M/s. Shripathee Investments Private Limited, CHENNAI v. ITO(OSD), CHENNAI

ITA 1711/CHNY/2007 | 2003-2004
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 171121714 RSA 2007
Assessee PAN AAGCS0993M
Bench Chennai
Appeal Number ITA 1711/CHNY/2007
Duration Of Justice 3 year(s) 9 month(s)
Appellant M/s. Shripathee Investments Private Limited, CHENNAI
Respondent ITO(OSD), CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-03-2011
Date Of Final Hearing 08-03-2011
Next Hearing Date 08-03-2011
Assessment Year 2003-2004
Appeal Filed On 25-06-2007
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL: B- BENCH: CHENNAI (BEFORE SHRI ABRAHAM P GEORGE AM & SHRI G EORGE MATHAN JM) ITA NOS.1711/MDS/07 983/MDS/08 & 714/MDS/10 ASST. YEAR 2003-04 M/S SHRIPATHEE INVEST MENTS P. LTD. VS. THE ITO (OSD) 6 BESANT AVENUE ADYAR CHENNAI 60020. CO. C IR. VI(2) CHENNAI. PAN NO. AAGCS0993M (APPELLANT) (RESPONDENT) AND ITA NOS.995 TO 997/MDS/10 ASST. YEARS 2001-02 2005-06 & 2006-07 THE ACIT CO CIR.VI(2) CHENNAI VS. M/S SHRIPA THEE INVESTMENTS P.LTD CHENNAI -60020. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S.SRIDHAR DEPARTMENT BY: SHRI KEB RENGAR AJAN JR. STANDING COUNSEL ORDER PER ABRAHAM P.GEORGE ACCOUNTANT MEMBER OF THE ABOVE ITA NO.1711/MDS/07 ITA NO.983/MDS/08 & ITA NO.714/MMDS/10 ARE APPEALS OF THE ASSESSEE WHEREAS ITA NOS.995 TO 997/MDS/10 ARE APPEALS OF THE REVENUE. ITA NOS.1711 983 714 995-997 2 2. APPEAL OF THE ASSESSEE IN ITA NO.1711/MSDS/07 IS TAKEN UP FIRST FOR DISPOSAL. THROUGH THIS APPEAL ASSESSEE ASSAILS THE ORDER OF T HE CIT(A) WHEREBY HE CONFIRMED THE DISALLOWANCE OF BUSINESS EXPENDITURE AND DEPRECIATI ON ` 15 34 243/- BY HOLDING THAT ASSESSEE DID NOT CARRY ON ANY BUSINESS DURING THE R ELEVANT PREVIOUS YEAR. 3. SHORT FACTS APROPOS ARE THAT ASSESSEE IN THE BU SINESS OF SHARE TRADING HAD FILED A RETURN FOR THE IMPUGNED ASST. YEAR DECLARING TOTA L INCOME OF ` 88 71 140/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS NOTED B Y THE AO THAT ASSESSEE HAD SHOWN DIVIDEND INCOME AND FIXED DEPOSIT INTEREST UNDER TH E HEAD BUSINESS INCOME AND THERE WAS NO SHARE TRADING INCOME WHATSOEVER. ASSESSEE HA D CLAIMED ADMINISTRATIVE AND OTHER OPERATIVE EXPENSES TOTALING TO ` 16 38 064/- MISC. EXPENSES ` 2 260/- AND DEPRECIATION ` 3 62 254/-. AO WAS OF THE OPINION THAT ASSESSEE HAV ING HAD NO BUSINESS DURING THE RELEVANT PREVIOUS YEAR SUCH EXPENDITURE COULD NOT BE ALLOWED AS DEDUCTION AGAINST DIVIDEND AND FIXED DEPOSIT INTEREST. NEVERT HELESS HE ALLOWED THE CLAIM OF AUDIT FEE ` 1 08 000/- AND MADE AN ADDITION OF THE BALANCE OF ` 18 94 578/-. 4. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF THE ASSESSEE WAS THAT IT HAD CONSIDERABLE TRADING STOCK OF SHARES. AS PER ASSESS EE BUILDING UP TRADING STOCK AMOUNTED TO CONDUCT OF BUSINESS AND EXPENDITURE COU LD NOT BE DISALLOWED. RELYING ON SEC. 37 OF THE INCOME-TAX ACT 1961 (THE ACT FOR SHORT) ASSESSEE ARGUED THAT THE CLAIM OF EXPENSES WAS WHOLLY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS AND THE EXPRESSION PURPOSE OF BUSINESS WAS WIDER IN SCOPE THAN THE E XPRESSION FOR THE PURPOSE OF EARNING PROFIT. RELIANCE WAS PLACED ON THE DECISIO N OF THE HON. APEX COURT IN THE CASE ITA NOS.1711 983 714 995-997 3 OF S.A. BUILDERS V. CIT (288 ITR 1). HOWEVER LD. CI T(A) WAS NOT FULLY IMPRESSED. ACCORDING TO HIM DIVIDEND AND FIXED DEPOSIT INTERE ST WERE ONLY INCIDENTAL TO ASSESSEES MAIN BUSINESS ACTIVITY AND THERE WAS NO BUSINESS A CTIVITY DONE BY ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. HOWEVER CIT(A) HELD THAT A SSESSEES CLAIM FOR SALARY ` 65 500/- BANK CHARGES ` 18 430/- CONVEYANCE CHARGES ` 1 41 177/- PRINTING AND STATIONERY ` 29 907/- STAFF WELFARE EXPENSES ` 20 016/- AND TELEPHONE EXPENDITURE ` 85 315/- ALL FORMING PART OF ITS ADMINISTRATIVE AND OPERATIVE EX PENSES WERE INCIDENTAL FOR MAINTENANCE OF ITS ESTABLISHMENT AND SHOULD BE ALLO WED AGAINST ITS INCOME UNDER THE HEAD OTHER SOURCES. BALANCE WAS HELD BY HIM AS CO RRECTLY DISALLOWED. 5. NOW BEFORE US LD. AR ASSAILING DISALLOWANCES SU STAINED BY THE CIT(A) DREW OUR ATTENTION TO THE AUDITED STATEMENT OF ACCOUNT OF TH E ASSESSEE FILED ALONGWITH ITS RETURN OF INCOME FOR THE IMPUGNED A.Y. ACCORDING TO HIM D EPOSITS AND OTHER CURRENT ASSETS SHOWN IN SCHEDULE VII TO THE BALANCE SHEET AS ON 31 -03-2003 CLEARLY REFLECTED AN INCREASE IN TRADING STOCK FROM ` NIL TO ` 166 838 688/- DURING THE RELEVANT PREVIOUS YEAR. ACCORDING TO HIM IT WAS TRUE THAT ASSESSEE DID NOT EFFECT ANY SALE OF SHARES DURING THE RELEVANT PREVIOUS YEAR BUT NEVERTHELESS HAVING ACCU MULATED SUBSTANTIAL STOCK IT WAS WAITING FOR AN OPPORTUNE TIME FOR SELLING THE SHARE S AND MAKING PROFITS. ACCORDING TO LD. AR IT WAS VERY MUCH NECESSARY TO INCUR EXPENDITURE FOR THE PURPOSE OF PURCHASING THE STOCK. LD. COUNSEL FURTHER ARGUED THAT A BUSINESS C OULD NOT BE CONSIDERED AS STOPPED EVEN WHEN THE STOCK WAS BEING ACQUIRED THOUGH THE RE WERE NO SALES. ITA NOS.1711 983 714 995-997 4 6. PER CONTRA LD. DR SUBMITTED THAT ASSESSEE HAD T RANSFERRED SUBSTANTIAL PART OF ITS INVESTMENT HELD IN SHARES AS ON 31-3-2002 TO TRADIN G STOCK AND THAT THIS WAS THE SECRET OF INCREASE IN TRADING STOCK. ACCORDING TO HIM THE RE WAS NO ACTUAL PURCHASE AND THERE WAS NO BUSINESS ACTIVITY WHATSOEVER CARRIED ON BY THE ASSESSEE. HENCE THE ARGUMENT OF THE LD. DR WAS THAT AO WAS CORRECT IN TREATING T HE EXPENSES AS NOT ALLOWABLE THERE BEING NO BUSINESS ACTIVITY. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVA L SUBMISSIONS. AUDITED BALANCE SHEET FILED BY ASSESSEE ALONGWITH ITS RETURN CLEARL Y SHOW AT SCHEDULE VII THAT ITS TRADING STOCK HAS INCREASED FROM NIL TO ` 166 838 688/- DURING THE RELEVANT PREVIOUS YEAR. ARGUMENT OF THE LD. DR IS THAT SUCH INCREASE IN TRA DING STOCK WAS ON ACCOUNT OF CONVERSION OF SHARES HELD UNDER THE INVESTMENT PORT FOLIO TO TRADING STOCK. SHARES UNDER INVESTMENT PORTFOLIO AS ON 31-03-2002 AS PER THE SA ME BALANCE SHEET WAS ` 186248098/-. NO DOUBT THIS HAD GONE DOWN TO ` 48310122/- BY 31-03-2003. IN EFFECT THERE WAS A REDUCTION BY ` 137937976/-. HOWEVER ASSESSEE HAD RETURNED CAPITAL GAINS ALSO FOR THE IMPUGNED ASSESSMENT YEAR AND HAD IN I TS COMPUTATION OF INCOME GIVEN A WORK OUT OF SUCH LONG TERM CAPITAL GAINS OF ` 72866891/-. THEREFORE IT FOLLOWS THAT ATLEAST A PART OF ITS INVESTMENT IN SHARES WERE LIQ UIDATED BY ASSESSEE AND GAINS ARISING THEREFROM RETURNED BY IT. THEREFORE WE CANNOT ACCE PT THE CONTENTION OF LD. DR THAT INCREASE IN STOCK WAS ON ACCOUNT OF SHARES HELD IN INVESTMENT BEING CONVERTED TO STOCK-IN- TRADE. IN ANY CASE INCREASE IN TRADING ST OCK OF SHARES BY ` 166838688/- WAS VERY MUCH MORE THAN DECREASE IN SHARE HELD UNDER IN VESTMENTS COMING TO ITA NOS.1711 983 714 995-997 5 ` 137937976/-.EVEN OTHERWISE MAIN OBJECT OF THE ASSESS EE COMPANY AS PER ITS MEMORANDUM OF ASSOCIATION READS AS UNDER: TO CARRY ON THE BUSINESS OF AN INVESTMENT COMPANY AND TO ACT AS STOCK BROKER AND TO UNDERTAKE AND TO TRANSACT ALL KINDS OF TRUST AND AGENCY BUSINESS AND TO ACQUIRE HOLD EXCHANGE SELL AND DEAL IN SHARES S TOCKS DEBENTURES DEBENTURE STOCKS BONDS OBLIGATIONS AND SECURITIES ISSUED OR GUARANTEED BY ANY COMPANY CONSTITUTED OR CARRYING ON BUSINESS IN INDIA OR ELS EWHERE AND DEBENTURES DEBENTURE STOCK BONDS OBLIGATIONS AND SECURITIES ISSUED OR GUARANTEED BY ANY GOVERNMENT SOVEREIGN RULER COMMISSIONER REPUBLIC BODY OR AUTHORITY SUPREME MUNICIPAL LOCAL OR OTHERWISE AND ALSO TO INVEST AND DEAL WITH THE MONEYS OF THE COMPANY IN OR UPON SUCH SECURITIES IN SUCH MANNER AS MAY FROM TIME TO TIME BE DETERMINED. IT IS CLEAR THAT ASSESSEE WAS AUTHORIZED TO CARRY O N THE BUSINESS AS A STOCK BROKER SELL AND DEAL IN SHARES AND ALSO AS ALSO AS AN INVESTME NT COMPANY. HENCE DURING THE COURSE OF ITS BUSINESS IF ON AN ANALYSIS OF ITS HOLDINGS AND THE INVESTMENT PORTFOLIO IT DECIDED TO COVERT SOME PART THEREOF TO ITS STOCK IN TRADE IT CANNOT BE DEEMED AS SOMETHING OTHER THAN PART OF THE BUSINESS ACTIVITY OF THE ASSESSEE. EVEN DEMARCATING AND IDENTIFYING THOSE PORTFOLIOS OF SHARES WHICH WE RE TO BE CONVERTED INTO STOCK IN TRADE REQUIRED CONSIDERABLE BUSINESS SKILL. SUC H AN ACTIVITY CANNOT BE TERMED AS NON- BUSINESS ACTIVITY. IN OUR OPINION JUST BECAUSE THER E WERE NO SALES EFFECTED DURING THE RELEVANT PREVIOUS YEAR A PRESUMPTION COULD NOT BE TAKEN THAT ASSESSEE WAS NOT CARRYING ON ITS BUSINESS ACTIVITY. WE ARE THEREFOR E OF THE OPINION THAT BOTH THE LOWER AUTHORITIES FELL IN ERROR IN HOLDING THAT THERE WAS NO BUSINESS ACTIVITY FOR THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. EXPENSES INCURRE D BY ASSESSEE WERE DISALLOWED ONLY FOR A REASON THAT THERE WAS NO BUSINESS ACTIVITY AN D NOT BECAUSE ASSESSEE COULD NOT ITA NOS.1711 983 714 995-997 6 PROVE THE GENUINENESS OR CORRECTNESS OF THE CLAIM. THIS BEING SO WE ARE OF THE OPINION THAT SUCH EXPENSES OUGHT NOT HAVE BEEN DISALLOWED. WE THEREFORE ALLOW THE CLAIM OF THE ASSESSEE OF EXPENSES AND DELETE THE DISALLOWANC ES. . IN THE RESULT GROUNDS 1 TO 4 OF THE ASSESSEE STAND ALLOWED. GROUND NO.5 IS GENERAL IN NATURE NEEDING NO ADJUDICATION. 8. APPEAL ITA NO.1711/MDS/07 OF THE ASSESSEE IS TH EREFORE ALLOWED. 9. NOW WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO .983/MDS/08. THROUGH THIS APPEAL ASSESSEE ASSAILS THE ORDER DATED 11-03-2008 PASSED BY CIT CHENNAI-III UNDER SEC. 263 OF THE ACT. 10. SHORT FACTS APROPOS ARE THAT THE CIT INITIATED PROCEEDINGS AGAINST THE ASSESSEE UNDER SEC. 263 OF THE ACT FOR A REASON THAT ASSESSE ES ONLY BUSINESS WAS PURCHASE AND SALE OF SHARES AND LONG TERM CAPITAL GAINS ADMITTED BY ASSESSEE SHOULD HAVE BEEN TREATED AS ARISING OUT OF SPECULATION BUSINESS. PLA CING RELIANCE ON THE DECISION OF HON. CALCUTTA HIGH COURT IN THE CASE OF CIT VS. ARVIND I NVESTMENTS LTD. (192 ITR 365) AND ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SUCHAM FINANCE & INVESTMENTS (I) LTD. [290 ITR (AT) 379] LD. CIT ISS UED NOTICE TO THE ASSESSEE CALLING FOR OBJECTION AS TO WHY ITS CLAIM OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS SHOULD NOT BE DISALLOWED TREATING IT AS INCOME FROM SPECUL ATIVE BUSINESS. REPLY OF THE ASSESSEE WAS THAT AO HIMSELF HAD TREATED THE ASSESSEE AS NOT CARRYING ON ANY BUSINESS AT ALL AND AO HAVING MADE SUCH A CLEAR FINDING CONSIDERING AL L THE RELEVANT MATERIAL CIT COULD NOT SUBSTITUTE HIS VIEW WITH A LAWFUL VIEW TAKEN BY THE AO. FURTHER IT WAS POINTED OUT BY ASSESSEE THAT THE ISSUE WHETHER BUSINESS WAS CAR RIED ON BY THE ASSESSEE DURING THE ITA NOS.1711 983 714 995-997 7 RELEVANT PREVIOUS YEAR WAS CARRIED IN APPEAL BY ASS ESSEE BEFORE THE CIT(A) WHO HAD RULED IN FAVOUR OF THE ASSESSEE AND THEREFORE ON AC COUNT OF MERGER OF THE ORDER OF AO WITH THAT OF THE CIT(A) THERE WAS NO JURISDICTION WITH THE CIT TO INITIATE A REVISIONARY PROCEEDING UNDER SEC. 263 OF THE ACT. NEVERTHELESS LD. CIT WAS NOT IMPRESSED BY THE REPLIES GIVEN BY THE ASSESSEE. ACCORDING TO HIM NA TURE OF ASSESSEES BUSINESS WAS MENTIONED AS SHARE TRADING AND THE AO HAD NEVER E XAMINED WHETHER THE TYPE OF ACTIVITY CARRIED ON BY ASSESSEE WAS SPECULATIVE IN NATURE. FURTHER ACCORDING TO LD. CIT THE ISSUE REGARDING NATURE OF THE ACTIVITIES WAS N OT CONSIDERED BY AO NOR THE CIT(A) IN ASSESSEES APPEAL AND HENCE THERE WAS NO QUESTION OF ANY MERGER WHEREBY HIS REVISIONARY JURISDICTION WAS OUSTED. ACCORDING TO L D. CIT IN THE CASE OF ARVIND INVESTMENTS LTD. (SUPRA) IT WAS HELD BY HON. CALCU TTA HIGH COURT THAT THE BUSINESS OF A COMPANY IF IT CONSISTED OF PURCHASE AND SALE OF SH ARES AND IF IT DID NOT FALL WITHIN THE EXCLUDED CATEGORIES OF COMPANIES THEN SUCH A COMPA NY SHALL BE DEEMED TO BE CARRYING ON SPECULATION BUSINESS FOR THE PURPOSE OF SEC.73 OF THE ACT TO THE EXTENT TO WHICH ITS BUSINESS CONSISTED OF THE PURCHASE AND SALE OF SUCH SHARES NOTWITHSTANDING THE DEFINITION GIVEN TO SPECULATIVE TRANSACTION IN SEC. 43(5) OF THE ACT. FURTHER ACCORDING TO THE LD. CIT MUMBAI BENCH OF THE TRIBUNAL IN THE CA SE OF SUCHAM FINANCE & INVESTMENTS (I) LTD. (SUPRA) HAD HELD THAT EVEN WHE RE ENTIRE BUSINESS OF A COMPANY COMPRISED ON SALE AND PURCHASE OF SHARES OF OTHER COMPANIES IT HAD TO BE TREATED AS SPECULATION BUSINESS. HE THEREFORE CONSIDERED THE ORDER OF THE AO TO BE ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF R EVENUE AND DIRECTED HIM TO SUBJECT THE ITA NOS.1711 983 714 995-997 8 INCOME SHOWN BY THE ASSESSEE UNDER THE HEAD LONG TE RM CAPITAL GAINS TO THE NORMAL RATE OF TAXATION. 11. NOW BEFORE US ASSESSEES COUNSEL STRONGLY ASS AILING THE ORDER OF LD.CIT SUBMITTED THAT IN THE FIRST PLACE AO HAD CLEARLY CA ME TO A CONCLUSION THAT NO BUSINESS ACTIVITY WAS CARRIED ON BY ASSESSEE WHICH WAS CONFI RMED BY CIT(A) IN ASSESSEES APPEAL. ACCORDING TO HIM ONCE AO HAD COME TO A CO NCLUSION THAT NO BUSINESS ACTIVITY WAS CARRIED ON THERE WAS NO QUESTION OF WHETHER SU CH ACTIVITY WAS SPECULATIVE OR NOT. FURTHER ACCORDING TO HIM ALL THE SHARES THE SURPL US FROM SALE OF WHICH WAS SHOWN BY ASSESSEE AS LONG TERM CAPITAL GAINS WERE HELD UNDE R ITS INVESTMENT PORTFOLIO AND HENCE WERE EFFECTED THROUGH DELIVERY BASED TRANSACTIONS THEREBY TAKING IT OUT OF THE AMBIT OF SPECULATIVE TRANSACTION. HE WAS OF THE OPINION THAT LD. CIT(A) WAS TRYING TO SUBSTITUTE A LAWFUL FINDING ARRIVED AT BY THE AO AND HIS DIRECTI ONS WERE ARBITRARY. PER CONTRA LD. DR STRONGLY SUPPORTED THE ORDER OF THE CIT. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS. THERE IS NO DISPUTE THAT ASSESSEE HAD RETURNED A SUM OF ` 88 71 144/- AS ITS NET LONG TERM CAPITAL GAINS FO R THE IMPUGNED A.Y. SUCH LONG TERM CAPITAL GAINS WAS WORKED OUT BY IT AFTER DEDUCTING SHORT TERM CAPITAL LOSS OF ` 63995748/- FROM LONG TERM CAPITAL GAINS OF ` 72866892/-. THERE IS NO DISPUTE THAT THE AO HAD FOR THE IMPUGNE D AY DISALLOWED THE CLAIM OF EXPENSES OF THE ASSESSEE ON A FINDING THAT ASSESSEE HAD NOT CARRIED ON ANY BUSINESS OF TRADING IN SHARES. NOW IT IS NECESSARY FOR US TO HA VE A LOOK AT THE TOTAL LONG TERM CAPITAL GAINS OF ` 72866892/- SHOWN BY THE ASSESSEE. THE DETAILS THERE OF AS GIVEN BY THE ASSESSEE ALONGWITH ITS RETURN APPEARS AS UNDER: ITA NOS.1711 983 714 995-997 9 QTY SCRIP NAME PURCHASE DATE SALES DATE PURCHASE VALUE SALES VALUE CAPITAL GAINS/LOSS 207159 MARS SOFTWARE 1995-1996 2002-03 507100.00 5420840.59 4913740.59 17000 USHA BELTRON 1995-1996 2002-03 0 .00 422715.80 422715.80 214000 CAUVERY TELECOM 1999-2000 2002-03 4116628.50 642000.00 -34746 28.50 50000 EXQUISITE EXPORTS 1999-2000 2002-03 500000.00 50000.00 -4 50000.00 36557 PENTAFOUR COMMUNI CATION 1999-2000 2002-03 9728535.34 255899.00 -94726 36.34 266000 ARVIND REMEDIES 1999-2000 2002-03 5519500.00 41496000.00 35976500 .00 802700 ARVIND REMEDIES 2001-02 2002-03 80270000.00 125221200.00 44951200.0 0 10 0641763.84 173508655.39 72866891. 55 THUS IT CAN BE SEEN THAT ALL THE SHARES WHICH WERE SOLD BY ASSESSEE FROM WHICH IT HAD RETURNED LONG TERM CAPITAL GAINS WERE PURCHASED IN THE YEARS 1995-96 AND 1999-2000 EXCEPT FOR 802700 SHARES OF ARVIND REMEDIES WHICH W ERE PURCHASED IN THE YEAR 2001- 02. THUS IT IS APODEICTIC THAT ALL THESE WERE DELIV ERY BASED TRANSACTIONS ON ACCOUNT OF SHEER GAP IN BETWEEN THE PURCHASE AND TIME OF SALE. STAND OF THE ASSESSEE WAS THAT THE GAINS WERE ALL OUT OF DELIVERY BASED TRANSACTIO N AND HENCE NOT COMING OUT OF ANY TRADING OF SHARES HELD AS STOCK-IN-TRADE. PREPOND ERANCE OF PROBABILITY IS THAT THE SHARES PURCHASED UNDER INVESTMENT PORTFOLIO WOULD B E DELIVERY BASED ONLY. NOW IF WE LOOK AT THE DECISION OF HON. CALCUTTA HIGH COURT IN THE CASE OF ARVIND INVESTMENTS LTD. (SUPRA) RELIED ON BY LD. CIT THEIR LORDSHIPS DID H OLD THAT EXPLANATION TO SEC.73 OF THE ACT MANDATED TREATING PURCHASE AND/OR SALE OF SHARE S OF CERTAIN COMPANIES TO BE ITA NOS.1711 983 714 995-997 10 SPECULATIVE BUT THE IMPORTANT POINT MISSED OUT BY L D. CIT IS THAT SUCH EXPLANATION TO SEC.73 TREATING PURCHASE/SALE OF SHARES BY CERTAIN COMPANIES TO BE SPECULATIVE WAS FOR THE PURPOSED OF SEC.73 ONLY. THIS WAS THE FINDING O F HON. CALCUTTA HIGH COURT. SEC. 70 TO 79 OF THE ACT ARE RULES RELATING SET OFF AND CAR RY FORWARD OF LOSS. SEC.73 PROVIDE THAT ANY LOSS COMPUTED IN RESPECT OF SPECULATION BUSINES S CARRIED ON BY AN ASSESSEE SHALL NOT BE SET OFF OTHER THAN AGAINST PROFITS AND GAINS OF ANOTHER SPECULATION BUSINESS. IT IS FOR THIS PURPOSE OF REGULATING THE SET OFF THAT SUC H EXPLANATION TO SEC.73 PROVIDED FOR PURCHASE AND SALE OF SHARES BY COMPANIES WHICH WERE NOT INVESTMENT OR BANKING COMPANY OR COMPANIES CARRYING ON BUSINESS OF GRANTI NG LOANS AND ADVANCES TO BE TREATED ON THE SAME FOOTING AS SPECULATIVE BUSINESS . WHAT WAS HELD BY HON. CALCUTTA HIGH COURT WAS THAT THE SAID EXPLANATION WOULD APPLY TO THE BUSINESS OF PURCHASE AND SALE OF SHARES EVEN WHERE THE ONLY BUSINESS OF A CO MPANY WAS PURCHASE AND SALE OF SHARES. THIS CANNOT BE EXTENDED TO MEAN THAT THE SA ID EXPLANATION HAD APPLICATION BEYOND SEC.73 SINCE THE EXPLANATION ITSELF CLEARLY S TATED THAT IT WAS FOR THE PURPOSE OF THAT SECTION ONLY. WE CANNOT EXTEND THE SAID EXPLANA TION SPECIALLY PROVIDED BY THE LEGISLATURE FOR THE PURPOSE OF REGULATING SET OFF A SPECULATION LOSS AND COME TO A CONCLUSION THAT ANY PROFITS ARISING TO A COMPANY OU T OF THE SALE OF SHARES HELD IN INVESTMENT PORTFOLIO EVEN WHERE ITS SOLE BUSINESS WAS TRADING IN SHARES SHOULD BE CONSIDERED AS SPECULATIVE BUSINESS INCOME EVEN WHE N IT FELL UNDER THE HEAD CAPITAL GAINS. AS FOR THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SUCHAM FINANCE & INVESTMENTS (I) LTD (SUPRA) THERE ALSO T HE QUESTION WAS REGARDING SET OFF OF LOSS WHEN SUCH LOSS AROSE OUT OF SHARE TRANSACTIONS EVEN WHEN THE ASSESSEE WAS ITA NOS.1711 983 714 995-997 11 CARRYING ON BUSINESS ACTIVITY OF PURCHASE AND SALE OF SHARES. WE FIND THAT MUMBAI TRIBUNAL WAS ALSO SEIZED OF AN ISSUE REGARDING SET OFF OF LOSSES AND IT WAS RIGHTLY HELD THAT EXPLANATION TO SEC. 73 APPLIED EVEN WHERE THE BUSINESS CONSISTED OF DEALING IN SHARES. HERE ON THE OTHER HAND ASSESSEE HAD HELD THE SHARES UNDER ITS INVESTMENT PORTFOLIO AND BY VIRTUE OF SEC.43(5) OF THE ACT THE GAINS ARISING FROM SALE OF SUCH SHARES COULD NEVER BE CONSIDERED AS GAIN FROM A SPECULATIV E BUSINESS SINCE THE TRANSACTIONS WERE ALL DELIVERY BASED. IN ANY CASE AO HIMSELF HAD GIVEN A CLEAR FINDING THAT ASSESSEE WAS NOT CARRYING ON ANY BUSINESS OF SALE OF SHARES DURING THE RELEVANT PREVIOUS YEAR AND HENCE THE QUESTION WHETHER THERE WAS ANY SPECUL ATIVE SELLING IN SHARES DID NOT ARISE AT ALL. AO HAD TAKEN THIS POSITION AFTER CONS IDERING THE WORK-OUT OF LONG TERM CAPITAL GAINS GIVEN BY THE ASSESSEE ALONGWITH ITS R ETURN OF INCOME AND AO HAVING ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW C IT COULD NOT BY INVOKING SEC.263 OF THE ACT SUBSTITUTE HIS VIEW WITH THAT OF THE AO AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. METCO INDUSTRIES LTD. (294 ITR 121). IN ANY CASE IF WE LOOK AT PARA 11 OF THE ORDER OF THE CIT HE HAD GIVEN A DIRECTIO N TO THE AO TO SUBJECT THE NET INCOME OF ` 88.71 LAKHS BEING INCOME FROM LONG TERM CAPITAL GAI NS TO NORMAL RATE OF TAXATION AND TO ENHANCE THE ASSESSMENT. AS HELD BY JURISDICT IONAL HIGH COURT IN THE CASE OF CIT VS. SMT.TASNEEM Z. MADRASIWALA IN ITS ORDER DATED 0 7-12-2009 IN TCA NO.1310/2009 IN A PROCEEDING UNDER SEC. 263 CIT CANNOT DIRECT DIRE CT AN AO TO DO AN ASSESSMENT IN A PARTICULAR MANNER. WE ARE THEREFORE OF THE OPINION THAT LD.CIT FELL IN ERROR IN INVOKING SEC. 263 OF THE ACT. ORDER OF THE CIT STANDS QUASH ED. 13. APPEAL OF THE ASSESSEE IS ALLOWED. ITA NOS.1711 983 714 995-997 12 14. NOW WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO .714/MDS/10. THROUGH THIS APPEAL ASSESSEE ASSAILS THE ORDER DATED 24-03-2010 OF THE CIT WHEREBY HE HELD THAT AO HAD FOLLOWED THE DIRECTIONS OF THE CIT UNDER SEC.2 63 OF THE ACT AND THEREFORE THE APPEAL OF THE ASSESSEE BEFORE HIM WAS NOT MAINTAINA BLE. IN OTHER WORDS CIT DISMISSED THE APPEAL OF ASSESSEE AS NOT MAINTAINABLE SINCE TH E ORDER OF AO WAS PASSED PURSUANT TO ORDER OF THE CIT UNDER SEC. 263 FOR THE IMPUGNED A.Y. 15. WE HAVE ALREADY QUASHED THE ORDER OF CIT UNDER SEC. 263 FOR THE IMPUGNED AY AT PARA-12 ABOVE. THEREFORE THE CONSEQUENTIAL ORDE R PASSED BY AO PURSUANT TO THE ORDER OF LD. CIT NO MORE EXISTS. THIS BEING THE CA SE APPEAL OF THE ASSESSEE HAS BECOME IN FRUCTUOUS AND THE APPEAL IS DISMISSED ACC ORDINGLY. 16. NOW WE TAKE UP APPEAL OF THE REVENUE IN ITA NO. 995/MDS/10. REVENUE THROUGH THIS APPEAL ASSAILS THE ORDER DATED 24-03-2010 OF T HE CIT(A)-V CHENNAI AND HAS TAKEN FOUR GROUNDS IN TOTAL OF WHICH GROUND NOS. 1 AND 4 ARE GENERAL NEEDING NO ADJUDICATION. 17. VIDE ITS GROUND NO.2 REVENUE IS AGGRIEVED THAT CIT(A) DIRECTED AO TO TREAT THE SURPLUS EARNED BY THE ASSESSEE ON SALE OF SHARES AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. 18. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED A RETURN FOR THE IMPUGNED AY WHEREIN IT HAD SHOWN CAPITAL GAINS OF ` 2 63 74 512/- BUSINESS LOSS OF ` .2 52 09 341/- AND INCOME FROM OTHER SOURCES ` 10 92 567/-. AO HOWEVER HELD THAT THE ENTIRE INCOM E OF THE ASSESSEE AROSE FROM SHARE TRANSACTIONS. THER EFORE HE CONSIDERED THE AMOUNT ITA NOS.1711 983 714 995-997 13 RETURNED BY THE ASSESSEE AS CAPITAL GAINS AS PART OF THE BUSINESS PROFITS AND ASSESSED IT UNDER THE HEAD INCOME FROM BUSINESS. 19. IN ITS APPEAL BEFORE CIT(A) ASSESSEE SUBMITTED THAT CAPITAL GAINS WERE SHOWN BY IT ON SALE OF SHARES HELD AS INVESTMENT WHEREAS BU SINESS LOSS WAS ON ACCOUNT OF SHARES HELD AS STOCK IN TRADE. ACCORDING TO THE ASSESSEE THERE WAS NO BAR FOR AN ASSESSEE ENGAGED IN SHARE TRADING TO HOLD SHARES AS INVESTME NTS. FURTHER EXPLANATION OF THE ASSESSEE WAS THAT IT WAS MAINTAINING DISTINCTLY DIF FERENT PORTFOLIO FROM THE RIGHT BEGINNING FOR SHARES HELD AS TRADING STOCKVIS--VIS SHARES HELD AS INVESTMENT. CIT(A) WAS APPRECIATIVE OF THIS CONTENTION. ACCORDING TO H IM ASSESSEE WAS BOTH A DEALER IN SHARES AND ALSO AN INVESTOR IN SHARES AND IN VIEW O F THE DECISION OF HON. APEX COURT IN THE CASE OF ASSOCIATED INDUSTRIAL DEVELOPMENT CO.P. LTD. (82 ITR 586) AND OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NS S INVESTMENT P.LTD. (277 ITR 149) ASSESSEE WAS ENTITLED TO TREAT THE SURPLUS OR LOSS ARISING OUT OF SHARES SOLD FROM ITS INVESTMENT PORTFOLIO AND STOCK IN TRADE DIFFERENTLY . 20. NOW BEFORE US LD. DR STRONGLY ASSAILING THE ORD ER OF CIT(A) SUBMITTED THAT ASSESSEE COMPANY WAS FORMED WITH THE OBJECT OF DEAL ING IN SHARES DEBENTURES AND SECURITIES. ACCORDING TO THE LD. DR ASSESSEE SOLD SHARES IN LARGE QUANTITY. THOUGH A TAX PAYER WAS FREE TO EMPLOY ITS OWN METHOD OF BOOK KEEPING REVENUE WAS NOT BOUND TO ACCEPT ALL THOSE DESCRIPTIONS GIVEN BY ASSESSEE IN ITS BALANCE SHEET. AS PER THE LD. DR THE SALE OF SHARES WERE PART OF ASSESSEES ORDINARY LINE OF BUSINESS AND THEREFORE HAD TO BE CONSIDERED AS PART OF ITS TRADE ONLY. RELYING ON THE DECISION OF HON. APEX COURT IN THE CASE OF R.B.V. SINGH V. CIT (41 ITR 685) IT WA S POINTED OUT BY LD. DR THAT WHEN ITA NOS.1711 983 714 995-997 14 SUBSTANTIAL QUANTITIES OF SHARES WERE SOLD AT FREQU ENT INTERVALS IT HAD TO BE TREATED AS BUSINESS OF DEALING IN SHARES ONLY. LD. DR ALSO POI NTED OUT THAT ASSESSEE WAS HAVING SUBSTANTIAL RESERVES OF ` 76714589/- AS ON 31-03-2001 BUT ITS INVESTMENT IN S HARES CAME TO ` 144465241/-. THEREFORE ACCORDING TO HIM WHEN BORR OWED MONEY WAS USED FOR THE PURPOSE OF INVESTMENT IN SHARES THIS WAS O NLY A CAMOUFLAGE AND SUCH SHARES WERE TRADING STOCK ONLY. PER CONTRA LD. AR RELING ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF NSS INVESTMENT P. LTD. (SUPRA) AND THAT OF CIT VS. RAMAMRITHAM (306 ITR 239) SUBMITTED THAT ASSESSEE WAS MAINTAINI NG A DIFFERENT PORTFOLIOS FOR SHARES HELD IN INVESTMENTS AND SHARES HELD AS STOCK IN TRA DE ACCORDING TO HIM SUCH DIFFERENTIATION WAS BEING DONE FROM THE VERY BEGINN ING AFTER CONSIDERING VARIOUS ASPECTS OF DEPLOYMENT OF CAPITAL. LD. COUNSEL FURTH ER ARGUED THAT IT WAS NOT FOR THE AO TO SIT IN THE ARM CHAIR OF A BUSINESSMAN AND DECIDE WHICH SHARES WERE TO BE CONSIDERED AS INVESTMENT AND WHICH SHARES WERE TO B E CONSIDERED AS PART OF STOCK IN TRADE. 21. WE HAVE PERUSED THE RECORDS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT ASSESSEE WAS HAVING SEPARATE PORTFOLIO S ONE FOR INVESTMENT AND OTHER FOR STOCK IN TRADE. IF WE LOOK AT THE MEMORANDUM OF ASS OCIATION OF THE COMPANY ITS MAIN PURPOSE AS REPRODUCED BY US AT PARA-7 ABOVE INCLUDE BUSINESS AS AN INVESTMENT COMPANY AND ALSO BUSINESS OF TRADING IN SHARES. HEN CE IT WAS WELL WITHIN THE POWERS OF THE ASSESSEE TO MAINTAIN TWO DIFFERENT PORTFOLIOS ONE FOR INVESTMENT AND OTHER FOR REGULAR TRADING. THERE IS NO DISPUTE THAT ASSESSEE HAS BEEN MAKING INVESTMENT IN SHARES YEAR AFTER YEAR AND INVESTMENT PORTFOLIO WAS CONSISTENTLY REFLECTED IN ITS BALANCE ITA NOS.1711 983 714 995-997 15 SHEET OVER VARIOUS YEARS. NO DOUBT ASSESSEE MIGHT H AVE ENGAGED IN A LARGE NUMBER OF TRANSACTIONS OF SALE AND PURCHASE OF SHARES. BUT T HIS BY ITSELF WOULD NOT BE SUFFICIENT TO HOLD THAT WHAT WAS HELD BY IT AS INVESTMENT WAS ACT UALLY STOCK IN TRADE. THE INVESTMENT IN SHARES AS ON 31-3-2001 CAME TO ` 144465241/- AND NO DOUBT PART OF IT DEFINITELY CAME OUT OF LOAN. HOWEVER THERE IS NO CONTENTION M ADE BY LD. DR THAT SUCH LOANS WERE SHORT TERM LOANS OR WERE OUT OF OVERDRAFT ACCOUNTS . THERE IS NOTHING WHICH STOP AN ASSESSEE FROM BORROWING MONEY FOR MAKING INVESTMENT IN SHARES. WE CANNOT SAY THAT JUST BECAUSE BORROWED MONEY WERE USED FOR INVESTMEN T IT CANNOT BE TREATED AS INVESTMENT BUT ONLY AS STOCK-IN-TRADE. IF WE LOOK A T THE LONG TERM CAPITAL GAINS SHOWN BY ASSESSEE COMPANY IT AROSE OUT OF FOLLOWING TRANS ACTION AS IT APPEARS FROM PAGE 2 OF THE ASSESSMENT ORDER: QTY SCRIP NAME PURCHASE DATE SALES DATE PURCHASE VALUE SALES VALUE CAPITAL GAINS 228400 WEWWIN INDUSTRIES 95-96 00-01 4350966.00 9098938.00 4747972 7100 WEWWIN INDUSTRIES 95-96 00-01 71000.00 282793.00 211793 38000 ZEE TELE 99-00 00-01 14996909.48 14340102.00 -656807 600 SQUARE D SOFT 99-00 00-01 156893.00 477720.00 320827 400 GLOBAL TELECOM 98-99 00-01 97620.00 439560.00 341940 300 GLOBAL TELECOM 98-99 00-01 73215.00 456180.00 382965 4500 GLOBAL TELECOM 98-99 00-01 880200.00 6432303.90 5552103 9000 HIMACHAL FUTURISTIC 98-99 00-01 428850.00 12317070.00 118882200 35000 GOLD STONE ENGG. 98-99 00-01 1412950.00 4894033.00 3481083 1250 GOLD STONE ENGG. 98-99 00-01 50462.50 151182.00 10071 9 90 GOLD STONE ENGG. 98-99 00-01 2018.00 5715.00 3696 TOTAL 22521084.00 4889 5596.90 26374512 ITA NOS.1711 983 714 995-997 16 OBVIOUSLY THESE SHARES WERE ALL PURCHASED ATLEAST O NE YEAR BACK. MANY OF THE SHARES WERE ACQUIRED NUMBER OF YEARS EARLIER. THIS MIGHT N OT ITSELF SHOW THAT THE SHARES SO PURCHASED WERE ONLY FOR INVESTMENT PURPOSES. BUT T HE LENGTH OF HOLDING ALONGWITH THE DIFFERENTIATION IN PORTFOLIO LENDS CONSIDERABLE STR ENGTH TO THE ARGUMENT OF THE ASSESSEE THAT SHARES HELD UNDER INVESTMENT WAS NOT INTENDED FOR THE PURPOSE OF TRADING. HONBLE JURISDICATIONAL HIGH COURT IN THE CASE OF CIT VS. R AMAMRITHAM (SUPRA) HELD AS UNDER AT PARA-4 OF ITS ORDER: 4. HEARD THE COUNSEL. ON FACTS IT WAS FOUND THAT THE ASSESSEE HAS BEEN MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR THE TRADING IN SHARES AS WELL AS INVESTMENTS IN SHARES. THE ASSESSEE IS CARRYING ON THE BUSINESS ONLY IN THE NA ME AND STYLE OF BRILLIANT AND COMPANY. THE SURPLUS EARNED FROM BRILLIANT AND C OMPANY HAS BEEN SHOWN AS BUSINESS INCOME. THE PAYMENTS IN SHARES HAVE BEEN DONE BY THE ASSESSEE IN HIS PERSONAL ACCOUNT. FURTHER IT WAS FOUND THAT THE ASSESSEE HA S BEEN HOLDING SHARES FOR A LONG TIME AND HAS BEEN UTILIZING THE SURPLUS FUNDS ONLY FOR T HE INVESTMENTS. IN EARLIER YEARS ALSO THE ASSESSEE HAS BEEN SHOWING ONLY CAPITAL GAINS ON SIMILAR TRANSACTIONS AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. THERE IS NOTHING IN LAW WHICH PROHIBITS A TRADER IN SHARES TO INVEST IN SHARES. THE INTENTION OF THE ASSESSEE IS RELEVANT TO DETERMINE WHETHER HE IS CARRYING ON THE BUSINESS IN SHARES OR INVESTMENTS. ON FACTS BOTH THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL CORRECTLY HELD TH AT THE SURPLUS DERIVED FROM THE SALE OF SHARES HAS TO BE ASSESSED UNDER THE HEAD CAPITAL G AINS. THE SAID FINDING IS BASED ON VALID MATERIALS AND EVIDENCE AND THE ORDER OF THE T RIBUNAL IS NOT A PERVERSE ONE. THE CONCURRENT FINDING GIVEN BY BOTH THE AUTHORITIES BE LOW IS BASED ON VALID MATERIALS AND EVIDENCE. IN THE CASE OF COMMISSIONER OF INCOME-TA X VS. P. MOHANAKALA (2007) 210 CTR (S.C.) 20 : (2007) 291 ITR 278 (S.C.) THE HON' BLE SUPREME COURT HELD THAT WHENEVER THERE IS A CONCURRENT FINDING BY THE AUTHO RITIES BELOW NO INTERFERENCE SHOULD BE CALLED FOR BY THE HIGH COURT. UNDER THESE CIRCUMSTA NCES WE DO NOT FIND ANY ERROR OR LEGAL INFIRMITY IN THE ORDER OF THE TRIBUNAL SO AS TO WAR RANT INTERFERENCE. WE ARE THEREFORE OF THE OPINION THAT LD.CIT(A) WAS WELL JUSTIFIED IN DIRECTING THE AO TO TREAT THE SURPLUS EARNED BY ASSESSEE ON THE SALE OF SHARES HELD UNDER THE INVESTMENT ITA NOS.1711 983 714 995-997 17 PORTFOLIO AS CAPITAL GAINS AND NOT AS BUSINESS INCO ME. GROUND NO.2 OF THE REVENUE STANDS DISMISSED. 22. VIDE GROUND NO.3 GRIEVANCE OF THE REVENUE IS TH AT THE CIT(A) DELETED THE ADDITION OF ` 3 LAKHS PAID BY THE ASSESSEE TO ONE GANDHINAGAR CLU B. AO HAD MADE THE DISALLOWANCE FOR A REASON THAT SUCH PAYMENT WAS A MATTER OF PERSONAL INTEREST AND WAS NOT EXCLUSIVELY INCURRED FOR THE PURPOSE OF ITS BUS INESS. IN APPEAL LD. CIT(A) DELETED SUCH DISALLOWANCE FOR A REASON THAT ASSESSEE WAS RI GHT IN CLAIMING CLUB MEMBERSHIP SUBSCRIPTION FEE OF ` 3 LAKHS AS A DEDUCTIBLE EXPENDITURE UNDER SEC.37 OF THE ACT AS THE SAME WAS INCURRED WITH AN INTENTION TO PROMOTE ITS BUSINESS PROSPECTS. RELIANCE WAS PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SUNDARAM INDUSTRIES LTD. (240 ITR 335). 23. NOW BEFORE US LD.DR STRONGLY ASSAILING THE O RDER OF CIT(A) CONTENDED THAT THE EXPENDITURE WAS NOT INCURRED FOR THE PURPOSE OF BUS INESS OF THE ASSESSEE. PER CONTRA LD. AR SUPPORTED THE ORDER OF THE CIT(A). 24. WE HAVE PERUSED THE ORDERS AND HEARD BOTH THE P ARTIES. CIT(A) HAD DELETED THE DISALLOWANCE ON A REASONING THAT CLUB SUBSCRIPTION WAS PAID TO PROMOTE THE BUSINESS OF THE ASSESSEE COMPANY AND MEMBERSHIP TO SUCH CLUB FO R AN EMPLOYEE OF THE ASSESSEE THOUGH IT GAVE SOME PERSONAL BENEFIT TO THE EMPLOYE E WAS STILL ALLOWABLE. WE ARE OF THE OPINION THAT THE CIT(A) RIGHTLY RELIED ON THE D ECISION OF THE JURISDICTIONAL HIGH COURT IN SUNDARAM INDUSTRIES LTD. (SUPRA) IN DELETING THE DISALLOWANCE. NOTHING HAS BEEN ITA NOS.1711 983 714 995-997 18 SHOWN BY LD. DR TO TAKE A VIEW THAT THE EXPENSES WE RE NOT INCURRED FOR THE BUSINESS OF THE ASSESSEE. GROUND NO.3 OF THE REVENUE STANDS DIS MISSED. 25. IN THE RESULT APPEAL OF THE REVENUE STANDS DIS MISSED. 26. NOW WE TAKE UP APPEAL OF THE REVENUE IN ITA NOS .996 & 997/MDS/10 FOR THE A.YRS.2005-06 & 2006-07 RESPECTIVELY. IDENTICAL GRO UNDS HAVE BEEN TAKEN BY REVENUE IN BOTH THESE APPEALS. REVENUE ASSAILS ORDERS OF L D.CIT(A) DIRECTING THE AO TO TREAT SURPLUS EARNED BY ASSESSEE ON SALE OF SHARES AS CAP ITAL GAINS. THIS IS VERY SIMILAR TO GROUND NO.2 RAISED BY REVENUE IN ITA 995/MDS/10 FOR AY 2001-02. WE HAVE ALREADY HELD THAT CIT(A) WAS JUSTIFIED IN ALLOWING THE CLA IM OF THE ASSESSEE SINCE SALE OF SHARES COMING UNDER PORTFOLIO OF INVESTMENT COULD ONLY BE CONSIDERED AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. NOTHING WAS BROUGHT BEFORE US B Y THE LD. DR FOR WARRANTING A DIFFERENT VIEW FOR THE IMPUGNED A.YS. IN THE RESULT APPEALS FOR BOTH ASST. YEARS 2005-06 AND 2006-07 ARE DISMISSED. 27. TO SUMMARISE THE RESULT APPEAL OF THE ASSESSEE IN ITA NOS.1711/MDS/07 AND 983/MDS/08 ARE ALLOWED WHEREAS ITS APPEAL IN ITA N O.714/MDS/10 STANDS DISMISSED. APPEAL OF THE REVENUE IN ITA NOS.995 TO 997/MDS/10 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 25- 03-201 1. . SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 25TH MARCH 2011. ITA NOS.1711 983 714 995-997 19 CC: THE ASSESSEE 2)THE ASSESSING OFFICER 3)THE C IT(A) 4) THE CIT 5)THE D.R 6)GUARD FILE. NBR