALSO F&O TRANSACTIONS HAVING THE SAME BANK ACCO UNT BUT TREATED THE LOSS FROM THE TRANSACTIONS AS BUSINESS. IF THE A SSESSEE IS HAVING THE SAME BANK ACCOUNT FOR BOTH SHORT TERM CAPITAL GAIN AND B USINESS TRANSACTIONS THE CONTENTION THAT ASSESSEE DO NOT HAVE CURRENT ACCOU NT BUT ONLY SAVING BANK ACCOUNT HENCE, SHORT TERM CAPITAL GAINS SHOULD BE T REATED AS SUCH AND NOT AS BUSINESS INCOME CANNOT BE ACCEPTED. ASSESSEE IS USING THE SAME ACCOUNT FOR ALL TRANSACTIONS. AS SEEN FROM THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE THE TRANSACTIONS UNDERTAKEN ON A PARTICULA R DAY, I.E. INTRA-DAY TRANSACTIONS ARE TREATED AS SPECULATIVE TRANSACTION /TRADING IN SHARE. AS SEEN FROM THE SUMMARY PLACED ON RECORD THE ASSESSEE HAS INDULGED IN INTRA- DAY TRANSACTIONS REGULARLY THROUGHOUT THE YEAR AND HAS EARNED PROFIT OF ` 1,39,260/- IN SHARE TRADING WHEREAS THE LOSSES IN S HARE TRADING WAS TO THE TUNE OF ` 1,84,980/-. THIS INDICATES THAT THE ASSESSEE WITHOU T ANY INFRASTRUCTURE OR EMPLOYEES, WHICH IS ONE OF THE CO NTENTIONS TO SUPPORT THE SHORT TERM CAPITAL GAIN, INDULGED IN REGULAR INTRA- DAY TRANSACTIONS, QUANTITY AND QUANTUM OF WHICH IS NOT PLACED ON RECORD NOR EX AMINED BY THE A.O. AS THE TABLE INDICATES THE ASSESSEE WAS DOING REGULAR INTRA-DAY TRANSACTIONS THROUGHOUT THE YEAR. IT SEEMS THAT ONLY WHERE THE D ELIVERY WAS TAKEN THE TREATMENT WAS GIVEN BY THE ASSESSEE AS THAT OF SHOR T TERM CAPITAL GAIN EVENTHOUGH 70% OF THE TRANSACTIONS BOTH VOLUME-WISE AS WELL AS NUMBER OF TRANSACTIONS-WISE ARE WITHIN 30 DAYS. NOT ONLY THAT MORE THAN 75% OF THE TRANSACTIONS ARE HAVING A SPAN OF 1 TO 120 DAYS. JU ST BECAUSE THE PERCENTAGE OF PROFIT AT 54% WAS EARNED IN TRANSACT IONS OF MORE THAN 120 DAYS, BY ITSELF THAT CANNOT SUPPORT THE CONTENTION THAT THIS IS TO BE TREATED SHORT TERM CAPITAL GAIN. 12. ANOTHER INTERESTING FACTOR NOTICED IS THAT THE ASSE SSEE HAS CLOSING STOCK AS ON 31.03.2005 TO THE EXTENT OF ` 21,27,543/- WHICH ARE OF PURCHASES IN MARCH 2005 ALONE. THERE ARE FIVE SCRIP S OF PADMALAYA TELE, NAGARJUNA CONSTRUCTION CO., BHUSHAN STEEEL, MIDDAY AND INVINC LABS, WHICH ARE PURCHASES IN MARCH 2005 AND AS SEEN FROM THE CLOSING STOCK SUMMARY AS ON 31.05.2006 EXCEPT NAGARJUNA CONSTRUCT ION CO. THERE ARE NO OTHER SHARES WHICH ARE CARRIED FORWARD TO THE NEXT ACCOUNTING YEAR. IT IS ALSO NOT SURE WHETHER THE SAME SCRIPS IN NAGARJUNA CONST RUCTION CO. WERE ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 6 CARRIED FORWARD AS THE RATE AT WHICH IT WAS SHOWN I N THE BALANCE SHEET OF 2050 SHARES AT ` 536.17 THE COST OF WHICH WAS SHOWN AT ` 10,99,156/- WHEREAS THE BALANCE AS ON 31.03.2006 OF NAGARJUNA C ONSTRUCTION CO. WERE 4000 NUMBERS AT ` 267.45 FOR A VALUE OF ` 10,68,916/-. THIS INDICATES THAT EITHER THERE CAN BE AN ISSUANCE OF BONUS SHARES IN THE COMPANY SO AS TO INCREASE THE SHARES TO 4000 NUMBERS AFTER SELLING 5 0 OR 100 SHARES OF THIS LOT OR THESE ARE SEPARATE SET OF SHARES PURCHASED, AS NOT ONLY THEIR QUANTITY BUT RATES AND VALUE ARE ALSO DIFFERING. THIS INDICA TES THAT ASSESSEES STOCK SUMMARY AS ON 31.03.2006 IS NOT THE CARRIED OVER TR ANSACTIONS AS ON 31.03.2005. COUPLED WITH THE FACT THAT THE ASSESSEE IS NOT HAVING ANY LONG TERM CAPITAL GAINS AND ALSO WAS INDULGING IN INTRA- DAY TRANSACTIONS AND DERIVATIVES (F&O) TRANSACTIONS INDICATE THAT THE IN TENTION OF THE ASSESSEE MAINLY SEEMS TO BE BUSINESS IN NATURE. 13. HOWEVER, A FINDING CANNOT BE GIVEN AT THIS LEVEL IN THE ABSENCE OF THE NUMBER TRANSACTIONS UNDERTAKEN AND THE QUANTUM OF T RANSACTIONS UNDERTAKEN AS BUSINESS TRANSACTIONS ON INTRA-DAY. S INCE THE LEARNED COUNSEL EXPRESSED HIS INABILITY TO PLACE THE DETAIL S ON RECORD, WE HAVE NO OTHER OPTION THAN TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO EXAMINE THE NUMBER OF TRANSACTIONS UNDERTAKEN BY TH E ASSESSEE ON INTRA- DAY, BOTH QUANTITY-WISE AND VALUE-WISE AND EXAMINE WHETHER THE RATIO OF TURNOVER IN THE BUSINESS IS MORE OR LES SIMILAR TO THE TURNOVER IN THE CAPITAL GAIN SO CATEGORISED BY THE ASSESSEE. NOT ONLY THAT THE A.O. SHOULD ALSO ENQUIRE WHETHER THE ASSESSEE HAS PURCHASED THE SAME SET OF SHARES WHICH ARE TREATED AS BUSINESS AS SPECULATION AND ALSO IN SHORT TERM CAPITAL GAIN ONLY ON THE BASIS OF DELIVERY OR SEPARATE TRANSACTI ON NOT INTER CONNECTED SO AS TO UNDERSTAND WHETHER THE INTENTION TO BUY IS OF BUSINESS OR INVESTMENT. 14. IN THE CASE OF SMT. SADHANA NABERA ITA NO. 2586/MUM /2009 THE VARIOUS PRINCIPLES ANALYSING THE SHARE TRANSACTIONS ARE SUMMARISED VIDE PARA 12 AND 13 AS UNDER: - 12. BEFORE ANALYSING THE FACTS OF THE CASE IT IS N ECESSARY TO NARRATE THE PRINCIPLES APPLICABLE IN DECIDING THE ISSUE AS LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEMENTS RELIED UPON BY BOTH THE A.O . AND THE CIT(A) AND ASSESSEE. THE A.O. HAS RELIED UPON THE PRINCIPLES T HAT ENTRIES IN THE ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 7 BOOKS OF ACCOUNT ARE NOT DETERMINING FACTOR TO DECI DE THE REAL NATURE OF TRANSACTIONS TUTICORIN ALKALI CHEMICALS AND FERTI LIZERS LTD. VS. CIT (SC) 227 ITR 172. IF A RECEIPT IS TRADING RECEIPT THE FA CT THAT IT IS NOT SHOWN IN THE ACCOUNT OF THE ASSESSEE DOES NOT PREVENT THE A. O. IN TREATING IT AS TRADING RECEIPT CHOWRINGHEE SALES BUREAU P. LTD. 87 ITR 548 (SC) & PUNJAB DISTILLING INDUSTRIES LTD. 35 ITR 523 (SC). NAME OF LABEL GIVEN BY A PARTY TO A PARTICULAR AMOUNT IS NOT CONCLUSIVE - CIT VS. J.D. ITALIA 141 ITR 953 (AP). & CIT VS. BAZPUR CO-OP SUGAR FACTORY LTD. 172 ITR 330 (SC). THE QUESTION WHETHER IT AMOUNT TO BUSINESS AC TIVITY WILL DEPEND ON THE PECULIAR FACTS OF THE CASE G. VENKATASWAMI NA IDU & CO. VS. CIT 35 ITR 594. WITH REFERENCE TO THE BUSINESS ACTIVITY TH E A.O. HELD THAT THE VOLUME, FREQUENCY AND REGULARITY OF SHARE TRANSACTI ONS DONE IN ORGANIZED MANNER INDICATE BUSINESS ACTIVITY CIT V S. MOTILAL HIRABHAI SPG. & SVG. CO. LTD. 13 ITR 173 (GJU), RAJA BAHADUR VISHESHWARA SINGH VS. CIT 41 ITR 685 (SC), PUNJAB CO-OPERATIVE BANK L TD. VS. CIT 8 ITR 635, ETC. 13. IT IS HELD THAT WHETHER A TRANSACTION OF SALE A ND PURCHASE OF SHARES WERE TRADING TRANSACTIONS OR THEY WERE IN TH E NATURE OF INVESTMENT IS A MIXED QUESTION OF LAW AND FACTS AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. H. HOLCK LARSE N 160 ITR 67. IT IS FURTHER HELD IN THE CASE OF CIT VS. ASSOCIATED INDU STRIAL DEVELOPMENT CO. P. LTD. 82 ITR 586 THAT IT IS POSSIBLE THAT THE ASS ESSEE TO BE BOTH AN INVESTOR AS WELL AS DEALER IN SHARES. WHETHER A PAR TICULAR HOLDING IS BY WAY OF INVESTMENT OR FORM PART OF STOCK-IN-TRADE IS A MATTER WITHIN THE KNOWLEDGE OF THE ASSESSEE AND IT IS FOR THE ASSESSE E TO PRODUCE EVIDENCE FROM THE RECORDS AS TO WHETHER HE MAINTAINED ANY DI STINCTION BETWEEN SHARES WHICH ARE HELD AS INVESTMENT AND THOSE HELD AS STOCK-IN-TRADE. IT IS ALSO HELD IN THE CASE OF MOTILAL HIRABHAI SPG. & SVG. CO. LTD. 113 ITR 173 (GUJ) AND RAJA BAHADUR VISHESHWARA SING 41 ITR 685 (SC) THAT TREATMENT IN THE BOOKS BY AN ASSESSEE WILL NOT BE C ONCLUSIVE AND IF THE VOLUME, FREQUENCY AND REGULARITY AT WHICH TRANSACTI ONS ARE CARRIED OUT INDICATE SYSTEMATIC AND ORGANISED ACTIVITY WITH PRO FIT MOTIVE THEN IT BECOMES BUSINESS PROFIT NOT CAPITAL GAIN. IN THE CA SE OF CIT VS. PKN CO LTD.60 ITR 65 IT WAS HELD THAT PURCHASE WITH AN INT ENTION TO RESALE WILL ALSO, UNDER THE CHANGED CIRCUMSTANCE, WOULD BE CAPI TAL GAINS. IT IS ALSO HELD IN THE CASE OF SAROJ KUMAR MAZUMDAR VS. CIT 37 ITR 242 BY THE HON'BLE SUPREME COURT THAT PURCHASE WITH AN INTENTI ON TO RESALE IN ORDER TO GAIN PROFIT WILL BE BUSINESS PROFIT DEPENDING ON THE CIRCUMSTANCES OF THE CASE LIKE NATURE QUANTITY OF PURCHASE AND NATUR E OPERATION INVOLVED. IT WAS ALSO HELD IN THE CASE OF JANKI RAM BAHADUR R AM VS. CIT 57 ITR 21(SC) THAT NO SINGLE FACT HAS ANY DECISIVE SIGNIFI CANCE AND THE QUESTION MUST BE ANSWERED DEPENDING ON THE COLLECTIVE EFFECT OF ALL RELEVANT MATERIAL BROUGHT ON RECORD. 15. NOT ONLY THAT, SIMILAR PRINCIPLES WERE ALSO ESTABLI SHED IN THE CASE OF MR. RAKESH J. SANGHVI ITA NO. 4607/MUM/2008 AND HAR SHA N. MEHTA ITA NO. 1859/MUM/2009, RELIED UPON BY THE LEARNEDDR. AT THE SAME TIME THERE ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 8 IS ALSO ORDER OF THE COORDINATE BENCH IN THE CASE O F M/S. SMK SHARES & STOCK BROKING PVT. LTD. IN ITA 799/MUM/2009 WHEREIN THE ASSESSEES CONTENTION WAS THAT IT IS SHORT TERM CAPITAL GAIN W AS ALSO UPHELD MOSTLY ON THE FACTS AND ALSO NOTICING THAT A.O. HAS ACCEPTED THE LONG TERM CAPITAL GAIN AS SUCH. THUS VARIOUS COORDINATE BENCHES HAVE NOTIC ED THE FACTS AND ARRIVED AT CONCLUSIONS ACCORDINGLY DEPENDING ON THE FACTS OF EACH CASE. KEEPING IN VIEW THE ABOVE PRINCIPLES, PRIMA FACIE T HERE SEEMS TO BE OVERWHELMING EVIDENCE THAT THE ASSESSEE IS MOSTLY I NDULGED IN BUSINESS TRANSACTIONS. HOWEVER, IN THE ABSENCE OF DETAILS OF INTRA-DAY TRANSACTIONS, NATURE SHORT TERM CAPITAL GAINS EARNED AND DETAILS OF PERIODICITY AND VOLUMES ON RECORD, WE REFRAIN FROM GIVING ANY FINDI NG WHETHER THE INCOMES ARE TO BE ASSESSED AS CAPITAL GAINS OR BUSINESS INC OME. IN OUR VIEW THE CIT(A), WITHOUT ANALYSING THE FACTS, HAS SIMPLY CAR RIED AWAY BY THE ARGUMENTS OF THE ASSESSEE, WHICH WE HAVE DISCUSSED ABOVE. IN OUR VIEW THE FINDINGS OF THE CIT(A) WITHOUT ANALYSING THE FACTS CANNOT BE UPHELD. 16. IN VIEW OF THIS WE RESTORE THE MATTER BACK TO THE F ILE OF THE A.O. TO EXAMINE THE SHARE TRANSACTIONS IN DETAIL KEEPING IN VIEW ALL THE PRINCIPLES LAID DOWN IN VARIOUS COORDINATE BENCH DECISIONS REL IED UPON BY THE LEARNED D.R. AS WELL AS THE ASSESSEE AND ALSO THE FACTS IN THIS REGARD TO AND TO GIVE A CLEAR FINDING WHETHER THE ASSESSEE HAS INDULGED IN BUSINESS TRANSACTIONS OR INVESTMENT OR BOTH SO AS TO DETERMINE THE NATURE OF INCOMES CORRECTLY. THE ISSUE IS RESTORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION AFTER EXAMINING THE FACTS AND AFTER GIVING DUE OPPORTUNITY TO THE A SSESSEE. GROUNDS ARE CONSIDERED ALLOWED. 17. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 10 TH DECEMBER 2010 ITA NO. 884/MUM/2010 SHRI LESLIE BAPITISTA 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXV, MUMBAI 4. THE CIT XXV, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.