ITO,Ward 6(2), Pune V. Sh. Panchganga Agro Impex p Ltd, Pune

ITA 956/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49834 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H C LEUVA
• Assessee Lawyers: VIPIN K GUJRATHI
• Keywords: Business income; Depreciation; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C.SUDHIR, JM AND SHRI G.S. PANNU, AM ITA NO.956/PN/09 (ASSTT. YEAR 2005-06) INCOME-TAX OFFICER, WARD-6(2), PUNE. APPELLANT VS. SHREE PANCHGANGA AGRO IMPEX P. LTD., PUNE. . RESP ONDENT APPELLANT BY : SHRI H.C. LEUVA, DR RESPONDENT BY : SHRI VIPIN K. GUJRATHI ORDER PER I.C. SUDHIR, JM FIRST APPELLATE AUTHORITYS ORDER HAS BEEN QUESTIO NED BY THE REVENUE MAINLY ON THE FOLLOWING GROUNDS:- THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT - (I) THE ASSESSEE IS ENTITLED TO DEPRECIATION ON CAR REGISTERED IN THE NAME OF ONE OF ITS DIRECTORS; (II) HOLDING THAT OUT OF SUM OF RS.77,87,000/- AD MITTED BY HE ASSESSEE UNDER THE HEAD SHORT TERM CAPITAL GAINS WHICH WAS ASSESSED BY THE ASSESSING OFFICER UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, A SUM OF RS.76,97 ,491/- COULD BE ASSESSED UNDER THE HEAD SHORT TERM CAPITA L GAINS AND (III) RESTRICTING THE DISALLOWANCE ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES TO A MEAGER RS.3,22,284/- MADE IN THE ASSESSMENT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL O N RECORD AND THE DECISIONS RELIED UPON BY THEM. 2 GROUND NO.1 :- THE ASSESSING OFFICER DISALLOWED THE CLAIMED D EPRECIATION ON CAR AMOUNTING TO RS.3,72,725/- ON THE BASIS THAT TH E CAR WAS NOT OWNED BY THE ASSESSEE-COMPANY. HE NOTICED THAT THE DEPRECIATION WAS CLAIMED ON THE VEHICLE REGISTERED IN THE NAME OF ONE OF ITS DIRECTORS. I N SUPPORT, HE PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SUNNET ENGINEERING PVT. LTD. PUNE VS. ACIT, CIRCLE 6, PUNE (ITA NO.778 /PN/2004). THE LEARNED CIT (A) HAS HOWEVER DELETED THE DISALLOWANCE FOLLOWING THE LATER DECISION OF THE PUNE BENCH OF THE ITAT IN THE CASE OF ROHAN BUILDERS & DEVELOPERS PVT. LTD. IN ITA NO.942/PN/2006 WHEREIN DISCUSSING ITS EARLIER DECI SION IN THE CASE OF SUNNET ENGINEERING PVT. LTD.. (SUPRA), THE TRIBUNAL HAS HE LD THAT THE DEPRECIATION IN RESPECT OF VEHICLES OWNED BY THE COMPANY AND USED F OR ITS BUSINESS WAS ALLOWABLE THOUGH IT WAS REGISTERED IN THE NAME OF T HE DIRECTORS. 3. IN SUPPORT OF THE GROUND, THE LEARNED DEPARTMEN TAL REPRESENTATIVE HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER, WHICH WE HAVE ALREADY DISCUSSED HEREIN ABOVE. THE LEARNED AR, ON THE OTH ER HAND, TRIED TO JUSTIFY THE FIRST APPELLATE AUTHORITYS ORDER ON THIS ISSUE. 4. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE DECISION OF THE PUNE BENCH OF THIS TRIBUNAL IN THE CASE OF ROHAN BUILDER S & DEVELOPERS PVT. LTD., (SUPRA) IS BASED UPON THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF MYSORE MINERALS LIMITED (239 ITR 775) (SC). THE T RIBUNAL, IN ITS LATER DECISION IN THE CASE OF ROHAN BUILDERS & DEVELOPERS PVT. LTD ., HAS HELD THAT THE DEPRECIATION IN RESPECT OF THE VEHICLES OWNED BY TH E COMPANY AND USED FOR ITS BUSINESS WAS ALLOWABLE THOUGH IT WAS REGISTERED IN THE NAME OF THE DIRECTORS. FOLLOWING THE DECISION OF THIS TRIBUNAL, WE ARE OF THE VIEW THAT THE LEARNED CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN THE 3 CIRCUMSTANCES, WE ARE NOT INCLINED TO INTERFERE WIT H THE ORDER OF THE FIRST APPELLATE AUTHORITY AND THE SAME IS UPHELD. GROUND NO.1 IS ACCORDINGLY REJECTED. GROUND NO.2 :- THE RELEVANT FACTS ARE THAT THE ASSESSEE COMPA NY IN THE BUSINESS OF IMPORT, EXPORT AND TRADING OF ALL TYPES OF SPICES, DRY FRUITS, PULSES, SEEDS, CLEARING AND PROCESSING ACTIVITY OF AGRO P RODUCTS HAD SHOWN RS.77,87,000/- AS SHORT TERM CAPITAL GAINS ON SALE OF SHARES DURING THE YEAR. THE ASSESSING OFFICER WITH THIS NOTING THAT THE SHARES ARE PURCHASED AND SOLD WITHIN ZERO TO 236 DAYS BASIS AND MOST WERE SOLD WITHIN 30 TO 40 DAYS OF ITS PURCHASE, HELD THAT IT WAS PROFIT FROM THE BUSINESS. THE LEA RNED CIT (A) AFTER DISCUSSING THIS ISSUE IN DETAIL, HAS HOWEVER COME TO THE CONCL USION THAT OUT OF TOTAL AMOUNT OF RS.77,87,000/-, RS.89,509/- WAS TAXABLE UNDER TH E HEAD PROFIT AND GAINS OF BUSINESS AND THE BALANCE AMOUNT OF RS.76,97,491/- IS TO BE TAXED AS SHORT TERM CAPITAL GAINS. THE REVENUE HAS QUESTIONED THIS ACT ION OF THE FIRST APPELLATE AUTHORITY. 5. IN SUPPORT OF THIS GROUND, THE LEARNED DEPARTMEN TAL REPRESENTATIVE HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER A ND THE DECISIONS RELIED UPON BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE AS SESSEE SHOWED LOSS IN TRADING. THE ASSESSEE-COMPANY IS HAVING SYSTEMATIC SET UP TO DEAL WITH IN SHARES. HE REFERRED PAGE-50 OF THE PAPER BOOK (FILED ON BEHALF OF THE ASSESSEE) WITH THIS SUBMISSION THAT IN THE SHARES MENTIONED AT ITEM NOS . 6 AND 10, THE ASSESSEE HAS EARNED HUGE INCOME OF AROUND RS.75 LAKHS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D FURTHER THAT THE DECISIONS RELIED UPON BY THE LEARNED CIT (A) ARE DI STINGUISHABLE ON FACTS AND HENCE THEY ARE NOT HELPFUL TO THE ASSESSEE. HE SUB MITTED THAT THERE ARE SEVERAL FACTORS TO COME TO A CONCLUSION AS TO WHETHER THE T RANSACTION IN SHARES IS WITH THE INTENTION TO INVESTMENT OR TO TRADE THEM. THE LEA RNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FACTORS LIKE SUBS TANTIAL NATURE OF TRANSACTION, 4 MANNER OF MAINTAINING BOOKS OF ACCOUNT, MAGNITUDE O F PURCHASE AND SALES WERE TO BE SEEN BY THE LEARNED CIT(A) TO DETERMINE THE N ATURE OF THE TRANSACTION. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT MOST OF T HE SHARES WERE SOLD WITHIN 30 TO 40 DAYS OF ITS PURCHASE. THUS, IT IS OBVIOUS THAT THE INTENTION OF THE ASSESSEE BEHIND THE TRANSACTION IN QUESTION WAS TO GAIN PROF IT IN BUSINESS OF TRADING IN SHARES AND NOT INVESTMENT IN SHARES. IT IS ALSO WO RTH NOTING THAT THE DIVIDEND WAS EARNED ONLY FROM FINOLEX SHARES. HE PLACED RELIAN CE ON THE FOLLOWING DECISIONS:- I) AJINKYA ELECTROMEIT PVT. LTD. VS. ACIT (ITA NO. 1519/PN/08 ASSESSMENT YEAR 2005-06 ORDER DATED 30-7-2010 II) SMT SADHANA NABERA VS. ACIT (ITA 2586/MUM/09 - ASST. YEAR 2005-06) ORDER DATED 27-3-2010. III) SOM NATH MAINI V CIT 306 ITR 414 (P & HT) IV) 113 ITR 483 (CALCUTTA) 7. THE LEARNED AR, ON THE OTHER HAND, TRIED TO JUST IFY THE FIRST APPELLATE ORDER ON THIS ISSUE. HE REITERATED BEFORE US THE SUBMIS SIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE SHARES ARE REFLECTED IN THE BOOKS OF THE ASSESSEE COMPANY AS INVESTMENT, SOURCE OF INVESTMEN T IS OUT OF SHARE HOLDERS FUNDS, BOOKS WERE MAINTAINED FOR MAKING INVESTMENT IN SHARES, MANNER OF MAINTENANCE OF BOOKS OF ACCOUNTS AS WELL AS MAGNITU DE OF SALE AND PURCHASE TRANSACTION ARE ALSO REFLECTING THE VERY INTENTION OF THE INVESTMENT IN SHARES BY THE ASSESSEE COMPANY. THE LEARNED AR ALSO REFERRED CBDT CIRCULAR NO.4 OF 2007, A COPY WHEREOF HAS BEEN MADE AVAILABLE AT PAG ES 42 TO 43 OF THE PAPER BOOK LAYING DOWN CERTAIN TESTS TO DECIDE AS TO WHET HER THE INCOME SHOULD BE TREATED AS CAPITAL GAINS OR BUSINESS INCOME. HE SU BMITTED THAT AS PER THE CIRCULAR, SUBSTANTIAL NATURE OF TRANSACTION, MANNER OF MAINTAINING BOOKS OF ACCOUNTS, MAGNITUDE OF PURCHASES AND SALE SHOULD F URNISH A GUIDE TO DETERMINE THE NATURE OF TRANSACTION. IN THE CASE OF THE ASS ESSEE THE SHARES ARE HELD BY THE COMPANY AS AN INVESTMENT AND ARE REFLECTED AS SUCH IN THE BALANCE-SHEET. HE 5 POINTED OUT THAT A COPY OF THE BALANCE-SHEET HAS BE EN MADE AVAILABLE AT PAGES 44 AND 45 OF THE PAPER BOOK. HE SUBMITTED FURTHER THAT THE PURCHASE AND SALE OF SHARES HAS TO BE ROUTED THROUGH THE PROFIT AND LOSS A/C. THE DIFFERENCE IN THE PROFIT ON SALES OF SHARES IS INDEPENDENTLY SHOWN AS OTHER INCOME. HE SUBMITTED THAT THE ONUS TO PROVE THE TRANSACTION AS BUSINESS TRANSACTION LIES ON THE DEPARTMENT AND THE CBDT CIRCULAR NO.4 OF 2007 IS BI NDING ON THE DEPARTMENT. THE REQUIREMENT IS TO SEE THE SURROUNDING CIRCUMSTA NCES AS TO WHETHER BEHIND THE TRANSACTION THE PRE-DOMINANT FACTOR WAS INVESTM ENT BY THE ASSESSEE OR TO TRADE THEREIN. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- I) CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPA NY PVT. LTD. 82 ITR 582 (SC) II) CIT VS. H. HOLCK LARSEN (160 ITR 67) (SC) III) FIDELITY NORTHSTAR FUND & OTHERS (288 ITR 641 ) (AAR) IV) SMT. SUREKHA BHAGVATIPRSASAD MUNDADA VS. ITO & OTHERS ITA NO.1332/PN/08- ASSESSMENT YEAR 2005-06 ) DATED 16 TH JUNE, 2010 V) HRA HOLDING & TRADING PVT. LTD. VS. DCIT (ITA NO S. 49 & 50/PN/2008 ASSESSMENT YEAR 2004-05) ORDER DATED 31 ST AUGUST, 2009. THE LEARNED AR SUBMITTED THAT THE MAIN ACTIVITY OF THE ASSESSEE IS BUSINESS IN DRY FRUITS HAVING TURNOVER DURING THE YEAR AT AROUN D RS.60 CRORES WHEREAS THE TURNOVER IN THE TRANSACTION OF SHARES IS AROUND RS. 2 CRORES ONLY. IN THE MEMORANDUM OF ASSOCIATION OF THE COMPANY, NO OBJECT OF TRADING IN SHARES HAS BEEN SHOWN BUT CLAUSE 10 TALKS ABOUT THE INVESTMENT IN SHARES. HE REFERRED PAGE NO.50 OF THE PAPER BOOK TO SUPPORT HIS CONTENT ION THAT FREQUENCY IN THE TRANSACTION OF SHARES WAS VERY LOW. HE REFERRED PA RA 6.9 OF THE FIRST APPELLATE ORDER WHEREIN THE LEARNED CIT (A) MADE OBSERVATIONS REGARDING FREQUENCY OF TRANSACTION IN SHARES. HE SUBMITTED THAT THERE ARE TOTAL NUMBER OF 20 INSTANCES OF PURCHASE IN 12 DIFFERENT SCRIPS DURING THE YEAR AND THERE ARE 15 SALES INSTANCES IN 11 SCRIPS IN THIS YEAR. NEITHER CAN IT BE TREATED AS HIGH VOLUME OF 6 PURCHASE AND SALES WHEN THE TOTAL AMOUNT OF TURNOVE R IS CONSIDERED, NOR IT CAN BE TREATED AS HIGH FREQUENCY. THE NUMBER OF TRANSA CTIONS AROUND 15 TO 20 PER YEAR CANNOT BE TREATED AS REGULAR BUSINESS ACTIVITY ON DAY TO DAY BASIS HAVING VERY HIGH FREQUENCY. SIMILARLY, IN RESPECT OF LAST YEAR I.E., 2004-05 ALSO NEITHER THE FREQUENCY NOR THE TURNOVER IN RESPECT OF SHARES PURCHASE/SALES WOULD BE HIGHER WHEN COMPARED TO THE REGULAR BUSINESS ACTIVI TY. THE LEARNED AR SUBMITTED THAT THE DECISIONS RELIED ON BY THE LEARN ED DR ARE HAVING DIFFERENT FACTS AND ISSUES, HENCE THOSE ARE NOT RELEVANT TO T HE FACTS OF THE INSTANT CASE. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: - I) GOPAL PUROHIT V JCIT 122 TTJ 87 (BOM) UPHELD BY THE BOMBAY HIGH COURT , II) SARNATH INFRASTRUCTURES (P) LTD V.ACIT 120 TTJ 216 (LUCKNOW) 8. CONSIDERING THE ABOVE SUBMISSIONS AND HAVING GON E THROUGH THE DECISIONS RELIED UPON BY THE PARTIES AS WELL AS THE CBDT CIRCULAR NO.4 OF 2007, WE ARE OF THE VIEW THAT NO SINGLE PRINCIPLE WOULD B E DECISIVE AND THE TOTAL EFFECT OF ALL THE PRINCIPLES SHOULD BE CONSIDERED TO DETER MINE WHETHER, IN A GIVEN CASE, THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENT O R STOCK IN TRADE. AS TO WHETHER THE INTENTION OF THE ASSESSEE IN THE TRANS ACTION OF SHARES REMAINED AS INVESTMENT , IS TO BE INFERRED BY SEVERAL GUIDING F ACTORS LIKE SUBSTANTIAL NATURE OF TRANSACTION, MANNER OF MAINTENANCE OF BOOKS OF ACCO UNTS, MAGNITUDE OF PURCHASE AND SALES ETC. THERE IS NO DISPUTE IN THE NOTING OF THE ASSESSING OFFICER THAT THE DIVIDEND WAS EARNED BY THE ASSESSEE ONLY F ROM FINOLAX SHARES BUT AT THE SAME TIME, IT CANNOT BE A SOLE DECIDING FACTOR FOR THE NATURE OF TRANSACTION. THE OTHER IMPORTANT ASPECT IN THE PRESENT CASE ON THE I SSUE IS THAT THE ASSESSEE HAS THROUGH OUT TREATED THE TRANSACTIONS IN SHARES AS A N INVESTMENT AND REFLECTED AS SUCH IN ITS BALANCE-SHEET, A COPY OF WHICH HAS BEEN MADE AVAILABLE AT PAGES 44 TO 45 OF THE PAPER BOOK; THE PURCHASES AND SALES OF SHARES HAVE NOT BEEN ROUTED THROUGH THE PROFIT & LOSS A/C; THE DIFFERENCE I.E. ON ACCOUNT OF SALE OF SHARES 7 HAVE BEEN INDEPENDENTLY SHOWN AS OTHER INCOME. DURI NG THE YEAR UNDER CONSIDERATION, THE TOTAL SALE OF SHARES IS TO THE T UNE OF RS.218 LAKHS AS COMPARED TO THE TOTAL SALES IN ROUTINE BUSINESS (DRY-FRUITS AND SPICES) TO THE TUNE OF RS.60.86 CRORES. CONSIDERING THE TOTAL TURNOVER OF THE COMPANY AND SHARE- HOLDERS FUND, IT IS VERY MUCH CLEAR THAT THE PURCHA SE AND SALE OF SHARES IS NOT THE MAIN ACTIVITY OF THE COMPANY AND CAN BE CALLED AS I NCIDENTAL ACTIVITY OF THE COMPANY. BESIDES, DURING THE YEAR, THE ASSESSEE HA S PURCHASED SHARES TO THE TUNE OF R.167 LAKHS AND SOLD THE SHARES TO THE TUNE OF RS.218 LAKHS. THE TRANSACTIONS RELATED TO A TOTAL OF 14 DIFFERENT SCR IPS SHOWN UNDER THE INVESTMENT AND WAS MADE IN 24 INSTANCES. THE TOTAL PROFIT OF RS.77,87,001/- HAS BEEN CALCULATED AFTER ADJUSTMENT OF PROFIT OF RS.83,24,9 18/- AGAINST THE LOSS OF RS.5,37,917/-. THUS, RS.97,87,000/- HAS BEEN CLAIM ED UNDER THE HEAD SHORT TERM CAPITAL GAINS. OUT OF THESE 14 COMPANIES SCR IPS, IN RESPECT OF TWO COMPANIES I.E., GLOBAL BOARDS LIMITED AND M/S KITPL Y INDUSTRIES LIMITED, THE SHARES WERE ACTUALLY PURCHASED IN THE MONTHS OF NOV EMBER AND DECEMBER 2003 I.E., PURCHASES IN THE LAST ASSESSMENT YEAR 2004-05 AND IT CONSTITUTED 4 INSTANCES OF PURCHASES. THEREFORE, THE TOTAL NUMBE R OF PURCHASES FOR THIS YEAR WERE OF 12 SCRIPS AND IN 20 TRANSACTIONS, AND THE T OTAL AMOUNT OF PURCHASES WERE OF RS.1,62,75,704/-. 9. SO FAR AS SALES ARE CONCERNED OUT OF 14 SCRIPS S HOWN UNDER THE INVESTMENT PORTFOLIO, NO SALES HAVE BEEN MADE IN R ESPECT OF M/S GLOBAL BOARDS LIMITED, G.V. FILMS LIMITED AND G-TECH INFOTRA LIMI TED I.E., SALES HAVE BEEN MADE IN RESPECT OF 11 SCRIPS RESULTING IN A TOTAL N UMBER OF 15 TRANSACTIONS OF SALES AMOUNTING TO RS.2,18,35,113/-. AS AGAINST TH IS AMOUNT OF SALES OF SHARES, THE TOTAL SALE TURNOVER OF THE ASSESSEE IN RESPECT OF ITS MAIN BUSINESS OF DRY-FRUITS AND SPICES, SEEDS ETC., WAS RS.60.86 CRORES DURING THE YEAR. LIKE-WISE, IN THE TRANSACTIONS AS PER RECORDS OF THE LAST YEAR I.E., ASSESSMENT YEAR 2004-05 THERE WERE 20 INSTANCES OF PURCHASES IN 9 SCRIPS WORTH RS .36,28,064/- AND IN 20 8 TRANSACTIONS OF SALES IN 9 SCRIPS WORTH RS.49,39,00 5/-. IT IS EXCLUDING AN OPENING BALANCE OF SHARES OUTSTANDING FROM EARLIER YEAR AND CLOSING BALANCE OF SHARES NOT RESULTED DURING THE YEAR. DURING THE ASSESSMEN T YEAR 2004-05, THE TURNOVER OF HE ASSESSEE IN RESPECT OF ITS REGULAR BUSINESS W AS RS.26 CRORES. NOTING THESE MATERIAL FACTS OF THIS CASE, WE ARE OF THE VIEW THA T THE LEARNED CIT (A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE TURNOVER IN RESPECT OF PURCHASES AND SALE OF SHARES WERE QUITE SMALL AS COMPARED TO THE TURNOVER OF REGULAR BUSINESS AND FREQUENCY OF SUCH SALES/PURCHASES WAS ALSO LOW. TH E BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF GOPAL PUROHIT V JCIT (SUPR A), NOW UPHELD BY THE HONBLE BOMBAY HIGH COURT, HAS HELD THAT STAKES BEING HIGH THESE DAYS, DEALINGS IN SHARE TRANSACTIONS NECESSITATE VARIOUS PARAPHERNALI A IN ORDER TO MINIMISE RISK AND THEREFORE, EMPLOYMENT OF NECESSARY INFRASTRUCTU RE BY ITSELF CANNOT CONVERSE AN INVESTMENT ACTIVITY INTO BUSINESS ACTIVITY. IT W AS HELD THEREIN FURTHER THAT WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIME OF PUR CHASE OF SHARES (OR ANY OTHER ITEM) CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN THE BOOKS OF ACCOUNT AS TO WHETHER IT HAS TREATED IT AS STOCK -IN-TRADE OR INVESTMENT. THERE IS NO DISPUTE THAT THE INTENTION OF THE ASSESSEE CANNO T BE READ FROM HIS MIND, BUT IT REFLECTS IN HIS CONDUCT AND THE WAY HE TREATS THE T RANSACTIONS. THE MAGNITUDE OF TRANSACTIONS DOES NOT ALTER THE NATURE OF TRANSACTI ON AND HENCE A TRANSACTION OF INVESTMENT DOES NOT BECOME A TRANSACTION OF TRADE O NLY BECAUSE OF ITS MAGNITUDE, HELD THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF JANA S. RANGWALA 11 SOT 627 (MUM) AND HYDERABAD BENCH OF TH E TRIBUNAL IN THE CASE OF SHAH-LAL INVESTMENTS AND FINANCIAL CONSULTANTS ( P) LTD. V. DCIT 2 SOT 371 (HYD), TO WHICH WE HAVE OCCASION TO GO THROUGH IN S OME OTHER SIMILAR APPEAL. THUS, TAKING INTO ACCOUNT THE ABOVE FACTS OF THE PR ESENT CASE IN ITS ENTIRETY ON THE ISSUE OF SHARE TRANSACTIONS, WE ARE OF THE VIEW THA T THE LEARNED CIT (A) HAS RIGHTLY COME TO THE CONCLUSION THAT OUT OF TOTAL A MOUNT OF RS.77,87,000/-, AN AMOUNT OF RS.89,509/- WAS ONLY RELATING TO THE TRA NSACTIONS UNDER THE HEAD 9 PROFIT AND GAINS OF BUSINESS AND THE REMAINING AM OUNT OF RS.76,97,491/- IS TO BE TAXED AS SHORT-TERM CAPITAL GAINS. THE LEARNED CIT (A) HAS TREATED RS.89,509/- AS BUSINESS INCOME ON HE BASIS THAT THE PURCHASES O F 3888 SHARES OF TISCO WERE MADE ON 17-5-2004 FOR RS.9,53,587/- ON THE SAM E DATE I.E., ON 17-5-2004 ITSELF ALL THE SHARES WERE SOLD FOR RS.10,43,096/-. THUS, HE TREATED THESE TRANSACTIONS AS DAY-TRADING IN COMMON PARLANCE. T HE PROFIT OF RS 89,509/- IS TREATED AS GAIN OUT OF BUSINESS WAS RESULTANT OF TH E SAID DAY TRADING. IN VIEW OF THE ABOVE, THE FIRST APPELLATE ORDER ON THIS ISSUE IS UPHELD. GROUND NO.2 IS ACCORDINGLY REJECTED. GROUND NO.3 : THE RELEVANT FACTS ARE THAT THE ASSESSING OFFICER DISALLOWED 20% OF THE CLAIMED AMOUNT OF RS.16,21,422/- ON ACCOUNT OF TRAVELING AND CONVEYANCE EXPENSES. THE ASSESSING OFFICER MADE THE DISALLOWA NCE OF RS.3,24,284/- IN THIS REGARD ON THE BASIS OF THE POSSIBILITY OF PERSONAL USER THEREOF. THE LEARNED CIT (A) NOTED THAT THE AMOUNT OF RS.11,37,500/- INCLUDE D IN THE TRAVELLING AND CONVEYANCE EXPENDITURE OF RS.16,21,422/- WAS RELATE D TO FOREIGN TRAVELLING EXPENSES OF THE MANAGING DIRECTOR IN CONNECTION WIT H BUSINESS OF THE ASSESSEE, WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER I N HIS ORDER. THE LEARNED CIT (A) ACCORDINGLY HELD THAT THE AMOUNT OF RS.11,37,50 0/- CANNOT BE CONSIDERED AS AN AD HOC DISALLOWANCE AS T WAS FULLY ALLOWABLE. T HE BALANCE AMOUNT OF RS.4,83,922/- MAINLY INCURRED ON VEHICLES AND CONVE YANCE EXPENSES FOR BUSINESS PURPOSES, THE LEARNED CIT (A) RESTRICTED T HE DISALLOWANCE OF 20% ON THIS AMOUNT OF RS.4,83,922/- ONLY. BUT, AGAIN CONS IDERING THE SUBMISSIONS OF THE ASSESSEE, HE REDUCED THE DISALLOWANCE TO 10% OF THE AMOUNT. THE SAME HAS BEEN QUESTIONED BY THE REVENUE BEFORE US. 10. CONSIDERING THE SUBMISSIONS OF THE PARTIES IN T HIS REGARD, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE LEA RNED CIT (A) ON THE ISSUE 10 ESPECIALLY LOOKING INTO THE TURNOVER OF THE ASSESSE E AS DISCUSSED ABOVE. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD AND THE GROUND NO.3 RAISED ON THIS ISSUE IS ACCORDINGLY DISMISSED. 10. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 31ST DAY OF MAY, 2011. SD/- SD/- (G.S. PANNU) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBE R PUNE, DATED THE 31 ST MAY, 2011 JMR* COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT. 3. CIT (A) 4. CIT CONCERNED, 5. D.R. ITAT B BENCH, PUNE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE