M/s. Altius Securities Trading (P) Ltd., CHENNAI V. DCIT, CHENNAI

MA 68/CHNY/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9970 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: TM
• Next Hearing Date: 08-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 20-06-2012
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM JT
• Assessee Lawyers: SYALI; N R SURESH
• Keywords: Capital asset; Business income; Rectification of order; Transactions in derivatives; Difference of opinion
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] M.P.NO.67/MDS/2012 [IN I.T.A NO.233/MDS/2010] ASSESSMENT YEAR : 2005-06 SHRI C.SRIKANTH NEW NO.19/3 (OLD NO.11/3) 3 RD AVENUE, BESANT NAGAR CHENNAI 600 090 VS THE DY. CIT COMPANY CIRCLE I(1) CHENNAI [PAN ABHPS5947E] (PETITIONER) (RESPONDENT) M.P.NO.68/MDS/2012 [IN I.T.A NO.234/MDS/2010] ASSESSMENT YEAR : 2005-06 M/S ALTIUS SECURITIES TRADING (P) LTD NEW NO.6 (OLD NO.29) CIT COLONY, II MAIN ROAD MYLAPORE CHENNAI 600 004 VS THE DY. CIT COMPANY CIRCLE I(1) CHENNAI [PAN AACCA4561D] (PETITIONER) (RESPONDENT) PETITIONER BY : SHRI M.S.SYALI, SR. ADVOCATE & SHRI N.R.SURESH, FCA RESPONDENT BY : SHRI GURU BASHYAM, JT. CIT DATE OF HEARING : 07-12-2012 DATE OF PRONOUNCEMENT : -12-2012 MP 67 & 68/12 :- 2 -: O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE MISCELLANEOUS PETITIONS FILED BY THE ABOVE ASSESSEES AGAINST THE CONSOLIDATED ORDER OF THE TRI BUNAL DATED 10.02.2012 PASSED IN I.T.A.NOS.233/MDS/2010 AND 234 /MDS/2010. 2. THE MISCELLANEOUS PETITIONS READ AS UNDER: 1. THE CAPTIONED APPEAL FILED BY THE REVENUE WAS HEARD BY THE HON'BLE BENCH ON 08 TH FEBRUARY 2012 AND VIDE ITS ORDER DATED 10 TH FEBRUARY, 2012, THE HON'B!E BENCH WAS PLEASED TO DI SPOSE OF THE APPEAL IN FAVOUR OF THE REVENUE [COPY OF OR DER PASSED BY THE HON'BLE BENCH IS ENCLOSED AS ANNEXURE 'A'. 2. THE SOLE ISSUE INVOLVED IN THE CAPTIONED APPEAL WAS WHETHER PROCEEDS FROM SALE OF SHARES/SECURITIES ARE TO BE T AXED AS INCOME UNDER THE HEAD CAPITAL GAIN OR AS INCOME FRO M BUSINESS. IN APPEAL BEFORE THE FIRST APPELLANT AUTHORITY IT W AS HELD TO BE TAXABLE AS SHORT TERM CAPITAL GAIN. THE REVENUE, HO WEVER, CONTESTED THE SAME BEFORE THIS HON'BLE TRIBUNAL. IN FACT, THE APPEAL STANDS DECIDED IN FAVOUR OF REVENUE. I T IS RESPECTFULLY SUBMITTED THAT IN THE ORDER PASSED BY THE HON ' BLE BENCH FO L LOWING MISTAKES HAVE INADVERTENTLY CREPT IN , WHICH ARE APPARENT FROM RECO R D : ( I ) NON- ADJUDICATION OF GROUND OF APPEAL NO. 6 & 7 : IT IS HUMBLY SUBMITTED THAT WHILE PASSING ITS ORDER , THE HON ' BLE BENCH I NADVERTENTLY DID NOT ADJUDICATE GROUNDS NO 6 & 7 SPECIFICALLY ARGUED BY THE COUNSEL FOR THE APPE LLANT BEFORE THIS HON ' BLE BENCH , RELYING UPON THE FINDINGS OF THE CIT(A). THE GROUNDS 6 & 7 ARE AS UNDER : GROUND NO. 6: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS WRONGLY OBSERVED THAT THE APPELLANT D ID NOT BORROW FUNDS FOR THE PURPOSE OF INVESTMENT AND UTILIZED HIS OWN FUNDS FOR THE SHARES HELD AS INVESTMENTS. THE BORROWED FUND FROM IFLS WAS FOR F&O BUSINESS AND NOT FOR THE PURPOSE OF INVESTMENT. IT IS SUBMITTED THAT THE PROFIT MADE PU RELY OUT OF TRANSACTION ON PURCHASE AND SALE OF SHARES IN CASH SEGMENT UTILIZING THE ILFS BORROWED FUNDS AMOUNTED TO RS. MP 67 & 68/12 :- 3 -: 17,57,808/-. EVEN SUCH GAIN HAVE BEEN ENTIRELY SHOW N AS CAPITAL GAIN U/S 111A OF THE ACT. GROUND NO. 7: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED THAT PERUSAL OF RETURNS AND BALANCE SHEETS OF THE APPELLANT REVEAL THAT THE APPELLANT H AS BEEN CONSISTENTLY MAINTAINING ASSET AS STOCK IN TRADE AS WELL AS INVESTMENT IN ITS ACCOUNTS. THE LEARNED CIT(A) OUGH T TO HAVE SEEN THAT THOUGH THE ASSESSEE HAS BEEN SHOWING INVESTMENTS AND STOCK IN TRADE IN ITS BOOK OF ACCOU NT, THE ASSESSEE HAS SUDDENLY STARTED BOOKING ALL ITS PURCH ASES AS INVESTMENTS SHOWN IN THE BOOKS HAS LEAPED FROM 9,81 ,132/- AS ON 31-03-2003 AND RS. 59,79,579/-AS ON 31-03-200 4 TO RS. 7,41,83,096/- AS ON 31-03-2005 WHICH ONLY SHOWS THAT THERE HAS BEEN NO CONSISTENCY IN THE METHOD OF ACCO UNTING FOLLOWED BY THE ASSESSEE. COPY OF THE SAID GROUNDS ANNEXED TO THE MEMORANDUM OF APPEAL FILED BY THE REVENUE IS ATTACHED HEREWITH AS ANNEXURE C . IT IS RESPECTFULLY SUBMITTED THAT THE HON ' BLE BENCH WHILE HEARING THE MATTER OUGHT TO HAVE ADJUDICATED UPON A BOVE GROUNDS AS ADJUDICATION THEREON WAS CARDINAL TO ITS CONCLUSION FOR RELEVANT DETERMINATION OF THE ISSUE . THE LEARNED CIT (A) WHILE REVERSING THE ORDER OF THE AO HAS GIVEN SPECIFIC FINDINGS WHICH ARE AS UNDER : (I) THE ASSESSEE IS NOT ONLY DEALING IN SHARES BUT IS A TRADER AS WELL AS AN INVESTOR . HE IS CONSISTENTLY MAINTAINING SHARES AS STOCK IN TRADE AS WELL AS INVESTMENTS AND SUCH MANNER OF KEEPING AND MAINTAINING THE RECORDS, PRESENTATION OF SHARES AS INVESTMENT IS SAME IN THE END OF ALL YEARS ; THEREFORE THERE IS NO REASON WHY THE CLAIM OF THE ASSESSEE BE NOT ACCEPTED. THIS REASONING OF THE CIT (A) IS TAKEN AS GROUND NO 7 BY THE REVENUE , WHICH REMAINED UNDISPOSED SINCE THE ARGUMENTS OF THE ASSESSEE HAVE NOWHERE BEEN CONTROVERTED. (II) THAT THE ASSESSEE DID NOT BORROW FUNDS FOR THE PURP OSE OF INVESTMENTS AND UTILIZED ITS OWN FUNDS FOR THE S HARES HELD AS INVESTMENTS. THE BORROWED FUNDS FROM ILFS W AS FOR F & O BUSINESS AND NOT FOR THE PURPOSE OF INVESTMENT . THIS FINDING OF CIT (A) IS CHALLENGED BY THE REVENUE AS GROUND NO . 6 , WHICH ITAT FAILED TO ADJUDICATE UPON. MP 67 & 68/12 :- 4 -: THE LAW IS TRITE THAT AN OMISSION TO ADJUDICATE THE GROUND RAISED IS A MISTAKE APPARENT FROM RECORD. REFERENC E IS INVITED TO THE JUDGMENT OF HON'BLE MADRAS HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME TAX VS MALLADI PROJECT MANAGEMENT(P) LTD. REPORTED IN 324 ITR 87(M AD) WHEREIN THE HON'BLE COURT HAS OBSERVED AS UNDER: 'ONE OF THE GROUNDS ON WHICH THE PRESENT APPEAL IS FILED IS THAT THE TRIBUNAL HAS TOTALLY LOST SIGHT O F, OF THE GROUND NOS. 5 TO 5.2 ON THE ISSUE OF TREATMENT OF CURRENT INVESTMENTS, WHICH HAS NOT AT ALL BEEN ADJUDICATED. WE HAVE HEARD THE ARGUMENT OF THE LEARNED COUNSEL F OR THE REVENUE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE OF THE VIEW THAT IF A PARTICULAR GRO UND HAS BEEN RAISED BY THE REVENUE AND THAT GROUND HAS NOT BEEN ANSWERED BY THE TRIBUNAL, IT IS FOR THE REVENUE TO BRING THE SAME TO THE NOTICE OF THE TRIB UNAL AND GET IT RECTIFIED BY PROCEDURE KNOWN TO LAW. THE NON- CONSIDERATION BY ITSELF CAN-NOT BE A REASON FOR FIL ING AN APPEAL. EVEN AN APPEAL IS FILED, IT HAS TO BE REMIT TED BACK TO THE TRIBUNAL, ONCE AGAIN FOR RECONSIDERATIO N OF THE ISSUE IF THE STATEMENT MADE BY THE REVENUE IS CORRECT. THEREAFTER, THE TRIBUNAL HAS TO DO THE VER Y SAME EXERCISE. INSTEAD, THE REVENUE COULD HAVE APPROACHED THE TRIBUNAL POINTING OUT THE MISTAKE IN NOT CONSIDERING THE SPECIFIC GROUND RAISED BY THE REVEN UE AND OBTAINED AN ORDER BY WAY OF RECTIFICATION, WHIC H PROCESS HAS NOT BEEN DONE IN THIS CASE, EVEN THOUGH THE ORDER OF THE TRIBUNAL WAS MADE ON FEBRUARY 6, 2008. FOR THE ABOVE REASONS, WE DISMISS THE APPEAL BY OBSERVING THAT IT IS OPEN TO THE REVENUE TO APPROAC H THE TRIBUNAL.' (II) RELEVANT FACTS ON RECORD IGNORED: THE HON ' BLE BENCH DID NOT TAKE COGNIZANCE OF THE FOLLOWING FACT S RECORDED BY THE HON ' BLE CIT(A) IN ITS ORDER DATED 27 T H NOVEMBER 2009 . WHILE COMING TO ITS CONCLUSION . (A) THE RETURN OF INCOME AND BALANCE SHEET OF THE APPEL LANT REVEAL THAT THE APPELLANT HAS BEEN CONSISTENTLY MAI NTAINING ASSETS AS STOCK-IN - TRADE AS WELL AS INVESTMENTS IN ITS BOOKS OF ACCOUNT . MP 67 & 68/12 :- 5 -: (B) THE APPELLANT PAID SHORT TERM CAPITAL GAIN AT NORMA L RATES ON THE STATE ON THE SHARE TRANSACTIONS EXECUTED IN THE PERIOD PRIOR TO 01-10-2004 . (C) THE APPELLANT HAS PROVED WITH EVIDENCE THAT ALL THE TRANSACTIONS CONFERRING SHORT TERM CAPITAL GAIN WER E TAKEN DELIVERY OF ANY TRANSACTED THROUGH DEMAT ACCOUNT . IT IS ALSO NOT TRUE THAT THE SHARES WERE HELD ONLY FOR 2 TO 45 DAYS. MANY SHARE WERE HELD FOR AS LONG AS 365 DAYS AND BEYOND AN YEAR AS WELL . (D) THE APPELLANT DID NOT BORROW FUNDS FOR THE PURPOSE OF INVESTMENT . THE SHARE PURCHASED AS INVESTMENT HAS ALSO BEEN KEPT IN THE INVESTMENT ACCOUNT AND IN THE STOC K-IN- TRADE (INVENTORY) ACCOUNT . THE APPELLANT HAS SHOWN INVESTMENT OF RS . 9,81,132/-, RS . 59 , 79 , 579/- AND RS . 7 , 41,83,096/- AS ON 31.03 . 2003, 31 . 03 . 2004 AND 31 . 03 . 2005 RESPECTIVELY AND HAS SHOWN DIVIDEND INCOME IN ALL T HESE YEARS (E) EVEN AFTER OCTOBER 2004, THE APPELLANT HAS SHOWN BUSINESS INCOME RS.3 . 78.847/- THESE FACTS ARE CARDINAL TO THE DETERMINATION OF TH E ISSUE AND ARE ON RECORD. NOT CONSIDERING THESE FACTS VITIATE S THE ORDER AND RENDER IT NOT IN ACCORDANCE WITH LAW. IT IS TRITE L AW THAT TRIBUNAL BEING A FACT FINAL AUTHORITY MUST, IN DECIDING AN A PPEAL, CONSIDER WITH DUE CARE ALL MATERIAL FACTS AND RECORD ITS FIN DING BASED CONTENTIONS RAISED BY THE ASSESSEE IN THE LIGHT OF THE EVIDENCE AND RELEVANT LAW. FAILURE TO CONFORM TO THESE MINIM UM REQUISITES WILL RENDER THE TRIBUNAL'S ORDER INVALID. IN THIS B EHALF, RELIANCE MAY BE PLACED ON THE FOLLOWING DECISIONS:- OMAR SALAY MOHAMED SAIT VS CIT MADRAS, REPORTED IN 37 ITR 151 (SC) ESTHURI ASWANTHIAH V. COMMISSIONER OF INCOME-TAX, MYSORE REPORTED IN 66 ITR 478 (SC UDHAVDAS KEWALRAM VS COMMISSIONER OF INCOME-TAX, BOMBAY CITY REPORTED IN 66 ITR 462 (SC) E. A. VENKATARAMIER AND SONS VS CIT MADRAS , REPO RTED IN 65 ITR 316 (MAD.) PRAYER IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE ORDER P ASSED BY HON'BLE ITAT ON 10 TH F EBRUARY, 2012 MAY KINDLY BE RECTIFIED /MODIFIED/AMENDED AND FACTS ARGUMENTS BE RECORDED CORRECTLY AFTER GIVING A DUE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE, IF THE HON'BLE BENCH DEEMS NECESSARY TO DO SO. MP 67 & 68/12 :- 6 -: 3. AT THE TIME OF THE HEARING, THE A.R OF THE ASSE SSEE SUBMITTED THAT HE IS NOT PRESSING PARA 2(I) OF THE MISCELLAN EOUS PETITIONS. HENCE, THE ISSUES RAISED IN PARA 2(I) OF THE MISCEL LANEOUS PETITIONS ARE REJECTED FOR WANT OF PROSECUTION. 4. THE ONLY GRIEVANCE OF THE ASSESSEES LEFT TO BE ADJU DICATED IN THE SAID MISCELLANEOUS PETITIONS ARISES IN PARA 2(II) O F THE MISCELLANEOUS PETITIONS. 5. THE A.R SUBMITTED THAT THE TRIBUNAL HAS STATED THAT CERTAIN FACTS ARE UNDISPUTED WHEREAS SOME OF THE FACTS CONSIDERED BY THE TRIBUNAL AS UNDISPUTED WERE, IN FACT, DISPUTED, AND ON WHICH THE FINDINGS OF THE CIT(A) WERE CONTRARY TO THE FINDINGS OF THE ASSESSI NG OFFICER. THUS, THE TRIBUNAL IGNORED THE FACTS FOUND BY THE CIT(A) AND ERRONEOUSLY CONSIDERED THE FACTS RECORDED BY THE ASSESSING OFFI CER AS UNDISPUTED FACTS. THE A.R POINTED OUT THAT THE CIT(A) HAS FOU ND THAT (A)THE RETURN OF INCOME AND BALANCE SHEET OF THE AP PELLANT REVEAL THAT THE APPELLANT HAS BEEN CONSISTENTLY MAI NTAINING ASSETS AS STOCK-IN-TRADE AS WELL AS INVESTMENTS IN ITS BOOKS OF ACCOUNT. (B) THE APPELLANT PAID SHORT TERM CAPITAL GAIN AT N ORMAL RATES ON THE STATE ON THE SHARE TRANSACTIONS EXECUT ED IN THE PERIOD PRIOR TO 01-10-2004. (C) THE APPELLANT HAS PROVED WITH EVIDENCE THAT ALL THE TRANSACTIONS CONFERRING SHORT TERM CAPITAL GAIN WER E TAKEN DELIVERY OF ANY TRANSACTED THROUGH DEMAT ACCOUNT. IT IS ALSO NOT TRUE THAT THE SHARES WERE HELD ONLY FOR 2 TO 45 DAYS. MANY SHARE WERE HELD FOR AS LONG AS 365 DAYS AND BEYOND AN YEAR AS WELL. MP 67 & 68/12 :- 7 -: (D)THE APPELLANT DID NOT BORROW FUNDS FOR THE PURPO SE OF INVESTMENT. THE SHARE PURCHASED AS INVESTMENT HAS A LSO BEEN KEPT IN THE INVESTMENT ACCOUNT AND IN THE STOC K-IN- TRADE (INVENTORY) ACCOUNT. THE APPELLANT HAS SHOWN INVESTMENT OF RS. 9,81,132/-, RS. 59,79,579/- AND R S. 7,41,83,096/- AS ON 31.03.2003, 31.03.2004 AND 31.03.2005 RESPECTIVELY AND HAS SHOWN DIVIDEND INCO ME IN ALL THESE YEARS (E) EVEN AFTER OCTOBER 2004, THE APPELLANT HAS SHOW N BUSINESS INCOME RS.3.78.847/- 6. WE FIND THAT THE CIT(A) HAS HELD AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, SUBMISSIONS MADE BY THE AR, AND VARIOUS CASE LAWS RELIED UPON B Y THE APPELLANT. WHETHER THE INCOME FROM SHARE TRADING WO ULD COME UNDER THE HEAD 'CAPITAL GAINS' OR 'BUSINESS INCOME' HAS BEEN SUBJECT MATTER OF NUMEROUS LITIGATION. AS PER THE P ROVISIONS OF THE ACT, 'BUSINESS INCOME' AND 'CAPITAL GAINS' ARE SUBJ ECT TO TAX AT DIFFERENT RATES OF TAX. THE PROVISIONS OF THE ACT D O NOT LAY DOWN CLEAR CRITERIA FOR DETERMINING THE CHARACTERISATION OF INCOME, BUT CERTAIN GENETIC PRINCIPLES HAVE EVOLVED OUT OF THE JUDICIAL PRECEDENTS AND ADMINISTRATIVE DISPENSATION. EARLIER IN 1989, VIDE INSTRUCTION NO. 1827 DATED 310889, CERTAIN TESTS WERE LAID DOWN BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) TO DISTINGUISH BETWEEN SHARES HELD AS STOCK-IN-TRADE A ND SHARES HELD AS INVESTMENT. THE CBDT HAS ISSUED CIRCULAR NO.4/2007, DATED 15.06.07 TO PROVIDE FURTHER GUIDELINES FOR DE TERMINING WHETHER A PERSON IS A TRADER IN STOCKS OR AN INVEST OR IN STOCKS. THE SAID CIRCULAR, ISSUED AS A SUPPLEMENT TO THE EA RLIER INSTRUCTION OF 1989, REITERATES THE PRINCIPLES LAID DOWN IN THE EARLIER JUDICIAL DECISIONS AND, MORE SPECIFICALLY, REPRODUCES CERTAIN OBSERVATIONS MADE IN THE TWO DECISIONS OF T HE HON'BLE SUPREME COURT (CIT V ASSOCIATED INDUSTRIAL DEVELOPM ENT COMPANY (P) LTD (1971) 82 ITR 586 (SC) AND CIT V H. HOLCK LARSEN (1986) 160 ITR 67 (SC)}. THE PRINCI PLES LAID DOWN BY THE SAID CIRCULAR ARE AS FOLLOWS: (I) WHETHER A PARTICULAR HOLDING OF SHARES IS BY WA Y OF INVESTMENT OR FORMS PART OF THE STOCK-IN-TRADE I S A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSE E WHO HOLDS THE SHARES AND IT SHOULD, IN NORMAL CIRCUMSTANCES, BE IN A POSITION TO PRODUCE EVIDENCE MP 67 & 68/12 :- 8 -: FROM ITS RECORDS AS TO WHETHER IT HAS MAINTAINED AN Y DISTINCTION BETWEEN THOSE SHARES WHICH ARE ITS STOC K-IN- TRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT. (II) WHERE A COMPANY PURCHASES AND SELLS SHARES, IT MUST BE SHOWN THAT THEY WERE HELD AS STOCK-IN-TRADE AND THAT EXISTENCE OF THE POWER TO PURCHASE AND SEL L SHARES IN THE MEMORANDUM OF ASSOCIATION IS NOT DECISIVE OF THE NATURE OF TRANSACTION; (III) THE SUBSTANTIAL NATURE OF TRANSACTIONS, THE M ANNER OF MAINTAINING BOOKS OF ACCOUNTS, THE MAGNITUDE OF PURCHASES AND SALES AND THE RATIO BETWEEN PURCHASES AND SALES AND THE HOLDING WOULD FURNISH A GOOD GUID E TO DETERMINE THE NATURE OF TRANSACTIONS; (IV) ORDINARILY, THE PURCHASE AND SALE OF SHARES WI TH THE MOTIVE OF EARNING A PROFIT WOULD RESULT IN THE TRAN SACTION BEING IN THE NATURE OF TRADE / ADVENTURE IN THE NAT URE OF TRADE, BUT WHERE THE OBJECT OF THE INVESTMENT IN SH ARES OF A COMPANY IS A DERIVE INCOME BY WAY OF DIVIDEND, ETC., THEN THE PROFITS ACCRUING BY CHANGES IN SUCH INVESTMENT (BY SALE OF SHARES) WILL YIELD CAPITAL G AIN AND NOT REVENUE RECEIPT. 4.1 IMPORTANTLY, THE CIRCULAR ALSO RECOGNISES THAT AN ASSESSEE COULD HAVE TWO PORTFOLIOS VIZ., INVESTMENT PORTFOLI O COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSET S AND TRADING PORTFOLIO COMPRISING OF STOCK-IN-TRADE WHICH ARE TO BE TREATED AS TRADING ASSETS. THE MUMBAI TRIBUNAL IN THE CASE OF GOPAL PUROHIT V JCIT (2009) 122 TTJ 87 (MUM) HAS REITERAT ED THE PRINCIPLES LAID DOWN IN THE ABOVE-MENTIONED CBDT CI RCULAR AND HAS CONCLUDED THAT AN ASSESSEE CAN BE AN INVESTOR A ND TRADER SIMULTANEOUSLY AND HENCE INCOME EARNED ON THE SAME SHOULD BE CLASSIFIED ACCORDINGLY. 4.2 THE HON'BLE SUPREME COURT IN RAJA BAHADUR KA MAKHYA NARAIN SINGH (SUPRA) HAS HELD THAT THE DISTINCTION BETWEEN THE TWO TYPES OF TRANSACTIONS IS NOT ALWAYS EASY TO MAK E. HOWEVER, IF THE FACTS OF THE APPELLANT ARE CONSIDERED AGAINST T HE PRINCIPLES LAID DOWN BY THE JUDICIAL PRECEDENTS AND CBDT CIRCU LAR, IT IS CLEAR THAT THE APPELLANT HAS MADE SUBSTANTIAL COMPL IANCE TO THE CRITERIA FOR INVESTMENT. A PERUSAL OF THE RETURNS O F INCOME AND BALANCE SHEETS OF THE APPELLANT REVEAL THAT THE APP ELLANT HAS BEEN CONSISTENTLY MAINTAINING ASSETS AS STOCK-IN-TR ADE AS WELL AS INVESTMENTS IN ITS BOOKS OF ACCOUNT. THERE IS NO D ISPUTE THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S 10(38) AND HAS PAID TAX U/S 111A AT CONCESSIONAL RATE ON TRANSACTIONS WHERE SECURITY MP 67 & 68/12 :- 9 -: TRANSACTION TAX HAD BEEN PAID. IT IS ALSO NOTED THA T THE APPELLANT HAS PAID TAX ON SHORT TERM CAPITAL GAIN AT NORMAL RATES ON THE SHARE TRANSACTIONS EXECUTED IN THE PERIOD PRIOR TO 01-10-2004. THERE WAS AN AMENDMENT IN THE ACT BY FINANCE ACT, 2 004 WHEREBY SECTION 10(38) OF THE ACT WAS CHANGED AND A CONCESSIONAL RATE OF TAX AT THE RATE OF 10% WAS LEV IED SUBJECT TO THE CONDITION THAT THE TRANSACTIONS RESULTING INTO THIS TYPE OF CAPITAL GAINS SUFFER SECURITY TRANSACTION TAX. IF A NY ADVANTAGE ACCRUES TO THE ASSESSEE DUE TO A LEGISLATIVE ENACTM ENT WHICH CONFERS CERTAIN ADVANTAGE ON THE APPELLANT, THEN TH E SAME CANNOT BE TAKEN AWAY BY THE REVENUE BY TREATING THE TRANSACTION IN SUCH A WAY THAT THE APPELLANT SUFFER S THE HIGHER / MAXIMUM RATE OF TAXATION. THE MODUS OPERANDI OF TH E APPELLANT, THE MANNER OF KEEPING THE RECORDS AND PRESENTATION OF SHARES AS INVESTMENT AT THE END IS SAME IN ALL THE YEARS. THE REFORE, THERE IS NO REASON AS TO WHY THE CLAIM MADE BY THE APPELLANT SHOULD NOT BE ACCEPTED. THE APPELLANT HAS NO DOUBT TRANSACTED IN LARGE NUMBER OF SHARES WHICH HAVE GIVEN IT 'BUSI NESS PROFIT' AS WELL AS 'CAPITAL GAIN'. THAT BY ITSELF COULD NOT CO NVERT A CAPITAL GAIN INTO BUSINESS PROFIT. THOUGH THE PERIOD OF HOL DING FOR LONG TERM CAPITAL GAIN HAS BEEN SPECIFIED IN THE ACT, NO SUCH PERIOD HAS BEEN SPECIFIED FOR SHORT TERM CAPITAL GAIN BUT THE APPELLANT HAS PROVED WITH EVIDENCE THAT ALL THE TRANSACTIONS CONFERRING SHORT TERM CAPITAL GAIN WERE TAKEN DELIVERY OF AND TRANSACTED THROUGH DEMAT ACCOUNT. IT IS ALSO NOT TRUE THAT THE SHARES WERE HELD ONLY FOR 2 TO 45 DAYS. MANY SHARES WERE HELD FOR AS LONG AS 365 DAYS. IN ANY CASE, THE LEARNED ASSESSING OFFICE R HAS NOT DISTURBED THE LONG-TERM CAPITAL GAIN. THUS, IMPLIED LY, AS PER THE ASSESSING OFFICER, EITHER THE SHARES WERE HELD FOR MORE THAN 12 MONTHS OR FOR A PERIOD OF 2 TO 45 DAYS. THIS IS FAC TUALLY WRONG AND THE APPELLANT HAS HELD MANY SHARES FOR PERIOD E XCEEDING 45 DAYS UPTO 12 MONTHS. (THE APPELLANT DID NOT BORROW FUNDS FOR THE PURPOSE OF INVESTMENT AND UTILISED HIS OWN FUNDS FO R THE SHARES HELD AS INVESTMENT. THE BORROWED FUNDS FROM ILFS WA S FOR F&O BUSINESS AND NOT FOR THE PURPOSE OF INVESTMENT. TH E SHARES PURCHASED AS INVESTMENT HAVE ALSO BEEN KEPT IN THE INVESTMENT ACCOUNT AND NOT IN THE STOCK-IN-TRADE (INVENTORY) A CCOUNT. THE APPELLANT HAS SHOWN INVESTMENT OF RS.9,81,132/-, RS .59,79,579/- AND RS.7,41,83,096/- AS ON 31-03-2003, 31-03- 2004 AND 31-03- 2005 RESPECTIVELY. HE HAS ALSO SHOWN DIVIDEND INCOM ES IN ALL THE YEARS. THE ASSERTION THAT APPELLANT DID NOT SHOW AN Y BUSINESS INCOME FROM TRADING IN SHARES AFTER 01-10-2004 IS A LSO NOT CORRECT. HE HAS ALSO SHOWN BUSINESS INCOME OF RS 3,78,847/- AFTER OCTOBER, 2004. IN VIEW OF THE ABOVE FACTUAL POSITION AND JUDICIAL PRECEDENTS, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN TREATING THE 'SHORT- TERM CAPITAL GAIN' AS 'BUSINESS INCOME'. THE ASSESSING OFFICER IS, ACCORDINGLY, DIR ECTED TO ACCEPT THE SHORT-TERM CAPITAL GAIN SHOWN BY THE APP ELLANT. THE APPELLANT SUCCEEDS ON THIS GROUND. MP 67 & 68/12 :- 10 -: 7. THE TRIBUNAL, VIDE PARA 5 OF ITS ORDER DATED 10.2.2 012, HAS HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER, MORE SPECIFICALLY PARA 5, CLEARLY BRINGS OUT THE NATURE OF TRANSACTIONS. THESE FACTS AS BROUGHT OUT BY THE ASSESSING OFFICER REMAINED UNDISPUTED . ADMITTEDLY, THE ASSESSEES CAN MAINTAIN TWO PORTFOLIOS, BEING TRADIN G IN SHARES AND INVESTMENTS. IN THE PRESENT CASE IT IS NOTICED THAT FROM 1 . 4.2004 TO 30.9.2004 THE ASSESSEES CONTINUED TO HOLD THAT THEY WERE DOING BUSINESS. SUDDENLY FROM 1 . 10 . 2004 TO 31 . 3.2005 THE ASSESSEES CHANGED THEIR STAND THAT THEY WANT TO DO INVESTMENTS. HOWEVER, DURING THIS PERIOD WHEN THE ASSESSEES ARE CLAIMING TO BE DOING INVESTMENTS, THE ASSESSEES HAVE PURCHASED AND SOLD SHARES OF MORE THAN 106 COMPANIES AND THE VOLUME OF SHARES TRANSACTED IS IN A FEW LAKHS. THE HOLDING PERIOD OF THE SHARES IS ALSO VERY SHORT. THE CONSISTENT PRACTICE OF THE ASS ESSEES HAS BEEN TO TREAT THE TRANSACTIONS AS BUSINESS. THE ASS ESSEES HAVE CHANGED THE CONSISTENT STAND FROM BUSINESS TO INVES TMENT WITHOUT SHOWING ANY VALID CAUSE . IN ANY CASE, CONSIDERING THE VOLUME OF THE TRANSACTIONS AS ALSO THE RATIO BETWEE N THE PURCHASE AND SALE AND THE HOLDINGS , EVEN BY APPLYING THE PRINCIPLES AS LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF RAJA BAHADUR VISHESHWARA SINGH, REFERRED TO SUPR A, THE TRANSACTIONS CAN BE CONSIDERED ONLY AS A BUSINESS T RANSACTION AND NOT ONE THAT GIVES RISE TO SHORT TERM CAPITAL G AINS. EVEN APPLYING THE DECISION RELIED UPON BY THE LEARNED C! T(A) IN THE CASE OF GOPAL PUROHIT, REFERRED TO SUPRA, AS THE AS SESSEES HAVE BEEN CONSISTENTLY FOLLOWING THE PRACTICE OF TREATIN G THE TRANSACTIONS IN SHARES AS BUSINESS, A DIFFERENT STAND SHOULD NOT BE TAKEN FOR THE PERIOD 1.10.2004 TO 31.3.2005. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A WRONG FOOTING AND CALL S FOR INTERFERENCE. IN THE CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) STANDS REVERSED AND THAT OF THE ASSESSING OF FICER STANDS RESTORED. IN THE CIRCUMSTANCES, THE APPEALS OF THE REVENUE ARE ALLOWED. 8. THUS, WE FIND THAT THE TRIBUNAL HAS ERRED IN NOT CO NSIDERING CERTAIN FINDINGS OF THE CIT(A), SUCH AS BUSINESS INCOME OF ` 3,78,847/- WAS SHOWN BY THE ASSESSEE AFTER 1.10.20 04, SHORT TERM CAPITAL GAINS WERE ALSO SHOWN BEFORE 30.9.2004, CER TAIN SHARES WERE MP 67 & 68/12 :- 11 -: HELD FOR AS LONG AS 365 DAYS, ASSESSEE CONSISTENTL Y IN HIS BALANCE SHEET OF EARLIER YEARS HAS ALSO SHOWN INVESTMENT IN SHARES APART FROM SHARES ACQUIRED AS STOCK-IN-TRADE AND HOLDING THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS SUDDENLY CHANGED FROM 1.10.2 004 ITS CONSISTENT PRACTICE OF SHOWING THE PROCEEDS FROM SHARE TRANSAC TION BUSINESS AS INCOME AND NOT CAPITAL GAINS; AND SHARES WERE HELD FOR A VERY SHORT PERIOD OF TIME. WE, THEREFORE, FIND THAT THERE WAS AN APPARENT MISTAKE IN THIS OBSERVATION OF THE TRIBUNAL. FURTH ER THE ASSESSEE HAS CLAIMED THAT THESE FACTS WERE CARDINAL TO DECIDE TH E ISSUE WHICH WAS BEFORE THE TRIBUNAL AND THEREFORE, THE TRIBUNAL SHO ULD RECALL ITS ORDER DATED 10.2.2012. 9. WE FIND THAT THE HON'BLE ALLAHABAD HIGH COURT IN TH E CASE OF CIT VS MOOLCHAND SHYAM LAL, 273 ITR 160(ALL) HAS HELD A S UNDER: 5. THUS, IT IS NOW WELL-SETTLED THAT IN THE ABSENCE OF ANY SPECIFIC POWER CONFERRED BY THE STATUTE OR INFERRED BY IMPLI CATION, THE TRIBUNAL WHICH HAS BEEN CONSTITUTED UNDER THE ACT C ANNOT EXERCISE ANY POWER OF REVIEW. NO SUCH POWER CAN BE INFERRED BY IMPLICATION NOR THERE IS ANY SPECIFIC PROVISION IN THE ACT PROVIDING FOR REVIEW. HOWEVER, IF AN ERROR FALLS WITHIN THE P ROVISIONS OF SECTION 254(2) OF THE ACT, THEN SURELY. THE TRIBUNA L CAN EXERCISE THE POWER CONFERRED UNDER THE SAID ACT AND RECTIFY ITS MISTAKE. IT IS WELL SETTLED THAT, IF THE FACTS OF A PARTICULAR CASE HAS BEEN RECORDED INCORRECTLY OR SOME ERROR HAS CREPT IN, W HICH DOES NOT REQUIRE ANY DEBATE AND IS APPARENT ON THE RECORD, SUCH A MISTAKE CAN BE CORRECTED IN EXERCISE OF POWERS UNDE R SECTION 254(2). THE PRESENT ONE IS ONE OF SUCH CASES WHERE THE TRIBUNAL HAD INCORRECTLY RECORDED CERTAIN FACTUAL A SPECT IN ITS ORDER WHICH, UPON AN APPLICATION BEING MADE, IT HA D DELETED SUCH PORTION AND RESTORED THE APPEAL TO ITS FILE TO BE DECIDED AFRESH. THE TRIBUNAL CANNOT BE SAID TO HAVE COMMITT ED ANY ILLEGALITY AS THE MISTAKE WAS APPARENT ON THE FACE OF THE RECORD WHICH FALLS WITHIN THE PROVISIONS OF SECTION 254(2) OF THE ACT. MP 67 & 68/12 :- 12 -: 10. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, W E FIND THAT IT SHALL BE IN THE INTEREST OF JUSTICE, TO RECALL THE CONSOLIDATED ORDER OF THE TRIBUNAL DATED 10.2.2012 PASSED IN I.T.A.NOS.233/MD S/2010 AND 234/MDS/2010. WE ORDER ACCORDINGLY AND DIRECT THE REGISTRY TO FIX THE APPEALS FOR HEARING IN USUAL COURSE. 11. IN THE RESULT, BOTH THE MISCELLANEOUS PETITIONS ARE ALLOWED. ORDER PRONOUNCED ON , THE OF DECEMBER 2012, AT CHENNAI AS PER MY SEPARATE ORDER SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S. SAINI) ACCOUNTANT MEMBER 04/01/2013 07.1.2013 DATED: DECEMBER, 2012 RD : COPY TO: 1. PETITIONER 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR MP 67 & 68/12 :- 13 -: PER V. DURGA RAO, JUDICIAL MEBER : I HAVE GONE THROUGH THE PROPOSED ORDER AND AFTER C AREFUL PERUSAL OF THE SAME I REGRET THAT I AM UNABLE TO CO NCUR WITH THE REASONING AND CONCLUSION OF MY LEARNED BROTHER, THE ACCOUNTANT MEMBER. ACCORDINGLY, AFTER DUE DISCUSSION WITH MY LEARNED BROTHER, I PROPOSE TO WRITE MY SEPARATE ORDER FOR T HE REASONS GIVEN HEREAFTER. 2. THE PRESENT MISCELLANEOUS APPLICATIONS ARE FILE D BY THE ASSESSEES ON THE GROUND THAT RELEVANT FACTS HAVE BE EN IGNORED WHILE ADJUDICATING THE APPEALS. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT CERTAIN MATERIAL FACTS WHICH WERE ON RECORD, AS REC ORDED BY THE LEARNED CIT(APPEALS), WERE NOT CONSIDERED BY THE TR IBUNAL, NAMELY, A) THE RETURN OF INCOME AND BALANCE SHEET REVEALED THAT THE APPELLANT HAS BEEN CONSISTENTLY MAINTAININ G ASSETS AS STOCK-IN-TRADE AS WELL AS INVESTMENTS IN ITS BOOKS OF ACCOUNT. B) THE APPELLANT PAID SHORT TERM CAPITAL GAIN AT NORMAL RATES ON THE STATE ON THE SHARE TRANSACTIONS EXECUTED IN THE PERIOD PRIOR TO 01-10-2004. MP 67 & 68/12 :- 14 -: C) THE APPELLANT HAS PROVED WITH EVIDENCE THAT ALL THE TRANSACTIONS CONFERRING SHORT TERM CAPITAL GAIN WERE TAKEN DELIVERY OF ANY TRANSACTED THROUGH DEMAT ACCOUNT. IT IS ALSO NOT TRUE THAT THE SHARES WERE HELD ONLY FOR 2 TO 45 DAYS. MANY SHARE WERE HELD FOR AS LONG AS 365 DAYS AND BEYOND AN YEAR AS WELL. D) THE APPELLANT DID NOT BORROW FUNDS FOR THE PURPOSE OF INVESTMENT. THE SHARE PURCHASED AS INVESTMENT HAS ALSO BEEN KEPT IN THE INVESTMENT ACCOUNT AND IN THE STOCK-IN-TRADE (INVENTORY) ACCOU NT. THE APPELLANT HAS SHOWN INVESTMENT OF ` 9,81,132/-, ` 59,79,579/- AND ` 7,41,83,096/- AS ON 31.03.2003,31.03.2004 AND 31.03.2005 RESPECTIVELY AND HAS SHOWN DIVIDEND INCOME IN ALL THESE YEARS. E) EVEN AFTER OCTOBER 2004, THE APPELLANT HAS SHOWN BUSINESS INCOME ` `` ` 3,78,87/-. THESE FACTS ARE CARDINAL TO THE DETERMINATION OF TH E ISSUE AND ARE ON RECORD. NOT CONSIDERING THESE FAC TS VITIATES THE ORDER AND RENDER IT NOT IN ACCORDANCE WITH LAW. IT IS TRITE LAW TRIBUNAL BEING A FACT FINAL A UTHORITY MUST, IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE ALL MATERIAL FACTS AND RECORD ITS FINDING BASED ON CONTENTIONS RAISED BY THE ASSESSEE IN THE LIGHT OF THE MP 67 & 68/12 :- 15 -: EVIDENCE AND RELEVANT LAW. FAILURE TO CONFORM TO TH ESE MINIMUM REQUISITES WILL RENDER THE TRIBUNALS ORDER INVALID. IN THIS BEHALF, RELIANCE MAY BE PLACED ON THE FOLLOWING DECISIONS : * OMAR SALAY MOHAMED VS. CIT MADRAS,REPORTED IN 37 ITR 151 (SC) * ESTHURI ASWANTHIAH V. COMMISSIONER OF INCOME-TAX, MYSORE REPORTED IN 66 ITR 478 (SC) * UDHAVDAS KEWALRAM V. COMMISSIONER OF INCOME-TAX, BOMBAY CITY REPORTED IN 66 ITR 462 (SC) * E.A. VENKATARAMIER AND SONS V. CIT MADRAS, REPORTED IN 65 UITR 316 (MAD). ACCORDINGLY, THE LEARNED COUNSEL FOR THE ASSESSEES PRAYED FOR RECALLING THE ORDER PASSED BY THE TRIBUNAL. 4. ON THE OTHER HAND, THE LEARNED DR STRONGLY OPPOS ED THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEES A ND SUBMITTED THAT THE ABOVE MISCELLANEOUS APPLICATIONS DO NOT CO ME WITHIN THE PURVIEW OF SECTION 254(2) OF THE INCOME TAX ACT, 19 61 ('THE ACT' FOR SHORT) . HE FURTHER SUBMITTED THAT THE LEARNED COUNSEL FOR THE ASSESSEE WHO HAD APPEARED BEFORE THE TRIBUNAL AT TH E FIRST INSTANCE, I.E. AT THE TIME OF HEARING OF THE APPEAL S, DID NOT DISPUTE THE DETAILED ARGUMENTS ADVANCED BY THE DEPA RTMENTAL MP 67 & 68/12 :- 16 -: REPRESENTATIVE AND, THEREFORE, UNDER THE GARB OF RE CTIFICATION OF MISTAKE, IT IS NOT POSSIBLE FOR THE ASSESSEES TO TA KE A FURTHER CHANCE OF RE-ARGUING THE APPEALS WHICH HAVE ALREADY BEEN DECIDED. HE SUBMITTED THAT WHETHER THE TRANSACTION S CARRIED ON BY THE ASSESSEE FOR THE PERIOD 01-10-2004 TO 31-03- 2005 AMOUNTED TO BUSINESS INCOME OR SHORT-TERM CAPITAL G AINS, IS A DEBATABLE ISSUE. HE FURTHER SUBMITTED THAT THE REC TIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. THE LEARNED DR SUBMITTED THAT THE TRIBUNAL, AFTER CONSIDERING THE ENTIRE FAC TS AND CIRCUMSTANCES OF THE CASE AND BY APPLYING INDEPENDE NT MIND, CAME TO THE CONCLUSION THAT IT IS BUSINESS INCOME. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER. 5. HAVE HEARD BOTH THE PARTIES. THE PRESENT MISCEL LANEOUS APPLICATIONS FILED BY THE ASSESSEES ARE AGAINST THE CONSOLIDATED ORDER OF THE TRIBUNAL IN ITA NOS. 233 & 234/MDS/201 0 DATED 10- 02-2012. THE ASSESSING OFFICER AFTER CONSIDERING T HE ENTIRE FACTS AND DETAILS OF THE CASE COMPLETED THE ASSESSMENT TR EATING THE INCOME OF THE ASSESSEE AS BUSINESS INCOME. ON APPE AL, THE LEARNED CIT(APPEALS) HELD THE INCOME OF THE ASSESS EES FOR THE PERIOD 1.10.2004 TO 31.3.2005 AS SHORT-TERM CAPITAL GAIN. THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRI BUNAL. BEFORE MP 67 & 68/12 :- 17 -: THE TRIBUNAL THE LEARNED DR SUBMITTED THAT THE ASSE SSEES HAD MADE PROFITS IN THE TRADING IN THE CASH SEGMENT. T HE ASSESSEES HAD OFFERED THEIR PROFITS ON TRADING IN THE CASH SE GMENT FROM 1.4.2004 TO 30.9.2004 UNDER THE HEAD PROFITS AND G AINS OF BUSINESS. FOR THE PERIOD FROM 1.10.2004 TO 31.3.2 005 THE ASSESSEES HAD CLAIMED THE SAID TRADING IN THE CASH SEGMENT AS SHORT-TERM CAPITAL GAINS BY CLAIMING THAT THE SAM E WAS DONE FOR INVESTMENT PURPOSES. CONSEQUENTLY, THE ASSESSEES H AD ALSO CLAIMED LOWER RATE OF TAX BY APPLYING THE PROVISION S OF SECTION 111A OF THE ACT. IT WAS SUBMITTED THAT THE PROVISI ONS OF SECTION 111A CAME INTO THE STATUTE W.E.F. 1-4-2005. IT WAS FURTHER SUBMITTED THAT THIS CHANGE OF SHIFTING THE INCOME O FFERED BY THE ASSESSEE FROM THE HEAD BUSINESS TO SHORT- TERM C APITAL GAINS WAS AN AFTER-THOUGHT FOR THE PURPOSE OF REDUCING TH E INCIDENCE OF TAX. IT WAS THE SUBMISSION THAT THE PERCENTAGE OF PURCHASE AND SALE OVER THE HOLDINGS WAS 98%. IT WAS SUBMITTED T HAT THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT H AD FOUND THAT THE ASSESSEES HAD DURING THE PERIOD 1-10-2004 TO 31 -3-2005 PURCHASED AND SOLD SHARES OF AS MANY AS 106 COMPANI ES THROUGH THE STOCK EXCHANGE, 6,205,150 SHARES OF VARIOUS COM PANIES HAD BEEN PURCHASED AND SOLD DURING THE PERIOD FOR A TOT AL MP 67 & 68/12 :- 18 -: CONSIDERATION OF ` 77,81,61,051/- AND THE SALE WAS FOR AN AMOUNT OF ` 79,70,31,405/-. THE HOLDING PERIOD OF THE SHARES WAS ON AN AVERAGE OF 2 TO 45 DAYS. EXCEPT FOR A VERY SMALL N UMBER OF SHARES WHICH WERE PURCHASED DURING THE FAG END OF T HE FINANCIAL YEAR, ALL THE SHARES PURCHASED DURING THE PERIOD 1. 4.2004 TO 31.3.2005 HAD BEEN SOLD WITHIN A VERY SHORT PERIOD OF TIME BEFORE THE CLOSE OF THE FINANCIAL YEAR. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD FOUND THAT THE ASSESSEES HAD DEALT IN LARGE VOLUME OF SHARES IN A VARIED NUMBER OF COMPANIES WH ICH CLEARLY SHOWED THAT THE INTENTION OF THE ASSESSEES WAS ONLY TO DO BUSINESS. IT WAS FURTHER SUBMITTED THAT THE LEARNED CIT(APPEALS) HAD HELD THAT THE TRANSACTIONS DONE BY THE ASSESSEE FOR THE PERIOD 1-10-2004 TO 31-3-2005 WAS LIABLE TO BE TREA TED ONLY AS A SHORT-TERM CAPITAL GAINS AS THE ASSESSEES HAD BEEN CONSISTENTLY MAINTAINING ASSETS IN STOCK-IN-TRADE AS WELL AS INV ESTMENTS IN THEIR BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE REVENUE WAS NOT DISPUTING THE FACT THAT THE ASSESSE ES COULD MAKE INVESTMENTS AS ALSO DO TRADING IN SHARES AND I T WAS ONLY CHALLENGING THE ISSUE THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEES IN THE PURCHASE AND SALE OF SHARES BETWEE N THE PERIOD 1.10.2004 TO 31.3.2005 WAS LIABLE TO BE TREATED AS BUSINESS MP 67 & 68/12 :- 19 -: INCOME AND NOT SHORT-TERM CAPITAL GAINS AS THE INVE STMENTS WERE NOT MADE DURING THAT YEAR. THE ASSESSING OFFICER A LSO CATEGORICALLY HELD THAT THE PURCHASE AND SALE OF SH ARES AS DONE BY THE ASSESSEES DURING THE SAID PERIOD WAS NOT IN THE COURSE OF INVESTMENTS BUT WAS IN THE COURSE OF BUSINESS. HE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F RAJA BAHADUR VISHWESHWARA SINGH (DECEASED) & OTHERS V. C IT, REPORTED IN 41 ITR 685 (SC). 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE AS SESSEES, AT THE TIME OF HEARING OF THE APPEALS, RELIED ON THE D ECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GOP AL PUROHIT, REPORTED IN 336 ITR 287 AND SUBMITTED THAT THE PRIN CIPLE OF CONSISTENCY HAS TO BE FOLLOWED AND THE ASSESSEES AR E ENTITLED TO FOLLOW TWO SEPARATE PORTFOLIOS AND ACCORDINGLY SUPP ORTED THE ORDER PASSED BY THE LEARNED CIT(APPEALS). 7. AFTER CONSIDERING THE ABOVE SUBMISSIONS, THE TRI BUNAL HAS HELD, VIDE PARA 5 OF ITS ORDER DATED 10-02-2012, AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER, MORE SPECIFICALLY PARA 5, CLEARLY BRINGS OUT THE NATURE OF TRANSACTIO NS. THESE FACTS AS BROUGHT OUT BY THE ASSESSING OFFICER REMAINED UNDISPUTED. ADMITTEDLY, THE ASSESSEES MP 67 & 68/12 :- 20 -: CAN MAINTAIN TWO PORTFOLIOS, BEING TRADING IN SHARE S AND INVESTMENTS. IN THE PRESENT CASE IT IS NOTICED THAT FROM 1.4.2004 TO30.9.2004 THE ASSESSEES CONTINUED TO HOLD THAT THEY WERE DOING BUSINESS. SUDDENLY FROM 1.10.2004 TO 1.3.2005 THE ASSESSEES CHANGED THEIR STAND THAT THEY WANT TO DO INVESTMENTS. HOWEVER, DURING THIS PERIOD WHEN THE ASSESSEES ARE CLAIMING TO BE DOING INVESTMENTS, THE ASSESSEES HAVE PURCHASED AND SOLD SHARES OF MORE THAN 106 COMPANIES AND THE VOLUME OF SHARES TRANSACTED IS IN A FEW LAKHS. THE HOLDING PERIOD OF THE SHARES IS ALSO VERY SHORT. THE CONSISTENT PRACT ICE OF THE ASSESSEES HAS BEEN TO TREAT THE TRANSACTIONS AS BUSINESS. THE ASSESSEES HAVE CHANGED THE CONSISTENT STAND FROM BUSINESS TO INVESTMENT WITHOUT SHOWING ANY VALID CAUSE. IN ANY CASE, CONSIDERING THE VOLUME OF THE TRANSACTIONS AS ALSO THE RATIO BETWEEN THE PURCHASE AND SALE AND THE HOLDINGS, EVEN BY APPLYING THE PRINCIPLES AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RAJA BAHADUR VISHESHWARA SINGH, REFERRED TO SUPRA, THE TRANSACTIONS CAN BE CONSIDERED ONLY AS A BUSINESS TRANSACTION AND NOT ONE THAT GIVES RISE TO SHORT TERM CAPITAL GAINS. EVEN APPLYING THE DECISIO N RELIED UPON BY THE LEARNED CIT(A) IN THE CASE OF GOPAL PUROHIT, REFERRED TO SUPRA, AS THE ASSESSEES HAVE BEEN CONSISTENTLY FOLLOWING THE PRACTICE OF MP 67 & 68/12 :- 21 -: TREATING THE TRANSACTIONS IN SHARES AS BUSINESS, A DIFFERENT STAND SHOULD NOT BE TAKEN FOR THE PERIOD 1.10.2004 TO 31.3.2005. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A WRONG FOOTING AND CALL S FOR INTERFERENCE. IN THE CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) STANDS REVERSED AND THAT OF THE ASSESSING OFFICER STANDS RESTORED. IN THE CIRCUMSTANCES, THE APPEALS OF THE REVENUE ARE ALLOWED. 8. THUS THE TRIBUNAL BY CONSIDERING THE ASSESSMENT ORDER AS ALSO THE ORDER PASSED BY THE LEARNED CIT(APPEALS) A ND THE ELABORATE SUBMISSIONS MADE BY THE LEARNED DR AND AL SO BY CONSIDERING THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF RAJA BAHADUR VISHESHWARA SINGH (SUPRA) AS ALSO TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOP AL PUROHIT (SUPRA) CAME TO THE CONCLUSION THAT THE SHARE TRANS ACTIONS MADE BY THE ASSESSEE FOR THE PERIOD OF 1.10.2004 TO 31.3 .2005 WAS BUSINESS INCOME. WITH THE ABOVE OBSERVATION, THE TR IBUNAL REVERSED THE ORDER PASSED BY THE LEARNED CIT(APPEAL S) AND RESTORED THE ORDER PASSED BY THE ASSESSING OFFICER. MP 67 & 68/12 :- 22 -: 9. BEFORE THE TRIBUNAL THE LEARNED DR HAS SPECIFICA LLY POINTED OUT THAT THE ASSESSEES TRANSACTIONS IN THE PURCHAS E AND SALE OF SHARES BETWEEN THE PERIOD 1.10.2004 AND 31.3.2005 W ERE LIABLE TO BE TREATED AS BUSINESS INCOME AS THE ASSESSEES H AVE NOT MADE ANY INVESTMENTS DURING THAT YEAR. THEREFORE IT WAS SUBMITTED THAT IT IS LIABLE TO BE TREATED AS ONLY THE BUSINES S INCOME. THIS IS THE MAIN DISPUTE BETWEEN THE REVENUE AND THE ASSESS EES. THE LEARNED COUNSEL FOR THE ASSESSEE WHO HAD APPEARED B EFORE THE TRIBUNAL HAD NOT SHOWN ANY MATERIAL TO COME TO THE CONCLUSION THAT THE SUBMISSIONS OF THE LEARNED DR WERE NOT COR RECT. THE REVENUE HAS TAKEN A SPECIFIC STAND BEFORE THE TRIBU NAL BY RAISING GROUND NO.8 THAT THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE AVERAGE HOLDING OF SH ARES RANGED FROM 2 TO 45 DAYS. THE LEARNED COUNSEL FOR THE ASS ESSEE HAS NOT SUBSTANTIATED TO SHOW THAT MANY OF THE SHARES HELD BY THE ASSESSEE WERE MORE THAN 365 DAYS BY PRODUCING RELEV ANT MATERIAL. WHEN THE TRIBUNAL HAS APPLIED ITS INDEP ENDENT MIND WITH REGARD TO ALL THE RELEVANT FACTS BY CONSIDERIN G THE SUBMISSIONS OF BOTH SIDES AND ALSO BY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RAJA BAHADU R VISHWESHWARA SINGH (DECEASED) & OTHERS V. CIT (SUPR A) AND ALSO MP 67 & 68/12 :- 23 -: CONSIDERING THE CASE LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GOPAL PUROHIT (SUPRA), IN MY OPI NION, THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEES D O NOT COME WITHIN THE SCOPE OF SECTION 254(2) OF THE ACT. 10. INSOFAR AS THE CASE LAWS RELIED ON BY THE LEARN ED COUNSEL FOR THE ASSESSEE ARE CONCERNED, I HAVE GONE THROUGH THE SAME AND FIND THAT THE FACTS AND CIRCUMSTANCES INVOLVED THER EIN ARE ENTIRELY DIFFERENT FROM THOSE INVOLVED IN THE PRESENT CASE. THEREFORE THEY WILL NOT RENDER ANY HELP IN DECIDING THE PRESENT MI SCELLANEOUS APPLICATIONS. 11. THE SCOPE OF SECTION 254(2) OF THE ACT HAS ELAB ORATELY BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF EXPRESS NEWSPAPERS LTD. V. DCIT (320 ITR 12) (MAD) AS FOLLOWS : THE SCOPE AND AMPLITUDE OF SECTION 254(2) AND THE ANALOGOUS PROVISION SECTION 154 OF THE ACT HAVE BEE N CONSIDERED BY CATENA OF DECISIONS OF THE APEX COURT AND OTHER HIGH COURTS. THE UNIFORM OPINION OF THE COURT S OF SUPERIOR JURISDICTION IS THAT A PATENT, MANIFEST AN D SELF- EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISC USSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAI D TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED UNDER SECTION 254(2). AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CO RRECT OR NOT. AN ERROR APPARENT ON THE RECORD MEANS AN ER ROR WHICH STRIKES ONE ON MERE LOOKING AND DOES NOT NEED A MP 67 & 68/12 :- 24 -: LONG DRAWN OUT PROCESS OF REASONING ON POINTS ON WH ICH THERE MAY BE CONCEIVABLY TWO OPINIONS. THE ERROR SH OULD NOT REQUIRE ANY EXTRANEOUS MATTE TO SHOW ITS INCORR ECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF TH E VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS O NE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVER ED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. SECTION 2 54(2) SPECIFICALLY EMPOWERS THE TRIBUNAL TO AMEND AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF AN ORDER, ANY OR DER PASSED BY IT UNDER SECTION 254(1) WITH A VIEW TO RE CTIFY ANY MISTAKE APPARENT FROM THE RECORD EITHER SUO MOTU OR ON AN APPLICATION. IN ORDER TO ATTRACT THE APPLICATION OF SECTION 254(2), THE MISTAKE MUST EXIST AND THE SAME MUST BE APPARENT FROM THE RECORD. THE EXPRESSION 'MISTAKE APPARENT FROM THE RECORDS' CONTAINED IN SECTIONS 15 4 AND 254(2) HAS WIDER CONTENT THAN THE EXPRESSION 'ERROR APPARENT ON THE FACE OF THE RECORD' OCCURRING IN OR DER 47 RULE 1 OF C.P.C. THE RESTRICTIONS ON THE POWER OF REVIEW UNDER ORDER 47 RULE 1 OF C.P.C. DO NOT HOLD GOOD IN THE CASES OF SECTIONS 254(2) AND 154 OF THE ACT. SECTIO N 254(2) DOES NOT CONFER POWER ON THE TRIBUNAL TO REVIEW ITS EARLIER ORDER. UNDER THE GRAB OF RECTIFICATION OF MISTAKE I T IS NOT POSSIBLE FOR A PARTY TO TAKE FURTHER CHANCE OF RE-A RGUING THE APPEAL ALREADY DECIDED. WHAT CAN BE RECTIFIED UNDER SECTION 254(2) IS A MISTAKE WHICH IS APPARENT AND P ATENT. THE MISTAKE HAS TO BE SUCH FOR WHICH NO ELABORATE R EASONS OR ENQUIRY IS NECESSARY. WHERE TWO OPINIONS ARE POS SIBLE THEN IT CANNOT BE SAID TO BE A MISTAKE APPARENT ON THE RECORD. WHEN PREJUDICE RESULTING FROM AN ORDER IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OM ISSION, IT IS ITS BOUNDEN DUTY TO SET IT RIGHT. THE PURPOSE BE HIND THE ENACTMENT OF SECTION 254(2) OF THE ACT TO AMEND ANY ORDER PASSED UNDER SUB-SECTION (1), IF ANY MISTAKE APPARE NT FROM THE RECORDS IS BROUGHT TO THE NOTICE OF THE TRIBUNA L, IS BASED ON THE FUNDAMENTAL PRINCIPLE THAT NO PARTY APPEARING BEFORE THE TRIBUNAL, BE IT AN ASSESSEE OR THE DEPARTMENT, SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL. THIS FUNDAMENTAL PRINCIP LE HAS NOTHING TO DO WITH THE INHERENT POWER OF THE TRIBUN AL. IF PREJUDICE IS RESULTED TO THE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OM ISSION AND WHICH ERROR IS A MANIFEST ERROR, THEN THE TRIBU NAL MP 67 & 68/12 :- 25 -: WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. RECT IFICATION CAN BE MADE ONLY WHEN A GLARING MISTAKE OF FACT OR LAW COMMITTED BY THE OFFICER PASSING THE ORDER BECOMES APPARENT FROM THE RECORD. THE RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. A POINT WHICH WAS NOT EXAMINED ON FACTS OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT FROM THE RECORD. NO ERROR CAN BE S AID TO BE APPARENT ON THE FACE OF THE RECORD IF IT IS NOT MANIFEST OR SELF EVIDENT AND REQUIRES AN EXAMINATION OR ARGUMEN T TO ESTABLISH IT. WHERE WITHOUT ANY ELABORATE ARGUMENT ONE COULD POINT TO THE ERROR AND SAY HERE IS A SUBSTANT IAL POINT OF LAW WHICH STARES ONE IN THE FACE, AND THERE COUL D REASONABLY BE NO TWO OPINIONS ENTERTAINED ABOUT IT, IS A CLEAR CASE OF ERROR APPARENT ON THE FACE OF THE REC ORD. VIDE ASST. CIT V. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (2008) 305 ITR 227(SC), HONDA SIEL POWER PRODUCTS LTD. V. CIT (2007) 295 ITR 466 (SC); HARI VISHNU KAMATH V. AHMA D ISHAQUE, AIR 1955 SC 233;(1955) 1 SCR 1104; CIT V. KESHRI METAL PVT. LTD. (1999) 237 ITR 165 (SC); DEV A METAL POWDERS P. LTD. V. COMMISSIONER, TRADE TAX (2 007) 10 VST 751 (SC); (2008) 2 SCC 439, CIT V. HERO CYCL ES PVT. LTD. (1997) 228 ITR 463 (SC), SATYANARAYAN LAXMINARAYAN HEGDE V. MALLIKARJUN BHAVANAPPA TIRUMALE, AIR 1960 SC 137; (1960) 1 SCR 890, THUNGABHADRA INDUSTRIES LTD. V. GOVERNMENT OF ANDHR A PRADESH REP. BY THE DEPUTY COMMISSIONER OF COMMERCI AL TAXES, AIR 1964 SC 1372, BATUK K. VIYAS V. SURAT BOROUGH MUNICIPALITY, ILR 1953 BOM 191, MRS. K.T.M. S. UMMA SALMA V. CIT (1983) 144 ITR 890 (MAD), KIL KOTAGIRI TEA AND COFFEE ESTATES CO. LTD. V. ITAT (1 988) 174 ITR 579 (KER), CIT V. R.CHELLADURAI (1979) 118 ITR 108 (MAD), STATE OF TAMIL NADU V. THAKOREBHAI AND BROTHERS (1983) 52 STC 104 (MAD), JAINARAIN JEEVAR AJ V. CIT (1980) 121 ITR 358 (RAJ), CIT V. VARDHMAN SPINN ING (1997) 226 ITR 296 (P&H), BATA INDIA LTD. V. DEPUTY DEPUTY CIT (1996) 217 ITR 871 (CAL) AND CIT V. PRA HLAD RAI TODI (2001) 251 ITR 833 (GAUHATI). FROM THE VARIOUS JUDGMENTS OF THE SUPREME COURT ABOVE REFERRED TO AND OTHER HIGH COURTS, IT IS CLEA R THAT THE TRIBUNAL'S POWER UNDER SECTION 254(2) IS NOT T O REVIEW ITS EARLIER ORDER BUT ONLY TO AMEND IT WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD. WHAT CAN BE MP 67 & 68/12 :- 26 -: TERMED AS 'MISTAKE APPARENT?'. 'MISTAKE' IN GENERAL MEANS TO TAKE OR UNDERSTAND WRONGLY OR INACCURATELY ; TO MAKE AN ERROR IN INTERPRETING; IT IS AN ERROR; A FA ULT, A MISUNDERSTANDING, A MISCONCEPTION. MISTAKE IN TAXAT ION LAWS HAS A SPECIAL SIGNIFICANCE. IT IS MOSTLY SUBJE CTIVE AND THE DIVIDING LINE IS THIN AND INDISCERNIBLE. 'APPAR ENT' MEANS VISIBLE, CAPABLE OF BEING SEEN, EASILY SEEN, OBVIOUS PLAIN, OPEN TO VIEW, EVIDENT, APPEARS, APPEARING AS REAL AND TRUE, CONSPICUOUS, MANIFEST, SEEMING. THE PLAIN MEANING OF THE WORD 'APPARENT' IS THAT IT MUST BE SOMETHING WHICH APPEARS TO BE EX-FACIE AND INCAPABL E OF ARGUMENT AND DEBATE. IF SUCH A 'MISTAKE APPARENT ON THE FACE OF RECORD' IS BROUGHT TO THE NOTICE, SECTION 2 54(2) EMPOWERS THE TRIBUNAL TO AMEND THE ORDER PASSED UND ER SECTION 254(1). AMENDMENT OF AN ORDER DOES NOT MEAN OBLITERATION OF THE ORDER ORIGINALLY PASSED AND ITS SUBSTITUTION BY A NEW ORDER. WHAT IS MISTAKE APPARE NT ON THE FACE OF THE RECORD OR WHERE DOES A MISTAKE CEA SE TO BE MERE MISTAKE, AND BECOME MISTAKE APPARENT ON THE FA CE OF THE RECORD IS RATHER DIFFICULT TO DEFINE PRECISEL Y, SCIENTIFICALLY AND WITH CERTAINTY. AN ELEMENT OF INDEFINITENESS INHERENT IN ITS VERY NATURE AND IT M UST BE DISCERNIBLE FROM THE FACTS OF EACH CASE BY JUDICIOU SLY TRAINED MIND. MERE EXISTENCE OF A MISTAKE OR ERROR WOULD NOT PER SE RENDER THE ORDER AMENABLE FOR RECTIFICAT ION, BUT SUCH A MISTAKE MUST BE ONE WHICH MUST BE MANIFEST O N THE FACE OF THE RECORD. 12. IN THE ABOVE CASE THE HONBLE JURISDICTIONAL HIG H COURT HAS HELD THAT UNDER THE GARB OF RECTIFICATION OF MISTAK E IT IS NOT POSSIBLE FOR A PARTY TO TAKE ANOTHER CHANCE OF RE-A RGUING THE APPEAL ALREADY DECIDED. THIS OBSERVATION MADE BY T HE HONBLE JURISDICTIONAL HIGH COURT SQUARELY APPLIES TO THE PR ESENT CASE. THE HONBLE JURISDICTIONAL HIGH COURT FURTHER OBSERV ED IN THE ABOVE CASE THAT THE RECTIFICATION IS NOT POSSIBLE I F THE QUESTION IS MP 67 & 68/12 :- 27 -: DEBATABLE. A POINT ON WHICH WAS NOT EXAMINED ON F ACTS OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT FROM REC ORD. THIS OBSERVATION OF THE HONBLE JURISDICTIONAL HIGH COURT ALSO SQUARELY APPLIES TO THE CASE IN HAND. 13. IN VIEW OF THE ABOVE, TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLL OWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF EXPRESS NEWSPAPERS LTD. V. DCIT (SUPRA), THE MISCEL LANEOUS PETITIONS ARE LIABLE TO BE DISMISSED. I THEREFORE REJECT THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEES. 14. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS A RE DISMISSED. SD/- CHENNAI, (V. DURGA RAO) DATED, THE 04 TH JANUARY, 2013. JUDICIAL MEMBER H. MP 67 & 68/12 :- 28 -: IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT THIRD MEMBER M.P. NO.67(MDS)/2012 IN ITA NO.233(MDS)/2010 ASSESSMENT YEAR : 2005-06 SHRI C.SRIKANTH, NEW NO.19/3 (OLD NO.11/3), 3 RD AVENUE, BESANT NAGAR, CHENNAI-600 090. PAN ABHPS5947E. VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE I(1), CHENNAI. (PETITIONER) (RESPONDENT) AND M.P. NO.68(MDS)/2012 IN ITA NO.234(MDS)/2010 ASSESSMENT YEAR : 2005-06 M/S.ALTIUS SECURITIES TRADING THE DEPUTY COMMISSIONER (P) LTD., NEW NO.6 (OLD VS. OF INCOME- TAX, NO.29) CIT COLONY, II MAIN COMPANY CI RCLE I(1), RD., MYLAPORE CHENNAI-4. CHENNAI. PAN AACCA4561D. (PETITIONER) (RESPONDENT) PETITIONERS BY : NONE ADJOURNMENT DECLINED. RESPONDENT BY : DR. S.MOH ARANA, IRS, CIT & MR. GURU BASHYAM, IRS, JCIT DATE OF HEARING : 18 TH FEBRUARY, 2013 MP 67 & 68/12 :- 29 -: DATE OF ORDER : 25 TH FEBRUARY, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THESE TWO MISCELLANEOUS PETITIONS ARE FILED BY TH E ASSESSEES. THESE PETITIONS ARE IN THE NATURE OF RE CTIFICATION PETITIONS. THE TRIBUNAL HAD PASSED A COMMON ORDER ON 10 TH FEBRUARY, 2012 IN THE TWO APPEALS FILED BY THE REVE NUE IN ITA NOS.233 & 234(MDS)/2010. THOSE APPEALS RELATED TO THE ASSESSMENT YEAR 2005-06. THE APPEALS WERE FILED AG AINST THE ASSESSEES, SHRI C.SRIKANTH AND M/S.ALTIUS SECUR ITIES TRADING (P) LTD. IT IS THE CASE OF THE ASSESSEES, WHO WERE RESPONDENTS IN THE REVENUES APPEALS MENTIONED ABOV E, THAT CERTAIN MISTAKES ARE APPARENT FROM THE COMMON ORDER PASSED BY THE TRIBUNAL AND, THEREFORE, THOSE MISTAK ES MAY BE RECTIFIED AS PRAYED FOR, IN THESE PETITIONS. 2. THESE PETITIONS WERE HEARD BY THE DIVISION BENCH ON 7 TH DECEMBER, 2012. THE LEARNED ACCOUNTANT MEMBER, WHO AUTHORED THE LEADING ORDER, AGREED WITH THE ASSESSEES AND HELD THAT THERE ARE MISTAKES APPARENT FROM THE COMMON ORDER DATED 10 TH FEBRUARY, 2012 PASSED BY THE MP 67 & 68/12 :- 30 -: TRIBUNAL IN THE APPEALS FILED BY THE REVENUE. HE A CCORDINGLY ALLOWED THE RECTIFICATION PETITIONS FILED BY BOTH T HE RESPONDENT-ASSESSEES. THE LEARNED JUDICIAL MEMBER COULD NOT AGREE WITH THE PROPOSED ORDER OF THE LEARNED AC COUNTANT MEMBER. ACCORDINGLY, HE PASSED A DISSENTING ORDER, REJECTING THE CONTENTIONS RAISED BY THE PETITIONERS . HE DISMISSED THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEES. 3. THUS AROSE A DIFFERENCE OF OPINION BETWEEN THE LEARNED MEMBERS WHO CONSTITUTED THE DIVISION BENCH. CONSEQUENTLY, REFERENCES UNDER SECTION 255(4) OF TH E INCOME-TAX ACT, 1961 WERE MADE SEPARATELY BY THE LE ARNED MEMBERS FOR NOMINATING A THIRD MEMBER TO RESOLVE TH E DIFFERENCE. 4. THE LEARNED ACCOUNTANT MEMBER REFERRED THE POINT OF DIFFERENCE AS FOLLOWS:- WHETHER KEEPING IN VIEW THE FINDINGS OF THE CIT(A), THERE WAS ANY MISTAKE APPARENT FROM THE RECORDS RECTIFIABLE U/S 254(2) OF THE ACT IN THE ORDER DATED 10.2.2012 PASSED BY THE TRIBUNAL; WHEREIN THE TRIBUNAL PROCEEDED ON THE MP 67 & 68/12 :- 31 -: ASSUMPTION THAT THE FACTS OF THE CASE AS BROUGHT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WERE UNDISPUTED FACTS OF THE CASE? 5. THE LEARNED JUDICIAL MEMBER FRAMED THE POINT OF DIFFERENCE AS UNDER:- WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEES DO COME WITHIN THE PURVIEW OF SECTION 254(2) OF THE INCOME-TAX ACT, 1961 OR NOT? 6. THE HONBLE PRESIDENT THROUGH HIS PROCEEDINGS DATED 24 TH JANUARY, 2013 HAS NOMINATED ME AS THE THIRD MEMBER. THAT IS HOW THE MATTER IS PLACED BEFORE ME . 7. WHEN THE MATTERS WERE CALLED ON FOR HEARING ON MONDAY, THE 18 TH OF FEBRUARY, 2013, ADJOURNMENT APPLICATIONS RECEIVED FROM ONE MR.N.R.SURESH, A CHA RTERED ACCOUNTANT AT CHENNAI, WERE PLACED BEFORE ME. IT IS STATED IN THE ADJOURNMENT APPLICATIONS THAT A SENIOR ADVOCATE IS ENGAGED TO APPEAR FOR THE ASSESSEES, BUT AS HE WAS ENGAGED BEFORE THE SUPREME COURT, IT WOULD NOT BE P OSSIBLE MP 67 & 68/12 :- 32 -: FOR HIM TO APPEAR ON THE SAID DATE OF HEARING ON 18 TH FEBRUARY, 2013. THEREFORE, HE SOUGHT ADJOURNMENT, SUGGESTING FOUR CONVENIENT DATES OF THE SENIOR ADVO CATE AVAILABLE IN THE MONTH OF APRIL, 2013. 8. NOTICES OF HEARING IN THE PRESENT CASES WERE ISSUED BY THE REGISTRY ON 31 ST JANUARY, 2013. THE ASSESSEES HAVE RECEIVED THE NOTICES IN TIME. BUT, THE ASSESSEES SOUGHT ADJOURNMENTS ONLY LAST MINUTE THRO UGH LETTER DATED 13 TH FEBRUARY, 2013. MAY IT BE SO. WHEN THE MATTER WAS CALLED ON FOR HEARING, EVEN THE LOCAL CH ARTERED ACCOUNTANT AVAILABLE IN CHENNAI, DID NOT APPEAR BEF ORE THE BENCH TO TAKE A FRESH DATE, AFTER ASCERTAINING THE CONVENIENCE OF THE BENCH AS WELL. THE LOCAL CHARTE RED ACCOUNTANT, IT IS SEEMED, IS BOTHERED ONLY ABOUT TH E CONVENIENT DATES OF THE SENIOR ADVOCATE AND NOT BOT HERED ABOUT THE CONVENIENCE OF THE BENCH. THE PRESENT TH IRD MEMBER REFERENCES ARE NOT ON APPEALS, BUT ON THE MISCELLANEOUS APPLICATIONS FILED BY THE PETITIONERS IN THE LIGHT OF THE TRIBUNAL ORDER, WHICH HAS ALREADY BEEN PASSE D. PETITIONS OF THIS NATURE CANNOT BE ADJOURNED FROM T IME TO TIME WITHOUT CONVINCING REASONS. THIS IS BECAUSE THE DE LAY IN MP 67 & 68/12 :- 33 -: DISPOSING OF THESE MISCELLANEOUS PETITIONS WILL KEE P THE ORDER OF THE TRIBUNAL, WHICH HAS ALREADY BEEN PASSED, IN SUSPENDED ANIMATION. 9. TAKING AN OVERALL VIEW OF THE SITUATION AND EXERCISING THE JUDICIAL DISCRETION CONFERRED ON ME, I AM INCLINED TO DECLINE THE ADJOURNMENT PRAYERS PUT IN BY THE BRIEFING CHARTERED ACCOUNTANT AND PROCEED TO DISPOS E OF THE MATTER EX-PARTE, QUA THE PETITIONERS. 10. DR. S.MOHARANA, THE LEARNED COMMISSIONER OF INCOME-TAX AND SHRI GURU BASHYAM, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX, APPEARED FOR THE REVENU E AND PRESENTED THE CASE. 11. THE PETITIONER SHRI C.SRIKANTH IS THE MANAGING DIRECTOR OF M/S.ALTIUS SECURITIES TRADING(P) LTD., THE OTHER PETITIONER. THE ISSUE CONSIDERED BY THE TRIBUNAL I N THE APPEALS FILED BY THE REVENUE WAS WHETHER THE SHARES TRANSACTED DURING THE PERIOD BETWEEN 1-10-2004 TO 3 1-3- 2005 COULD BE TREATED AS SALE OF INVESTMENTS, RESUL TING IN SHORT-TERM CAPITAL GAINS OR THE TRANSACTIONS SHOULD BE TREATED AS REGULAR BUSINESS TRANSACTIONS, RESULTING IN PROF ITS AND MP 67 & 68/12 :- 34 -: GAINS OF BUSINESS. THE ASSESSEES HAD MADE A CLAIM BEFORE THE ASSESSING OFFICER THAT A PARTICULAR SEGMENT OF SHARE TRANSACTIONS RELATING TO THE ABOVE MENTIONED PERIOD WAS IN THE NATURE OF INVESTMENTS AND, THEREFORE, THE SURPL US ARISING OUT OF THE SALE OF THOSE SHARES SHOULD BE TREATED A S SHORT- TERM CAPITAL GAINS. THIS WAS NOT ACCEPTED BY THE A SSESSING OFFICER. THE ASSESSING OFFICER TREATED THE SURPLUS AS BUSINESS INCOME. IN FIRST APPEALS FILED BY THE ASS ESSEES, THE COMMISSIONER OF INCOME-TAX(APPEALS) REVERSED THE OR DER OF THE ASSESSING OFFICER AND HELD THAT THE TRANSACTION S ARE IN THE SEGMENT OF INVESTMENT AND, THEREFORE, THE SURPL US SHOULD BE TREATED AS SHORT-TERM CAPITAL GAINS. IN APPEALS FILED BY THE REVENUE, THE TRIBUNAL AGREED WITH THE ARGUMENTS OF THE REVENUE AND HELD THAT THE DISPUTED TRANSACTIONS WER E IN THE NATURE OF BUSINESS TRANSACTIONS AND, THEREFORE, THE SURPLUS SHOULD BE TREATED AS NORMAL BUSINESS PROFITS. THE APPEALS FILED BY THE REVENUE WERE ALLOWED. 12. THESE TWO PETITIONS ARE FILED IN THE CONTEXT O F THE ABOVE COMMON ORDER PASSED BY THE TRIBUNAL ON 10 TH FEBRUARY, 2012. MP 67 & 68/12 :- 35 -: 13. THE FIRST COMMON GROUND RAISED IN THESE RECTIFICATION PETITIONS IS THAT THE TRIBUNAL INADVE RTENTLY HAS NOT ADJUDICATED GROUND NOS.6 AND 7 ARGUED BY THE CO UNSEL FOR THE PETITIONERS, DEALING WITH THE ISSUE THAT TH E ASSESSEES ARE DEALING IN SHARES NOT ONLY IN THE COURSE OF BUS INESS BUT ALSO DEALING IN SHARES AS INVESTMENTS. THE SECOND MISTAKE POINTED OUT BY THE PETITIONERS IS THAT THE BENCH HA S NOT TAKEN COGNIZANCE OF THE RELEVANT FACTS RECORDED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN HIS ORDER DA TED 27 TH NOVEMBER, 2009. THOSE FACTS ALSO SUPPORTED THE PROPOSITIONS MADE BY THE ASSESSEES THAT THEY ARE DE ALING IN SHARES IN TWO SEGMENTS; ONE RELATING TO REGULAR BUS INESS AND THE OTHER RELATING TO INVESTMENTS. 14. THE LEARNED ACCOUNTANT MEMBER IN HIS 12-PAGE ORDER HAS AGREED WITH THE CONTENTIONS OF THE PETITI ONERS AND HELD THAT THERE IS AN APPARENT MISTAKE IN THE OBSER VATION OF THE TRIBUNAL IN THE MATTER OF HOLDING SHARES BY THE ASSESSEES IN THE NATURE OF INVESTMENTS. HE ACCORDINGLY PROPO SED TO RECALL THE CONSOLIDATED ORDER PASSED BY THE TRIBUNA L ON 10 TH FEBRUARY, 2012 IN ITA NOS.233 AND 234(MDS)/2010 AND TO POST THE APPEALS FOR FRESH HEARING IN USUAL COURSE. MP 67 & 68/12 :- 36 -: 15. THE LEARNED JUDICIAL MEMBER, ON THE OTHER HAND, HELD THAT THE TRIBUNAL HAS CONSIDERED ALL THE RELEVANT FACTS AVAILABLE ON RECORD WHILE DISPOSING OF THE AP PEALS FILED BY THE REVENUE AND THE PETITIONERS ARE IN FACT MAKI NG AN ATTEMPT TO RE-ARGUE THE CASES ONCE AGAIN BEFORE THE TRIBUNAL. HE FURTHER HELD THAT RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. A POINT, WHICH WAS NOT EXAMINED ON F ACTS OR IN LAW, CANNOT BE DEALT WITH AS A MISTAKE APPARENT FRO M RECORD. HE ACCORDINGLY PROPOSED TO DISMISS THE PETITIONS. 16. AFTER HEARING THE REVENUE, GOING THROUGH THE ORIGINAL TRIBUNAL ORDER, THE CONNECTED ORDERS OF TH E COMMISSIONER OF INCOME-TAX(APPEALS), THE MISCELLANE OUS PETITIONS FILED BY THE ASSESSEES AND THE DISSENTING ORDERS OF THE LEARNED MEMBERS, I FIND THAT THE ISSUES RAISED BY THE PETITIONERS BY WAY OF MISTAKES ARE ATLEAST DEBATABL E IN NATURE. THE ANCHOR FOR THE ARGUMENTS OF THE PETITI ONERS THAT THE TRIBUNAL HAS NOT CONSIDERED THE FACTS OF THE CA SES IN THE CORRECT PERSPECTIVE, IS BASED ON THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS). IT IS TO BE S EEN THAT THE TRIBUNAL HAS DECIDED THE APPEALS NOT ON THE BAS IS OF THE FACTS REFLECTED IN THE ORDERS OF THE COMMISSIONER O F INCOME- MP 67 & 68/12 :- 37 -: TAX(APPEALS) ALONE. THE TRIBUNAL HAS A DUTY TO CON SIDER THE ASSESSMENT ORDERS AS WELL, WHICH HAS BEEN RIGHTLY D ONE BY THE TRIBUNAL. THE TRIBUNAL HAS DISMISSED BOTH THE APPEALS AFTER CONSIDERING THE FACTS OF THE CASES AS AVAILAB LE IN THE RECORDS OF THE ASSESSING OFFICER AS WELL AS IN THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). THEREFORE, THE ARGUMENT OF THE PETITIONERS, CONCENT RATING IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS ) ALONE, IS A ONE-SIDE APPROACH. 17. THE ONLY ISSUE TO BE CONSIDERED BY THE TRIBUNA L WAS WHETHER THE SHARES TRANSACTED DURING A PARTICUL AR PERIOD WERE TRANSACTED IN THE NATURE OF REGULAR BUSINESS O R IN THE NATURE OF INVESTMENTS HELD BY THE ASSESSEES. THE T RIBUNAL CONSIDERED THE ENTIRE MATRIX OF THE FACTS AND HELD THAT THE SHARES WERE TRANSACTED IN THE COURSE OF REGULAR BUS INESS. ACCORDINGLY, THE TRIBUNAL UPHELD THE ORDERS OF THE ASSESSING OFFICER TREATING THE SURPLUS AS THE BUSINESS INCOME OF THE PETITIONERS. 18. THE ORDER OF THE TRIBUNAL MAY BE RIGHT OR WRON G, WHICH THE HONBLE HIGH COURT ALONE CAN DECIDE. AS THE TRIBUNAL DOES NOT HAVE THE POWER TO REVIEW ITS ORDE R, IT IS NOT MP 67 & 68/12 :- 38 -: POSSIBLE FOR THE TRIBUNAL TO GO BEYOND THE LIMITED SCOPE OF RECTIFICATION AND AFFORD AN OPPORTUNITY TO THE PETI TIONERS TO RE- ARGUE THEIR CASES. 19. AS IS WELL KNOWN, THE MISTAKE MUST BE APPARENT FROM RECORDS. THE PETITIONERS THEMSELVES HAVE TAKE N GREAT PAIN IN DRAFTING THE MISCELLANEOUS PETITIONS, RUNNI NG TO FOUR PAGES EACH, ALONGWITH ANNEXURES A AND C. 20. THE ORDER OF THE LEARNED ACCOUNTANT MEMBER RUNS TO 12 PAGES DEALING ON FACTS AS WELL AS ON THE LEGAL PROPOSITIONS DECLARED BY COURTS OF LAW. IT IS AFTE R SUCH A LONG EFFORT THAT THE LEARNED ACCOUNTANT MEMBER HAS COME TO A FINDING THAT MISTAKES ARE APPARENT IN THE ORDER OF THE TRIBUNAL. THE HONBLE JUDICIAL MEMBER ALSO HAS TAK EN EQUAL PAIN IN WRITING A 15-PAGE DISSENTING ORDER TO HOLD THAT NO MISTAKES ARE APPARENT FROM THE ORDER OF THE TRIBUNA L. THE LENGTH OF THE ORDERS PER SE, WILL NOT DECIDE THE ME RIT OF THE PETITIONS. BUT STILL I HAVE MENTIONED ALL THESE TH INGS TO SHOW PRIMA FACIE THAT HOW DEBATABLE THE ISSUE IS. IT IS ONLY AFTER LONG-WINDING DISCUSSIONS THAT IT WAS POSSIBLE TO TH E HONBLE MEMBERS TO PASS THE DISSENTING ORDERS EVEN. MP 67 & 68/12 :- 39 -: 21. IF WE GO THROUGH THE COMMON ORDER PASSED BY THE TRIBUNAL, IT IS TO BE SEEN THAT THEY HAVE CONSI DERED NOT ONLY THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(A PPEALS), BUT ALSO THE ORDERS OF THE ASSESSING AUTHORITY. TH E DISCUSSIONS REFLECTED IN THE COMMON ORDER OF THE TR IBUNAL HAVE THEIR BASE ON ALL THE RELEVANT FACTS OF THE CA SES. IT MIGHT BE TRUE THAT THE TRIBUNAL HAS NOT ADJUDICATED THE A PPEALS AFTER DISCUSSING THE GROUNDS ONE AFTER THE OTHER IN A SERIATIM. SUCH A MECHANICAL APPROACH IS NOT CALLED FOR IN ADJ UDICATING SECOND APPEALS. THE ISSUE HAS BEEN PROPERLY FRAMED AND CONSIDERED IN THE ORDER AND THE ISSUE HAS BEEN DECI DED IN THE LIGHT OF THE FACTS OF THE CASES. IT IS THE PIT H AND SUBSTANCE, AND NOT THE FORMAT OF THE ORDER, WHICH I S IMPORTANT IN THE ORDERS PASSED BY APPELLATE COURTS. 22. THEREFORE, IN MY CONSIDERED VIEW, THERE IS NO MISTAKE APPARENT ON RECORD IN THE COMMON ORDER PASS ED BY THE TRIBUNAL ON 10 TH FEBRUARY, 2012 IN ITA NOS.233 & 234(MDS)/2010. 23. I AGREE WITH THE ORDER PASSED BY THE LEARNED JUDICIAL MEMBER. THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEES ARE LIABLE TO BE DISMISSED. MP 67 & 68/12 :- 40 -: 24. THESE FILES SHALL BE HEREAFTER PLACED BEFORE T HE REGULAR BENCH FOR PASSING FINAL ORDERS IN THE LIGHT OF MAJORITY VIEW. DATED, THIS MONDAY, THE 25 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- (DR. O.K.NARAYANAN) VICE-PRESIDENT THIRD MEMBER CHENNAI, DATED, THE 25 TH FEBRUARY, 2013. V.A.P. MP 67 & 68/12 :- 41 -: IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] M.P.NO.67/MDS/2012 [IN I.T.A NO.233/MDS/2010] ASSESSMENT YEAR : 2005-06 SHRI C.SRIKANTH NEW NO.19/3 (OLD NO.11/3) 3 RD AVENUE, BESANT NAGAR CHENNAI 600 090 VS THE DY. CIT COMPANY CIRCLE I(1) CHENNAI [PAN ABHPS5947E] (PETITIONER) (RESPONDENT) M.P.NO.68/MDS/2012 [IN I.T.A NO.234/MDS/2010] ASSESSMENT YEAR : 2005-06 M/S ALTIUS SECURITIES TRADING (P) LTD NEW NO.6 (OLD NO.29) CIT COLONY, II MAIN ROAD MYLAPORE CHENNAI 600 004 VS THE DY. CIT COMPANY CIRCLE I(1) CHENNAI [PAN AACCA4561D] (PETITIONER) (RESPONDENT) PETITIONER BY : SHRI N.R.SURESH, FCA RESPONDENT BY : SHRI T.N.BETGIRI, JT.CIT DATE OF HEARING : 08-03-2013 DATE OF PRONOUNCEMENT : 08-03-2013 MP 67 & 68/12 :- 42 -: O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: ON DIFFERENCE OF OPINION BETWEEN MEMBERS CONSTITUTI NG THE BENCH, THE CASE WAS REFERRED TO THE HON'BLE PRESIDE NT FOR NOMINATION OF THIRD MEMBER UNDER SECTION 255(4) OF THE ACT. 2. THE HONBLE VICE-PRESIDENT, SITTING AS THE TH IRD MEMBER, HAS AGREED WITH THE VIEW OF THE JUDICIAL MEMBER THAT TH E MISCELLANEOUS PETITIONS FILED BY THE ASSESSEES ARE LIABLE TO BE DISMISSED. THUS, IN VIEW OF THE MAJORITY OPINION, THE MISCELLANEOUS PET ITIONS FILED BY THE ASSESSEES ARE DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS PETITIONS FILE D BY THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 08 TH OF MARCH, 2013, AT CHENNAI SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S. SAINI) ACCOUNTANT MEMBER DATED : 08 TH MARCH, 2013 RD COPY TO: 6. PETITIONER 7. RESPONDENT 8. CIT(A) 9. CIT 10. DR