ACIT, Hyderabad V. Smt I.Laxmi, Hyderabad

ITA 931/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9726 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P M S KAMA RAJU
• Keywords: Capital asset; Business income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C. GUPTA, VP AND SHRI CHANDRA POOJARI, AM I.T.A. NO. 931/HYD/2010 (ASSESSMENT YEAR 2006-07) THE ASST. CIT CIRCLE 10(1) HYDERABAD VS. SMT. I. LAXMI HYDERABAD PAN: AAPPI 0971 H APPELLANT RESPONDENT APPELLANT BY: SHRI K.E. SUNIL BABU RESPONDENT BY: SHRI P.M.S. KAMARAJU O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 29.03.2010 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. THE CIT(A) ERRED IN BOTH LAW AND FACTS. 2. THE CIT(A) IS ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE GAINS AS SHORT TERM CAPITAL GAINS AS AGAINST THE TREATMENT OF THE ASSESSING OFFICER ASS BUSINESS INCOME. 3. THE CIT(A) WOULD HAVE APPRECIATED THE FACT THAT THE ASSESSING OFFICER HAS CORRECTLY BROUGHT TO TAX THE GAINS OF ASSESSEE AS BUSINESS INCOME IN VIEW OF THE FACT THAT THE ASSESSEE INVOLVED IN DAY TRADING. THE ASSESSEE IS INVOLVED IN PURCHASE AND SALE OF SHARES REGULARLY WHICH SHOWS THAT THE ASSESSEE HAS NO INTENTION TO HOLD SHARES FOR A LONGER PERIOD WHICH WILL FETCH THE I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 2 DIVIDENDS. WHEN THE ASSESSEE HAS NO INTENTION TO HOLD THE SHARES FOR A LONGER PERIOD, THEN THE TRANSACTIONS CANNOT BE TREATED AS TRANSACTIONS FALLING WITHIN THE MEANING OF CAPITAL GAINS AND THUS ASSESSED AS BUSINESS INCOME. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESS EE FILED RETURN OF INCOME ON 13.10.2006 SHOWING TOTAL INCOME OF RS. 91,14,470. THE ASSESSEE HAS SHOWN SHORT TER M CAPITAL GAINS OF RS. 84,84,876 IN HER OWN ACCOUNT A ND RS. 6,18,782 IN THE ACCOUNT OF HER MINOR DAUGHTER. THE TOTAL SHORT TERM CAPITAL GAINS IS RS. 91,03,658. THE ASS ESSING OFFICER ASKED THE ASSESSEE TO FURNISH D-MAT ACCOUNT AND BILLS FOR PURCHASE AND SALES OF SHARES. FROM THE D ETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER OB SERVED THAT THE FREQUENCY AND VOLUME OF PURCHASE AND SALE OF SHARES ARE QUITE HIGH. SOMETIMES THE SHARES WERE PURCHASED AND SOLD ON THE SAME DATE. THE ASSESSING OFFICER OBSERVED THAT 1000 SHARES OF NAGARJUNA CONSTRUCTION WERE PURCHASED ON 10.11.2005 AND ANOTH ER 1000 SHARES OF THE SAME COMPANY WERE PURCHASED ON 18.11.2005. ANOTHER 1,000 SHARES WERE PURCHASED ON 22- 11-2005. THE ASSESSEE SOLD 1000 SHARES OF THE SAME COMPANY ON 22.11.2005 AND ANOTHER 1000 SHARES OF TH E SAME COMPANY WERE SOLD ON 30.11.2005. THE ASSESSEE PURCHASED 1000 SHARES OF THE SAME COMPANY ON 30.11.2005 AND SOLD THE SAME ON THE SAME DATE. THE SAME I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 3 SYSTEM WAS FOLLOWED BY THE ASSESSEE WITH REGARD TO THE SHARES OF OTHER COMPANIES ALSO. THE ASSESSING OFFI CER OBSERVED THAT THE FREQUENCY OF TRANSACTIONS WAS VER Y NEAR AND THE VOLUME WAS VERY HIGH. ACCORDINGLY HE TREAT ED THE TRANSACTIONS IN SHARES AS CAPITAL GAINS TRANSACTION S. 4. THE ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE TO THE ASSESSEE ON 11.11.2008 ASKING THE ASSESSEE AS T O WHY THE TRANSACTIONS IN SHARES SHOULD NOT BE TREATED AS TRANSACTIONS IN THE NATURE OF TRADE AND NOT AS CAPI TAL GAINS. THE ASSESSEE DID NOT COMPLY WITH THIS SHOW- CAUSE NOTICE. ANOTHER SHOW-CAUSE NOTICE WAS ISSUED ON 28.11.2008 ON THE SAME ISSUE. THE ASSESSEE WAS ASK ED TO EXPLAIN WHETHER ANY SHORT TERM CAPITAL LOSS WAS CLA IMED ON THE EQUITY SHARES AND TO GIVE REASONS WHETHER SECTI ON 94(7) OF THE INCOME-TAX ACT, 1961 WAS APPLICABLE OR NOT I N VIEW OF THE CLAIM OF EXEMPTION OF DIVIDEND AMOUNTING TO RS. 1,38,160 AS PER PROVISIONS OF SECTION 10(34) OF THE ACT. 5. BEFORE THE ASSESSING OFFICER THE ASSESSEE FURNISHED A NOTE ON SHORT TERM CAPITAL GAINS AND SUBMITTED THAT THE ASSESSEE WAS A HOUSE WIFE WHO HAD PURCHASED THE SHA RES AS INVESTMENT AND NOT AS STOCK-IN-TRADE. IT WAS FU RTHER SUBMITTED THAT WHETHER A PARTICULAR HOLDING OF SHAR ES IS BY WAY OF INVESTMENT OR FORMS PART OF STOCK-IN-TRADE I S A I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 4 MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSE E WHO HOLDS THE SHARES AND BOOK ENTRIES ARE THE RELEVANT EVIDENCE. THE ASSESSEE RELIED ON THE DECISION OF C IT (CENTRAL) CALCUTTA VS. ASSOCIATED INDUSTRIAL DEVELO PMENT COMPANY PVT. LTD. [82 ITR 586 (SC)] WHEREIN THE ASS ESSEE HAD SHOWN THE SHARES PURCHASED AS INVESTMENT IN THE BALANCE SHEET AND HENCE THE INCOME FROM SUCH SALE O F SHARES IS SHOWN UNDER CAPITAL GAINS. THE ASSESSE E SUBMITTED THAT FOR THE EARLIER ASSESSMENT YEAR, THE INCOME FROM SALE OF SHARES WAS SHOWN UNDER THE HEAD CAPITA L GAINS WHICH WAS ACCEPTED. JUST BECAUSE OF THE VOLU ME OF TRANSACTIONS HAVE BEEN INCREASED DURING THE CURRENT YEAR, IT CANNOT BE TREATED AS BUSINESS INCOME AND IT IS C APITAL GAINS. FOR THIS PROPOSITION THE ASSESSEE RELIED ON THE DECISION IN JANAK S. RANGWAL VS. ACIT [11 SOT 627 (MUM)]. THE ASSESSEE SUBMITTED THAT BEING A HOUSE WIFE, THE ACTIVITY WAS DONE NOT IN AN ORGANISED MANNER AN D THERE WAS NO SEPARATE OFFICE AND STAFF AND OTHER INFRASTRUCTURE AND NO SERVICES OF FINANCIAL ANALYST S OR SHARE BROKERS WERE OBTAINED. THE ASSESSEE INVESTED ONLY IN THE SELECT SCRIPS WHICH RESULTED IN SUBSTANTIAL SHO RT TERM APPRECIATION. THE ASSESSEE RELIED ON HER OWN SHARE S AND PARTIALLY ON BORROWED FUNDS. IT WAS FURTHER SUBMIT TED THAT THE ASSESSEE HAD NOT CLAIMED ANY BUSINESS EXPENDITU RE. IT I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 5 WAS CONTENDED THAT INSTEAD OF DEPOSITING IN A BANK THE ASSESSEE INVESTED IN SHARES. THE ASSESSEE SUBMITTE D THAT THE GAIN ON SALE OF SHARES TO TREAT AS SHORT TERM C APITAL GAIN U/S. 111A IT SHOULD HAVE BEEN SUFFERED STT. I N THE PRESENT CASE ALL THE SHARES ARE SOLD OR PURCHASED T HROUGH RECOGNISED STOCK EXCHANGE AND THE STT IS AT THE SOU RCE OF TRANSACTION ITSELF. THE ASSESSEE PURCHASED AND SOL D SHARES AT REGULAR INTERVALS AND THE SALE PROCEEDS WERE UTI LISED BOTH FOR REINVESTMENT AS WELL AS TO MEET THE DAY TO DAY FAMILY REQUIREMENTS. THE ASSESSEE FURTHER SUBMITTE D THAT IF ASSESSEE CLAIMS ANY EXPENSES RELATED TO THE EXEM PTED INCOME U/S. 14A OF THE ACT THE SAME IS NOT ALLOWED. SHE HAS NOT CLAIMED ANY EXPENSES RELATED TO THE DIVIDEN D INCOME AND HENCE THE DIVIDEND INCOME SHOULD BE ALLO WED AS EXEMPTED INCOME U/S. 10(34) OF THE ACT. 6. REGARDING THE APPLICABILITY OF SECTION 94(7) OF THE ACT, THE ASSESSEE SUBMITTED THAT SHE HAD NOT INCURRED AN Y LOSS ON SHARES ON WHICH DIVIDEND IS RECEIVED, BY PURCHAS ING THE SAME WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE R ECORD DATE AND SELLING THE SAME SHARES WITHIN A PERIOD OF THREE MONTHS AFTER THE RECORD DATE. ACCORDINGLY SECTION 94(7) OF THE ACT IS NOT APPLICABLE. I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 6 7. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OF THE ASSESSEE. HE OBSERVED THAT THE CASE LAW CIT ED BY THE ASSESSEE IN THE CASE OF CIT (CENTRAL) CALCUTTA VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY PVT. LTD. (SUPRA) DID NOT COVER THE CASE OF THE ASSESSEE AND IT GOES AGAINST THE ASSESSEE CONSIDERING THE TRANSACTION EN TRIES AS FOUND FROM THE BILLS ISSUED BY THE BROKER. THE HON BLE COURT CLEARLY HINTED THAT BOOK ENTRIES ARE RELEVANT EVIDENCE FOR THE PURPOSE OF DECIDING WHETHER THE INVESTMENT FORMS PART OF STOCK-IN-TRADE. AS SEEN FROM THE BILLS THE HOLDING PERIOD OF A PARTICULAR SHARE IS VERY LIMITED AND SO METIMES IT IS SOLD ON THE SAME DAY OF PURCHASE. THE ASSESSING OFFICER HELD THAT THE DECISION IN JANAK S. RANGWALL VS. ACI T (SUPRA) ALSO NOT RELEVANT TO THE FACTS OF THE PRESE NT CASE. IN THE PRESENT CASE THE NOT ONLY THE VOLUME OF TRADING WAS VERY HIGH BUT ALSO THE FREQUENCY OF TRADING WAS QUI TE HIGH AS STATED EARLIER. 8. REGARDING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS A HOUSE-WIFE, THE ACTIVITY WAS NOT DONE IN AN ORGANISED MANNER NOR MAINTAINING ANY SEPARATE OFFIC E OR SEPARATE STAFF OR OBTAINED FINANCIAL SERVICES OF FI NANCIAL ANALYSTS OR, THE ASSESSING OFFICER HELD THAT THESE FACTORS MAY NOT BE QUITE RELEVANT TO DECIDE THE ISSUE WHETH ER IT IS A TRADING ACTIVITY OR NOT. THE INTENTION OF THE ASSE SSEE IN I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 7 SELLING THE SHARES AT REGULAR INTERVALS AND REINVES TING THE SALE PROCEEDINGS IS A BASIC CHARACTERISTIC OF A TRA DING ACTIVITY. THE INTENTION OF THE ASSESSEE IN DOING S O IS NOT FOR EARNING OF DIVIDEND BUT ONLY EARNING PROFIT FROM SA LE OF THE SHARE ITSELF. MERE TRADING THROUGH RECOGNISED STOC K EXCHANGE AND PAYMENT OF STT CANNOT BE THE BASIC CRITERION FOR TREATING THE TRANSACTIONS AS NON-TRAD ING ACTIVITY. THE ASSESSING OFFICER HELD THAT THE ASS ESSEE SOLD THE SHARES FOR A SHORT PERIOD OF TIME AND FREQUENT BUYING AND SELLING OF THE SHARES PARTAKES THE CHARACTER OF TRADING ACTIVITY. ONCE THE ACTIVITY CARRIED ON BY THE ASSE SSEE IS IN THE NATURE OF TRADE, THERE IS NO CONCEPT OF SHORT T ERM CAPITAL GAINS. EVEN THOUGH THE ASSESSEE DEALS THE TRADING IN DELIVERY MODE, THE ACTIVITY CONFIRMS THAT THE AS SESSEE IS A TRADER AND THE PROFIT DERIVED THERE FROM SHOULD B E TAXED AS BUSINESS INCOME ONLY. 9. THE ASSESSING OFFICER FURTHER HELD THAT AS PER THE CBDT VIDE CIRCULAR NO. 4/2007 DATED 15.06.2007 IT H AS TO BE DETERMINED WHETHER THE SHORT TERM CAPITAL ASSET IS PURCHASED FOR INVESTMENT OR FOR TRADING PURPOSES. THE INTENTION OF THE ASSESSEE WHILE BUYING THE SHARES I .E., WHETHER IT IS TO DERIVE INCOME BY DIVIDEND OR PROFI T ON SALES OF SHARES IS TO BE SEEN. IF THE INTENTION IS TO DE RIVE DIVIDEND THE GAIN WOULD BE CAPITAL GAIN OR OTHERWISE IT IS A BUSINESS I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 8 INCOME. THE ASSESSING OFFICER OBSERVED THAT IN THE PRESENT CASE THE INTENTION OF THE ASSESSEE IN BUYING AND SE LLING THE SHARES IS TO EARN PROFIT ON SHARE TRADING AND NOT F OR EARNING DIVIDEND ON INVESTMENT. 10. THE ASSESSING OFFICER HELD THAT THE ARGUMENTS OF TH E ASSESSEE THAT SHE IS A HOUSE-WIFE DO NOT CONFORM TO THE FIGURES SEEN FROM THE RECORD. A HOUSE-WIFE WILL NO T HAVE A REGULAR SOURCE OF INCOME AND SAVINGS, IF ANY, WOULD BE INVESTED IN THE SAFEST INSTRUMENTS AND SHE WILL NOT VENTURE IN FREQUENT BUYING. THE ASSESSEE HAS TAKEN UNSECUR ED LOAN OF RS. 1,63,937 AND SECURED LOAN FOR RS. 45,91 ,801. SHE GOT CURRENT LIABILITIES OF RS. 1,10,00,779. DU RING THE CURRENT YEAR SHE PURCHASED SHARES FOR AN AMOUNT OF RS. 23,86,62,562 AND SOLD SHARES FOR RS. 25,02,69,936. ACCORDINGLY THE ASSESSING OFFICER REJECTED THE CLAI M OF THE ASSESSEE OF SHORT TERM CAPITAL GAIN OF RS. 91,03,65 8 U/S. 111A OF THE ACT. 11. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER. TH E LEARNED CIT(A) BY RELYING ON THE CASE LAW IN JANAK S. RANGWAL (SUPRA), AS RELIED ON BY THE ASSESSEE, HAS HELD THAT THE MAGNITUDE AND FREQUENCY OF TRANSACTIONS AR E NO GROUND TO DETERMINE WHETHER THE SAME IS CAPITAL GAI N OR I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 9 BUSINESS INCOME. WHAT IS IMPORTANT IS THE INTENTIO N OF THE ASSESSEE AND THE TREATMENT GIVEN BY HIM IN ITS BOOK S OF ACCOUNT. IN THE CASE OF THE PRESENT ASSESSEE, THER E IS NO DOUBT THAT THE INTENTION OF THE ASSESSEE HAD ALWAYS BEEN TO TREAT THE PURCHASE OF SHARES AS INVESTMENT. THE AS SESSEE HAD TREATED THE SAID SHARES AS INVESTMENT IN THE BA LANCE SHEET. THE ASSESSEE IS A HOUSE WIFE AND NOT ENGAGE D IN FULL TIME ACTIVITY OF SHARE TRADING. SHE DOES NOT HAVE ANY INFRASTRUCTURE. THE ASSESSEE HAD ALSO BROUGHT OUT THE DRAFT INSTRUCTIONS NO. 1827 DATED 31.8.1989 AND CIR CULAR NO. 4 OF THE CBDT AND EXPLAINED HOW THE PARAMETERS LAID DOWN THEREIN APPLIED IN HER CASE. THE ASSESSEE HAD SHOWN THE DIVIDEND INCOME AT RS. 1,38,160 WHICH AMPLY SHO WS THAT THE ASSESSEE HAS BEEN HOLDING THE SHARES TO EA RN DIVIDEND. THE CIT(A) HELD THAT THE ASSESSING OFFIC ER HAD ERRED IN TREATING THE PROFIT ARISING ON SALE OF SHA RES AS BUSINESS INCOME AND NOT AS CAPITAL GAINS AND DIRECT ED THE ASSESSING OFFICER TO TREAT THE GAIN AS SHORT TERM C APITAL GAINS AND NOT AS BUSINESS INCOME. AGGRIEVED BY SUC H ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFOR E US. 12. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED COUNSEL FOR T HE ASSESSEE STRONGLY RELIED ON THE ORDER OF THE CIT(A) . I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 10 13. WE HAVE HEARD THE SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. IN THE PRESEN T CASE, THE MAIN ISSUE IS WITH REGARD TO CLASSIFICATION OF INCOME ON SALE AND PURCHASE SHARES MADE BY THE ASSESSEE. AS SEEN FROM THE RECORD THE ASSESSEE BOUGHT AND SOLD 101 CO MPANY SHARES ON VARIOUS DATES AND EARNED INCOME OF RS. 84,84,876 ON HER OWN ACCOUNT AND RS. 6,18,782 IN TH E ACCOUNT OF HER MINOR DAUGHTER. THE CLAIM OF THE AS SESSEE IS THAT THE INCOME SHOULD BE TREATED AS SHORT TERM CAPITAL GAINS. THE HOLDING PERIOD OF THESE SHARES IS RANGI NG FROM 0 TO 157 DAYS. THE ASSESSEE HAS SOLD CERTAIN SHARES ON THE SAME DAY. THE FOLLOWING TABULAR INFORMATION MAKES IT CLEAR THAT THE ASSESSEE IS DEALING IN SHARES AS A TRADER AND NOT AS AN INVESTOR: NAME OF THE COMPANY NO. OF SHARES DATE OF PURCHASE DATE OF SALE IN THE CASE OF THE ASSESSEE NAGARJUNA CONSTRUCTIONS 500 31.08.2005 31.08.2005 1500 01.09.2005 01.09.2005 498 01.09.2005 01.09.2005 500 13.12.2005 13.12.2005 IN THE CASE OF I. MANASA (DAUGHTER) SAIL 1000 26.05.2005 26.05.2005 1000 30.05.2005 30.05.2005 ESSAR STEEL 5000 13.04.2005 13.04.2005 2000 15.04.2005 15.04.2005 INDUSIND BANK 1000 26.05.2005 26.05.2005 1000 27.05.2005 27.05.2005 1000 02.06.2005 02.06.2005 IVRCL 2000 12.04.2005 12.04.2005 1000 16.05.2005 16.05.2005 4000 13.07.2005 13.07.2005 100 27.07.2005 27.07.2005 I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 11 RAIN CALCING 4000 25.05.2005 25.05.2005 INFO TEC LTD. 500 22.04.2005 22.04.2005 TELE SERVICE 1000 30.05.2005 30.05.2005 TATA INDIA 1000 27.05.2005 27.05.2005 SHIPPING CORP. 1000 30.05.2005 30.05.2005 TATA CHEMICALS 1000 27.05.2005 27.05.2005 1000 02.06.2005 02.06.2005 NCC 1000 16.05.2005 16.05.2005 CLUCTCH AUTO LTD. 500 02.06.2005 02.06.2005 14. WE HAVE TO SEE THE INTENTION OF THE ASSESSEE WHILE DEALING IN THE SHARES TO CLASSIFY THE INCOME INTO E ITHER UNDER THE HEAD INCOME FROM BUSINESS OR INCOME FR OM CAPITAL GAIN. AS OBSERVED FROM THE TRANSACTIONS C ARRIED ON BY THE ASSESSEE, THE ASSESSEE HAS DEALT WITH 101 CO MPANY SHARES. THE HOLDING PERIOD IS FROM ZERO TO 157 DAY S. SIMILAR IS THE POSITION IN HERE MINOR DAUGHTERS CA SE. THE TRANSACTIONS ARE REPEATED IN NATURE. NEVERTHELESS, MOSTLY IT IS A DAY TO DAY TRANSACTION CARRIED ON BY THE AS SESSEE. AS SEEN FROM THE NUMBER OF TRANSACTIONS CARRIED ON BY THE ASSESSEE THE INTENTION OF THE ASSESSEE IS ONLY TO T RADE IN SHARES AND EARN PROFIT. THE FUNDS FOR THE ACQUISIT ION OF SHARES WERE MADE AVAILABLE FROM ICICI BANK OD ACCOU NT, KMIL LOAN ACCOUNT, LOAN FROM I.K. SHARMA, KOTAK, MO TILAL OSWAL, NETWORTH, SYKES & RAYS. IN OTHER WORDS, THE COST OF PURCHASE OF SHARES AT RS. 244 LAKHS MADE AS FOLLOWS : SECURED LOAN RS. 45.91 LAKHS UNSECURED LOAN RS. 1.64 LAKHS CURRENT LIABILITIES RS. 110.00 LAKHS BALANCE BY ASSESSEES OWN CAPITAL I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 12 15. BORROWAL OF FUNDS FOR THE PURPOSE OF PURCHASING OF SHARES IS ONE OF THE INDICATOR TO SHOW THAT THE ASS ESSEE IS ENGAGED IN THE TRADING IN SHARES AND MAKING PART OF THE INVESTMENT IN SHARES BY OWN FUNDS DOES NOT AUTOMATI CALLY LEAD TO THE CONCLUSION THAT THE ASSESSEE INVESTED T HE FUNDS AS AN INVESTOR. THE FREQUENCY OF TRANSACTIONS, HOL DING PERIOD AS WELL AS USAGE OF BORROWED FUNDS FOR THE P URPOSE OF BUYING THE SHARES PROVES THAT THE ASSESSEE IS A TRADER IN SHARES AND NOT AN INVESTOR IN SHARES. IN THE PRESE NT CASE THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHA SE OF SHARES IS TO DEAL IN SHARES. THUS THE ASSESSEE PUR CHASED THE SHARES WITH AN INTENTION TO SELL THE SAME TO MA KE PROFIT AND THE INCOME THAT ARISES OUT OF THE SHARE TRANSAC TIONS HAS TO BE TREATED AS INCOME FROM BUSINESS. ACCOR DINGLY, WE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH MARCH, 2011 TPRAO I.T.A. NO. 931/HYD/2010 SMT. I. LAXMI, HYDERABAD ==================== 13 COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 10(1), ROOM NO. 515, A.C. GUARDS, I.T. TOWERS, HYDERABAD. 2. SMT. I. LAXMI, 40 - 303, SUNDARA NILAYAM, JAWAHAR NAGAR, MOULAALI, HYDERABAD. 3. THE CIT(A) - VI, HYDERABAD. 4 THE CIT - V, HYDERABAD 5. THE DR B BENCH, ITAT, HYDERABAD