ACIT, New Delhi v. M/s. Devasan Investments Pvt. Ltd., New Delhi

ITA 3430/DEL/2010 | 2007-2008
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 343020114 RSA 2010
Assessee PAN YEARS1954T
Bench Delhi
Appeal Number ITA 3430/DEL/2010
Duration Of Justice 8 month(s) 17 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Devasan Investments Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-03-2011
Date Of Final Hearing 21-02-2011
Next Hearing Date 21-02-2011
Assessment Year 2007-2008
Appeal Filed On 13-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NOS. 3494 & 3430(DEL)2010 ASSESSMENT YEARS: 2006-07 & 2007-08 ASSTT.COMMISSIONER OF INCOME TAX M/S.DEVASAN INVESTMENTS PVT.LTD. CIRCLE 10(1) NEW DELHI. V. ANSA L BHAWAN KG MARG N.DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.K. LAL SR. DR RESPONDENT BY: S/SHRI AJ AY VOHRA ADVOCATE & ROHIT GARG CA ORDER PER A.D. JAIN J.M. THESE ARE DEPARTMENTS APPEALS FOR ASSESSMENT YEARS 2006-07 AND 2007-08. THE SINGLE COMMON ISSUE RAISED IN BOTH T HESE APPEALS IS THAT THE LD. CIT(A) HAS ERRED IN TAKING THE INCOME OF ` 3 50 75 908/-(FOR ASSESSMENT YEAR 2006-07) AND OF ` 1 43 43 154/- ( FOR ASSESSMENT YEAR 2007-08) AS SHORT TERM CAPITAL GAINS INSTEAD OF INCOME FROM BUS INESS. FOR CONVENIENCE THE FACTS ARE BEING TAKEN FROM ITA NO.3494(DEL) 2. THE AO ASSESSED THE SHORT TERM CAPITAL GAINS ON SALE OF SHARES HELD AS INVESTMENTS AMOUNTING TO ` 35 75 908/- AS BUSINESS INCOME. ON THE OTHER ITA NOS. 3494&3430(DEL)2010 2 HAND HE ACCEPTED THE GAIN ON SALE OF MUTUAL FUNDS AS SHORT TERM/LONG TERM CAPITAL GAINS. IN THE ASSESSMENT PROCEEDINGS THE AO ASKED OF THE ASSESSEE AS TO WHY INCOME FROM STCG/LTCG BE NOT TREATED AS BUSINESS INCOME. 3. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE FU NDS INVESTED IN MUTUAL FUNDS ON WHICH CAPITAL GAINS HAD BEEN RECE IVED WERE INVESTMENTS ONLY AND THEY COULD NOT BE TREATED AS STOCK-IN-TRA DE; THAT THE UNITS WERE NOT TRADABLE ON STOCK EXCHANGE AND HAD TO BE REDEEMED B Y SUCH MUTUAL FUNDS AND THUS PROFITS THEREON COULD NOT BE TREATED AS B USINESS INCOME AS AGAINST ` 12 70 710/- DECLARED AS LONG TERM CAPITAL GAIN AND ` 34 56 003/- DECLARED AS SHORT TERM CAPITAL GAIN; THAT SIMILARLY INVESTMENT WAS MADE IN SHARES AND DURING THE WHOLE YEAR THE COMPANY DEALT IN ONLY 9 SCRIPTS AND TOTAL PURCHASE/SALE WAS OF ` 3 CRORES ONLY; THAT THERE WERE NO FREQUENT TRANSACTIONS; THAT AS SUCH THE CAPITAL GAIN ON THE SHARES OF ` 35.75 LAKHS WAS NOT A BUSINESS PROFIT; THAT A SIMILAR TREATMENT HAD BEEN ACCEPTED BY THE AO IN ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 31.12.2 007 PASSED U/S 143(3) OF THE I.T. ACT; THAT THE AO HAD ACCEPTED THE STAND OF THE ASSESSEE COMPANY FOR ASSESSMENT YEAR 2005-06 SINCE SIMILAR ACTIVITI ES HAD BEEN CARRIED ON BY THE ASSESSEE COMPANY IN THAT YEAR AND THE CAPITAL G AIN WAS ACCEPTED BY THE AO UNDER SCRUTINY AFTER A DETAILED EXAMINATION; THA T THAT BEING SO THERE WAS NO OCCASION TO HOLD OTHERWISE FOR THE YEAR UNDER CO NSIDERATION; THAT THE ITA NOS. 3494&3430(DEL)2010 3 ASSESSEE COMPANY WAS HAVING NET OWNED FUNDS OF ` 7.32 CRORES AS ON 31.3.2006; THAT OUT OF THESE FUNDS THE ASSESSEE HA D MADE INVESTMENTS OF ` 4.58 CRORES AS ON 31.3.2006; THAT THE ASSESSEE COM PANY HAD INVESTED ITS SHAREHOLDERS FUNDS IN SHARES/UNITS OF MUTUAL FUNDS AS PER THE DECISION OF THE MANAGEMENT FROM TIME TO TIME; THAT THE INVESTME NT HAD BEEN MADE IN UNITS OF MUTUAL FUNDS AND SHARES WITH THE OBJECTIVE OF CAPITAL APPRECIATION IN THE LONG TERM AND IN CASE THE TARGET PRICE WAS A CHIEVED IN THE SHORT TERM THE SHARES WERE SOLD IN THE MARKET; THAT DEPENDING ON THE FUNDS AVAILABLE THE MANAGEMENT OF THE COMPANY DECIDED AS TO WHICH SHARE S HAD TO BE ACQUIRED; THAT THE SHARES WERE HELD BY THE ASSESSEE COMPANY D URING THE YEAR AS INVESTMENTS; THAT THE SHARES WERE SHOWN IN THE BALA NCE SHEET AS INVESTMENT UNDER SCHEDULE III OF THE AUDITED ACCOUNTS AND THE PROFIT ON SALE OF SUCH INVESTMENTS HAD BEEN DULY OFFERED FOR TAXATION UNDE R THE HEAD CAPITAL GAINS; THAT AS SUCH THE SHARES SOLD BY THE ASSESS EE COMPANY DURING THE YEAR HAD BEEN HELD BY IT UNDER THE HEAD INVESTMENT; TH AT THEREFORE THE GAIN THEREON WAS TAXABLE UNDER THE HEAD CAPITAL GAIN; THAT A SUBSTANTIAL PART OF THE CAPITAL GAIN HAD COME FROM INVESTMENT IN MUTUAL FUNDS WHICH WERE PURCHASED FOR A FAIRLY LONG PERIOD OF TIME AND IT C OULD NOT BE HELD THAT PROFIT ON SALE OF INVESTMENT IN MUTUAL FUNDS/SHARES COULD BE TREATED AS BUSINESS INCOME; THAT OUT OF A TOTAL INVESTMENT OF ` 4.58 CRORES AS ON 31.3.2006 A SUM ITA NOS. 3494&3430(DEL)2010 4 OF ` 2.50 CRORES HAD BEEN INVESTED IN MUTUAL FUNDS AND T HE BALANCE SUM OF ` 2.08 CRORES HAD BEEN INVESTED IN SHARES; THAT AS SU CH APPROXIMATELY 55% OF INVESTMENT HAD BEEN MADE IN MUTUAL FUNDS AND IT COU LD NOT BE SAID THAT THE SAME REPRESENTED BUSINESS INCOME; THAT FURTHER OUT OF TOTAL SHORT TERM CAPITAL GAIN OF ` 70.20 LAKHS A SUM OF ` 34.56 LAKHS HAD BEEN EARNED ON MUTUAL FUNDS AND THE BALANCE OF ` 36 LAKHS HAD BEEN EARNED ON SHARES AND THE GAIN FROM MUTUAL FUNDS REPRESENTED 49% OF THE TOTAL CAPITAL GAIN; THAT HENCE A SUBSTANTIAL PART OF THE ASSESSEE COMPANYS PROFIT ON INVESTMENT HAD ARISEN OUT OF INVESTMENT IN MUTUAL FUNDS AND SO TH E INCOME FROM SALE OF SHARES/MUTUAL FUNDS COULD NOT BE TREATED AS BUSINES S INCOME RATHER THAN CAPITAL GAINS SHOWN BY THE ASSESSEE COMPANY; THAT T HE INVESTMENT WAS AS PER THE DECISION OF THE MANAGEMENT FROM TIME TO TIME AN D THAT THE DECISION OF THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY STOO D DULY RECORDED IN THE MINUTES BOOKS OF THE MEETINGS OF THE BOARD OF DIRE CTORS. 4. THE AO HOWEVER DISAGREEING WITH THE STAND TAK EN BY THE ASSESSEE TREATED THE AMOUNT OF ` 35 75 908/- AS THE ASSESSEE COMPANYS BUSINESS INCOME. THE AO OBSERVED THAT THOUGH THE ASSESSEE HAD MENTIONED THE PURCHASES AND SALES AS INVESTMENT IN ITS BOOKS OF A CCOUNT THE NATURE OF THE TRANSACTIONS OF SHARES SHOWED THAT THE ASSESSEE WAS DOING FREQUENT TRANSACTIONS FOR SALE AND PURCHASE OF SHARES; THAT ON SIX OCCASIONS THE ITA NOS. 3494&3430(DEL)2010 5 ASSESSEE HAD PURCHASED SHARES OF M/S. MONNUT ISPAT LTD. AND ON NINE OCCASIONS THE ASSESSEE HAD MADE SALES OF THIS SCRI PT WHICH MEANT THAT THE SALE PURCHASE WAS SPREAD OVER THE WHOLE YEAR; THA T SIMILARLY THE ASSESSEE HAD MADE PURCHASES OF SHARES OF ING VYSYA BANK LTD. ON FOUR OCCASIONS AND HAD TRANSACTED SALES ON TWO OCCASIONS; THAT TH ESE ACTIVITIES ALONG WITH OTHER FACTS OF THE CASE SHOWED THAT THE MOTIVE OF THE ASSESSEE WAS TO EARN PROFIT FROM SALE AND PURCHASE OF THESE SHARES AND N OT TO EARN DIVIDEND; AND THAT THOUGH HE (THE AO) DID AGREE WITH THE ASSESSE E THAT THE GAIN ON MUTUAL FUNDS WAS GAIN ON INVESTMENT AS UNITS COULD NOT BE PURCHASED/SOLD IN THE OPEN MARKET. THE GAINS OF PURCHASE SALE OF UNITS OF MUTUAL FUNDS WERE ACCEPTED BY THE ASSESSEE AS INCOME FROM CAPITAL GAI NS OVER LONG TERM OR SHORT TERM. 5. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) DIRECTED THE AO TO TREAT THE INCOME OF ` 35 75 908/- AS SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME AS DONE BY THE AO. 6. AGGRIEVED THE DEPARTMENT IS IN APPEAL. 7. CHALLENGING THE IMPUGNED ORDERS THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT T HE INCOME OF ` 35 75 908/- AS SHORT TERM CAPITAL GAIN INSTEAD OF INCOME FROM B USINESS; THAT WHILE DOING SO THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT THE ASSESSEE WAS ITA NOS. 3494&3430(DEL)2010 6 INVOLVED IN FREQUENT TRADING OF SHARES AND NO SEPAR ATE BOOKS OF ACCOUNT WERE MAINTAINED; THAT THE LD. CIT(A) HAS ERRED IN NOT AP PRECIATING THE GUIDE-LINES ISSUED BY THE CBDT AND THE LEGAL DECISION SETTLED B Y THE ISSUE; THAT THE LD. CIT(A) HAS ERRED IN FAILING TO APPRECIATE THAT THIS IS A CASE OF A COMPANY AND NOT THAT OF AN INDIVIDUAL. RELIANCE HAS BEEN PLAC ED ON THE FOLLOWING CASE LAWS:- 1. CIT(CENTRAL CALCUTTA) V. ASSOCIATED INDUSTRIAL DE VELOPMENT CO.(P)LTD. 82 ITR 586(SC); 2. FIDELITY NORTH STAR FUND & OTHERS IN RE 288 ITR 641 AAR; 3. CIT/WT V. P. MANONMANI 245 ITR 48(MAD)(FB). 8. RELIANCE HAS ALSO BEEN PLACED ON CBDT CIRCULAR N O. 4/2007 DATED 15.6.2007 AND CBDT INSTRUCTION NO. 1827 DATED 31.8. 89. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS STRONGLY SUPPORTED THE IMPUGNED ORDERS. HE SUBMITS THAT THE LD. CIT(A) HAS CORRECTLY DIRECTED THE AO TO TREAT THE INCOME AS SHORT TERM C APITAL GAIN RATHER THAN BUSINESS INCOME OF THE ASSESSEE; THAT THE AO HAD WR ONGLY TAKEN DIVERGENT STANDS INASMUCH AS HE HAD TREATED THE GAIN ON SALE OF SHARES HELD AS INVESTMENTS AS BUSINESS INCOME WHEREAS THE GAIN O N SALE OF MUTUAL FUNDS HAD BEEN ACCEPTED AS SHORT TERM/LONG TERM CAPITAL G AIN; THAT IN WRONGLY TREATING THE SHORT TERM CAPITAL GAIN AS BUSINESS IN COME THE AO HAD FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COMPANY HAD C ARRIED OUT TRANSACTIONS OF ITA NOS. 3494&3430(DEL)2010 7 SHARES IN THE INVESTMENT ACCOUNT AND THAT THE PROFI T EARNED THEREON HAD BEEN DULY DECLARED AS CAPITAL GAIN; THAT THE AO HAD ALSO FAILED TO CONSIDER THAT THE DECISION TO HOLD THE SHARES AS INVESTMENT WAS DULY AUTHORIZED IN THE OBJECT CLAUSES OF THE MEMORANDUM OF ARTICLES OF ASSOCIATIO N OF THE ASSESSEE COMPANY; THAT IT IS WELL SETTLED THAT ONCE THE SHAR ES ARE HELD AS INVESTMENTS AND NOT AS STOCK-IN-TRADE THE PROFIT ON SALES THER EOF WOULD BE CAPITAL GAIN AND NOT BUSINESS INCOME; THAT THE AO HAD ERRED IN C ONSIDERING THE SHARES AS TRADING ASSETS AS AGAINST INVESTMENT AS DECLARED B Y THE ASSESSEE IN ITS AUDITED BALANCE SHEET; THAT THE INVESTMENTS WERE MA DE OUT OF SHARE CAPITAL AND RESERVES AND SURPLUS OF ` 736.0 LAKHS AS AGAINST WHICH THE INVESTMENTS WERE OF ` 448.2 LAKHS; THAT AS SUCH NO BUSINESS FUNDS WERE U TILIZED FOR MAKING THE INVESTMENTS; THAT IN THE FACE OF THESE F ACTS THE AO HAD ERRONEOUSLY CONCLUDED THAT BUSINESS FUNDS WERE UTIL IZED BY THE ASSESSEE COMPANY FOR MAKING INVESTMENTS; AND THAT THE LD. CI T(A) ON THE OTHER HAND HAS CORRECTLY APPRECIATED THE POSITION AND NO FAULT CAN BE FOUND WITH THE ORDERS UNDER APPEAL. 10. RELIANCE HAS BEEN PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE FOLLOWING CASE LAWS:- 1. CIT V. NSS INVESTMENTS PVT. LTD. 277 ITR 149(MAD) ; 2. CIT V. ESS JAY ENTERPRISES (P)LTD. 173 TAXMAN 1(D EL); ITA NOS. 3494&3430(DEL)2010 8 3. RAJA BAHADUR KAMAKHYA NARAIN SINGH V. CIT 77 ITR 253(SC); 4. CIT V. MADAN GOPAL RADHEY LASL 73 ITR 652; 5. CITADELL AGENCIES (P)LTD. V. ACIT [2007] 11 SOT 2 73(MUM) 6. ACIT V. KETHAN KUMAR A. SHAH 242 ITR 83(KER); AND 7. CIT V. ROHIT ANAND 327 ITR 445(DEL). 11. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ISSUE IS AS TO WHETHER THE LD. CIT(A) HAS JUSTI FIED IN DIRECTING THE AO TO TREAT THE INCOME OF ` 35 75 908/- FOR ASSESSMENT YEAR 2006-07 AND OF ` 1 43 43 145/- FOR ASSESSMENT YEAR 2007-08 AS SHORT TERM CAPITAL GAIN INSTEAD OF INCOME FROM BUSINESS. 12. UNDISPUTEDLY THE ASSESSEE HAD INVESTED IN MUTU AL FUNDS. THE GAINS THEREON WERE SHOWN AS INVESTMENTS. THE ASSESSEE COMPANY HAD SIMILARLY INVESTED IN SHARES AND THE GAIN THEREON WAS SHOWN A S CAPITAL GAIN UNDER INVESTMENTS. THOUGH THE AO TREATED THE GAIN ON MUTUAL FUNDS AS INVESTMENTS THE GAINS ON SALE AND PURCHASE OF SHAR ES WERE NOT SO TREATED. THE AO HELD THAT THE ASSESSEE HAD BEEN DOING FREQ UENT TRANSACTIONS OF SALE AND PURCHASE OF SHARES INASMUCH AS THE ASSESSEE HAD PURCHASED SHARES OF M/S. MONNET ISPAT LTD. ON SIX OCCASIONS AND HAD SOL D SUCH SHARES ON NINE OCCASIONS THE ACTIVITY OF SALE AND PURCHASE BEING SPREAD OVER TO WHOLE YEAR. IT WAS OBSERVED THAT SIMILARLY THE ASSESSEE HAD MA DE PURCHASE OF SHARES OF ING VYSYA BANK LTD. ON FOUR OCCASIONS AND HAD SOLD THEM ON TWO ITA NOS. 3494&3430(DEL)2010 9 OCCASIONS. SUCH ACTIVITY TO THE AO SHOWED THAT THE MOTIVE OF THE ASSESSEE WAS TO EARN PROFIT FROM SALE AND PURCHASE OF SHARES AND NOT TO EARN DIVIDEND. 13. THE LEARNED CIT(A) WHILE DIRECTING THE AO TO T REAT THE INCOME OF ` 35 75 908/- (FOR ASSTT.YEAR 2006-07) AND OF ` 1 43 43 154/- ( FOR ASSTT.YEAR 2007-08) AS STCG INSTEAD OF INCOME FROM BUSINESS OBSERVED THAT THE SHARES HAD BEEN SHOWN AS INVESTMENTS BY THE ASSESSE E COMPANY; THAT THE SHARES HAD BEEN PURCHASED OUT OF THE ASSESSEES OWN FUNDS; THAT THE ACTIVITY HAD BEEN DULY AUTHORIZED TO THE ASSESSEE COMPANY BY ITS MEMORANDUM OF ARTICLES OF ASSOCIATION; THAT APROPOS THE VOLUME OF SHARE TRANSACTIONS THE ASSESSEE HAD DEALT IN ONLY NINE SCRIPTS DURING THE ENTIRE YEAR WHICH INCLUDED 17 TRANSACTIONS OF SHARE PURCHASES AND 22 TRANSACTI ONS OF SHARE SALES DURING THE YEAR AGGREGATING TO 40 TRANSACTIONS IN THE WHO LE YEAR I.E. ONE TRANSACTION IN 10 DAYS WHICH WAS NOT A VERY HIGH F REQUENCY OF TRANSACTIONS; THAT THE ASSESSEE COMPANY HAD ALSO RECEIVED DIVIDEN D ON THE SHARES HELD BY IT; AND THAT THE INFRASTRUCTURE OF THE ASSESSEE COM PANY WAS ALSO VERY SMALL WHEREAS THE BUSINESS ACTIVITY REQUIRE A MUCH BIGGER INFRASTRUCTURE. 14. IT IS UNDISPUTED THAT THE SHARES HAVE BEEN SOLD AS INVESTMENT BY THE ASSESSEE COMPANY. THIS IS AVAILABLE FROM PAGE 5 O F THE ASSESSEES PAPER BOOK (APB FOR SHORT) WHICH IS A COPY OF THE ASS ESSEES BALANCE SHEET AS ON 31.3.2006. FOR ASSESSMENT YEAR 2006-07 THE AS SESSEE HAD DECLARED SHORT ITA NOS. 3494&3430(DEL)2010 10 TERM CAPITAL GAINS FROM SHARES AT ` 35 75 908/- SHORT TERM CAPITAL GAIN FROM MUTUAL FUNDS AT ` 34 56 003/- AND LONG TERM CAPITAL GAINS AT ` 12 70 710/-. 15. IT IS ALSO PATENT ON RECORD THAT THE INVESTMENT WAS MADE BY THE ASSESSEE OUT OF ITS OWN FUNDS. THE ASSESSEE COMPA NY WAS HAVING NET OWNED FUNDS OF ` 7.32 CRORES AS ON 31.3.2006 AS FOLLOWS:- ` SHARE CAPITAL 46. 25 LAKHS RESERVES AND SURPLUS 685.35 LAKH S _____________ TOTAL: 731.60 LAKHS -------------------- 16. AS ON 31.3.2006 THE ASSESSEE HAD MADE INVESTME NT OF ` 4.58 CRORES AS FOLLOWS:- ` INVESTMENT IN SHARES . 208 .42 LAKHS INVESTMENT IN MUTUAL FUNDS . 250.00 LAKHS _____________ 458.42 LAKHS -------------------- 17. INVESTMENT OF SHAREHOLDERS FUNDS IN SHARES HAD BEEN MADE BY THE ASSESSEE AS PER THE DECISION OF ITS MANAGEMENT FROM TIME TO TIME. THIS INVESTMENT HAD BEEN MADE WITH THE OBJECT OF CAPITAL APPRECIATION IN THE LONG ITA NOS. 3494&3430(DEL)2010 11 TERM AND IN CASE THE TARGET PRICE WAS ACHIEVED IN THE SHORT RUN THE SHARES WERE SOLD IN THE MARKET. A COPY OF MEMORANDUM OF ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY IS TO BE FOUND AT PAGES 30 TO 55 OF THE APB. THE MAIN OBJECTS TO BE PURSUED BY THE COMPANY ARE AT PA GES 32 OF THE APB AS FOLLOWS:- 1. TO CARRY ON THE BUSINESS OF AN INVESTMENT COMPA NY IN ALL ITS ASPECTS AND BRANCHES AND FOR THAT PURPOSE TO SUBSC RIBE TAKE PURCHASE OR ACQUIRE BY ORIGINAL SUBSCRIPTION CONTR ACT TENDER PURCHASE EXCHANGE UNDERWRITE PARTICIPATE IN SYND ICATES OR OTHERWISE AND WHETHER OR NOT FULLY PAID UP AND TO SUBSCRIBE FOR THE SAME SUBJECT TO SUCH TERMS AND CONDITIONS AS MAY BE THOUGHT FIT AND TO HOLD ISSUE REISSUE SELL PLEDGE DEAL OR OTHE RWISE DISPOSE OF SHARES (WHETHER FULLY PAID OR PARTLY PAID) STOCK D EBENTURES DEBENTURE STOCK BONDS OBLIGATIONS AND SECURITIES ISSUED OR GUARANTEED BY ANY GOVERNMENT SOVEREIGN RULER COMM ISSIONERS PUBLIC BODY OR AUTHORITIES WHETHER SUPREME DEBENT ANT MUNICIPAL LOCAL OR OTHERWISE IN ANY PART OF THE WORLD AND TO UNDERWRITE SHARES DEBENTURES DEBENTURE STOCK BONDS NOTES AND OTHER OBLIGATIONS AND TO MANAGE INVESTMENT POOLS SYNDICATES IN SHARES S TOCKS AND SECURITIES. 2. TO ACT AS INVESTMENT CONSULTANT MANAGEMENT CON SULTANT AND PROVIDE ADVISE SERVICES CONSULTANCY IN VARIOUS FI ELDS GENERAL ADMINISTRATIVE SECRETARIAL COMMERCIAL FINANCIAL LEGAL ECONOMIC LABOUR INDUSTRIAL TECHNICAL QUALITY CONTROL AND DATA PROCESSING. 18. IT IS OBVIOUS FROM THE FIRST MAIN OBJECT OF THE ASSESSEE COMPANY THAT IT IS TO CARRY ON THE INVESTMENT OF AN INVESTMENT COMP ANY. THAT BEING SO THE INVESTMENT IN QUESTION WAS IN CONSONANCE WITH ITS MAIN OBJECTS. IT WAS ITA NOS. 3494&3430(DEL)2010 12 DEPENDING ON THE FUNDS AVAILABLE THAT THE MANAGEMEN T OF THE ASSESSEE COMPANY DECIDED WHICH SHARES HAD TO BE ACQUIRED. THE SHARES ACQUIRED WERE HELD AS INVESTMENT BY THE ASSESSEE COMPANY DUR ING THE YEAR UNDER CONSIDERATION. THEY WERE SHOWN IN THE BALANCE SHEE T AS INVESTMENT UNDER SCHEDULE III OF THE AUDITED ACCOUNTS. THE PROFIT ON THE SALE THEREOF WAS DULY OFFERED FOR TAXATION AS CAPITAL GAIN. 19. APROPOS THE VOLUME OF THE TRANSACTION IT REMA INS UNCHALLENGED THAT THE ASSESSEE HAD DEALT IN ONLY NINE SCRIPTS DURING THE WHOLE YEAR INCLUDING 17 SHARE PURCHASES AND 22 SHARE SALES. THERE WAS THUS AN AGGREGATE OF 40 TRANSACTIONS IN THE WHOLE YEAR OR ONE TRANSACTION IN EVERY 10 DAYS. THIS CANNOT AT ALL BE SAID TO BE A HIGH FREQUENCY OF TRA NSACTIONS. 20. THEN AGAIN UNDISPUTEDLY THE ASSESSEE HAD RECE IVED DIVIDEND ON THE SHARES HELD BY IT. IN THE FACTS OF THE CASE IT CA NNOT BE HELD AS WAS WRONGLY DONE BY THE AO THAT THERE WAS NO INTENTION OF THE ASSESSEE TO EARN DIVIDEND. 21. NOT ONLY THIS IT HAS AGAIN GONE UNREBUTTED THA T THE INFRASTRUCTURE OF THE ASSESSEE COMPANY IS NOT ONE AS WOULD BE REQUIRE D FOR A BUSINESS ACTIVITY. THE ASSESSEE COMPANY HAS A VERY SMALL I NFRASTRUCTURE. 22. IT WAS ALL THE ABOVE FACTS WHICH WEIGHED WITH T HE LD. CIT(A) IN DIRECTING THE AO TO ASSESS THE INCOME AS SHORT TERM CAPITAL GAIN INSTEAD OF ITA NOS. 3494&3430(DEL)2010 13 INCOME FROM BUSINESS AND WE DO NOT FIND ANY ERROR I N THE ORDER OF THE LD. CIT(A) FOR THE DISCUSSION MADE IN THE IMPUGNED ORD ER. 23. NOW COMING TO THE CASE LAWS RELIED ON BY THE P ARTIES THE DEPARTMENT HAS FIRSTLY PLACED RELIANCE ON ASSOCIATED INDUST RIAL DEVELOPMENT CO. (P)LTD. (SUPRA). THEREIN THE ASSESSEE COMPANY A CTED AS MANAGING AGENTS OF VARIOUS COMPANIES. DURING THE ACCOUNTING PERIO D RELEVANT TO ASSESSMENT YEAR 1957-58 IT SOLD SHARES HELD BY IT IN THREE OF THE MANAGED COMPANIES AND DERIVED A NET PROFIT OF ` 1 26 027/- THEREFROM. THE ASSESSEE CLAIMED PROFIT AS CAPITAL GAINS AND STATED THAT THE IMMEDIA TE NECESSITY FOR THE SALE OF THESE SHARES WAS THE REDUCTION OF AN OVERDRAFT WITH ITS BANK. IT WAS NOT TREATED AS A DEALER IN SHARES IN EARLIER YEARS. T AKING INTO ACCOUNT THE PURCHASES AND SALES MADE BY THE ASSESSEE DURING YEA RS 1954 TO 1957 THE TRIBUNAL HELD THAT IN VIEW OF THE MULTIPLICITY OF T HE TRANSACTIONS OVER THE YEARS THE ASSESSEE HAD CEASED TO BE AN INVESTOR AND HAD BECOME A DEALER THOUGH IT DEALT ONLY IN SHARES OF THE MANAGED COMPA NIES. AS SUCH THE TRIBUNAL HELD THAT PROFIT OF ` 1 26 027/- AROSE TO THE ASSESSEE IN THE COURSE OF ITS BUSINESS AS A DEALER IN SHARES AND WAS LIABL E TO BE ASSESSED AS A REVENUE PROFIT. ON A REFERENCE THE HIGH COURT UPH ELD THE FINDING OF THE TRIBUNAL THAT THE ASSESSEE WAS A DEALER IN SHARES B UT HELD THAT IN VIEW OF THE ITA NOS. 3494&3430(DEL)2010 14 FACTS THAT PART OF THE SHARES WERE SUBSCRIBED FOR T HE PURPOSE OF ACQUIRING THE MANAGING AGENCY OF ONE OF THE MANAGED COMPANIES TH AT SUBSEQUENTLY LARGE BLOCKS OF SHARES WERE PURCHASED AND HELD FOR A LONG PERIOD WITHOUT SALE AND THAT THE SHARES WERE SOLD NOT IN SMALL BLOCKS BUT I N BIG BLOCKS TO REDUCE THE ASSESSEES LIABILITY ON ITS OVERDRAFT ACCOUNT THE SHARES WERE HELD BY THE ASSESSEE AS PART OF ITS INVESTMENT AND THEREFORE PROFIT ON THE SALE OF THE SHARES DID NOT ARISE TO IT IN THE COURSE OF ITS BUS INESS AS A DEALER IN SHARES AND WAS THEREFORE A CAPITAL RECEIPT. ON APPEAL THE HONBLE SUPREME COURT REVERSED THE DECISION OF THE HONBLE HIGH COURT. I T WAS HELD THAT IT WAS NOT OPEN TO THE HIGH COURT TO GIVE ITS FINDING ON THE Q UESTION WHETHER THE SHARES HAD BEEN HELD BY WAY OF INVESTMENT SINCE THAT QUEST ION WAS ESSENTIALLY ONE OF FACT AND NO DECISION OF THE TRIBUNAL WAS INVITED THEREON; THAT THE HIGH COURT HAD GONE BEYOND THE MATTERS WHICH WERE THE S UBJECT MATTER OF THE CONTROVERSY BEFORE THE TRIBUNAL; THAT THE ASSESSEE HAD MADE NO ATTEMPT WHATSOEVER TO MAKE OUT A CASE THAT THE SHARES WHICH HAD BEEN SOLD WERE A PART OF ITS CAPITAL INVESTMENT NOR DID IT PLACE AN Y MATERIAL FROM WHICH IT COULD BE ESTABLISHED THAT THOSE SHARES HAD BEEN TRE ATED IN ITS BOOKS DIFFERENTLY FROM OTHER SHARES HELD BY IT; THAT THE MERE FACT THAT THE SALE PROCEEDS WERE PAID INTO THE OVERDRAFT ACCOUNT IN WH ICH ADMITTEDLY PROCEEDS OF SALE OF ALL THE SHARES HELD BY THE ASSESSEE WERE BEING CREDITED AS AND WHEN ITA NOS. 3494&3430(DEL)2010 15 THE SALES WERE MADE AND THAT THESE SHARES HAD NOT B EEN SOLD WITH ANY AMOUNT OF FREQUENCY COULD NOT BE REGARDED AS SUFFICIENT TO ESTABLISH THAT THESE SHARES HAD BEEN HELD BY WAY OF INVESTMENT. IT WAS ALSO HE LD THAT WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMEN T OR FORMS PART OF THE STOCK-IN-TRADE IS A MATTER WHICH IS WITHIN THE KNOW LEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND HE SHOULD IN NORMAL CIRCUMSTA NCES BE IN A POSITION TO PRODUCE EVIDENCE FROM HIS RECORDS AS TO WHETHER HE HAS MAINTAINED ANY DISTINCTION BETWEEN THOSE SHARES WHICH ARE HIS STOC K-IN-TRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT. 24. ASSOCIATED INDUSTRIAL DEVELOPMENT CO.(P)LTD. (SUPRA). IT IS SEEN IS A DECISION WHICH TURNS ON ITS OWN FACTS. RELIANCE HAS BEEN PLACED ON THIS DECISION BY THE AO SO AS TO FIND SUPPORT FROM THE OBSERVATIONS OF THE HONBLE SUPREME COURT THAT AN ASSESSEE WHO IS HOLDI NG THE SHARES SHOULD BE IN A POSITION TO PROVE FROM ITS RECORDS AS TO WHETH ER IT HAS MAINTAINED ANY DISTINCTION BETWEEN THOSE SHARES WHICH ARE ITS STOC K-IN-TRADE AND THOSE HELD BY WAY OF INVESTMENT. AS TO HOW THIS RATIO OF TH E HONBLE SUPREME COURT IS DETRIMENTAL TO THE CASE OF THE ASSESSEE HAS NOWH ERE BEEN DELINEATED IN THE ASSESSMENT ORDER. RATHER THE ASSESSEE IN THE PRE SENT CASE IT IS SEEN HAS ABIDED BY THE SAID RATIO INASMUCH AS IT IS ON RECOR D AS DISCUSSED HEREIN ABOVE THAT THE ASSESSEE HAD ITS MAIN OBJECTIVE TO INVEST IN SHARES. IT ACTED ITA NOS. 3494&3430(DEL)2010 16 IN ACCORDANCE WITH THIS MAIN OBJECTIVE. THE ASSESS EE COMPANY SHOWED THE SHARES UNDER THE HEAD INVESTMENTS AND ACCORDINGLY OFFERED THE PROFIT THEREON UNDER THE HEAD CAPITAL GAIN. THAT BEING SO ASSOCIATED INDUSTRIAL DEVELOPMENT CO.(P)LTD. (SUPRA) CANNOT IN ANY MANNER BE SAID TO BE AGAINST THE ASSESSEE. 25. THE DEPARTMENT HAS NEXT PLACED RELIANCE ON FID ELITY NORTH STAR FUND & OTHERS IN RE (SUPRA). IN THAT CASE THE AUTHORITY FOR ADVANCE RULINGS HAS OBSERVED THAT THE SUBSTANTIAL NATURE OF TRANSACTION S THE MANNER OF MAINTAINING BOOKS OF ACCOUNT THE MAGNITUDE OF PURC HASE AND SALES AND THE RATIO BETWEEN THE PURCHASES AND SALES AND THE HOLDI NG WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF THE TRANSACTION. THE AO HAS REFERRED TO THIS DECISION IN THE ASSESSMENT ORDER. 26. WE ARE UNABLE TO SEE AS TO HOW THIS DECISION RU NS COUNTER TO THE CASE OF THE ASSESSEE. FIRST OF ALL THE SUBSTANTIAL NA TURE OF TRANSACTIONS HAS BEEN LAID BARE BY THE ASSESSEE BEFORE THE DEPARTMENT RIG HT FROM THE WORD GO AS DELIBERATED UPON IN THE PRECEDING PARAGRAPHS. THE HOLDING OF SHARES WAS BY WAY OF INVESTMENT. THE ACTIVITY WAS IN ACCORDANCE WITH THE MAIN OBJECTIVE OF THE ASSESSEE COMPANY. IT WAS DULY AUTHORIZED B Y THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY. T HE SHARES WERE PURCHASED OUT OF THE ASSESSEES OWN FUNDS AND NOT BORROWED FUNDS. THE DECISION OF ITA NOS. 3494&3430(DEL)2010 17 INVESTMENT OF THE ASSESSEES SHAREHOLDERS FUNDS IN SHARES/UNITS AND MUTUAL FUNDS WAS TAKEN BY THE MANAGEMENT OF THE ASSESSEE C OMPANY FROM TIME TO TIME WITH THE OBJECTIVE OF CAPITAL APPRECIATION IN THE LONG TERM AND IN CASE THE TARGET PRICE WAS ACHIEVED IN THE SHORT RUN THE SHARES WERE TO BE SOLD IN THE MARKET. IT WAS DEPENDING ON THE FUNDS AVAILABL E THAT THE MANAGEMENT OF THE ASSESSEE COMPANY DECIDED WHICH SHARES WERE TO B E ACQUIRED. THE INVESTMENT WAS SHOWN AS SUCH IN THE BALANCE SHEET O F THE ASSESSEE COMPANY UNDER SCHEDULE III OF THE AUDITED ACCOUNTS. THE A O HAD ALSO MISCONSTRUED THE VOLUME OF SHARE TRANSACTIONS. UNDISPUTEDLY TH E ASSESSEE DEALT IN ONLY NINE SCRIPTS DURING THE ENTIRE YEAR. THIS INCLUDE D 17 TRANSACTIONS OF SHARE PURCHASES AND 22 TRANSACTIONS OF SHARE SALES AGGRE GATING TO 40 TRANSACTIONS IN THE WHOLE YEAR. THIS MEANT THAT THERE WAS ONLY ONE TRANSACTION IN TEN DAYS WHICH BY NO STRETCH OF IMAGINATION CAN BE S AID TO BE A HIGH FREQUENCY OF TRANSACTIONS. THEREFORE FIDELITY NORTH STAR FUND & OTHERS IN RE (SUPRA) ALSO DOES NOT ACT IN ANY MANNER DETRIMENTA L TO THE CASE OF THE ASSESSEE. 27. FURTHER THE DEPARTMENT HAS ALSO PLACED RELIANC E ON CIT/WT V. P. MANONMANI(SUPRA). THEREIN THE HONBLE MADRAS HI GH COURT HELD THAT WHILE ASCERTAINING THE TRUE SCOPE OF A PROVISION IN A STATUTE ATTENTION MUST NECESSARILY BE PAID NOT ONLY TO THE TEXT VIZ. TH E WORDS EMPLOYED IN THE ITA NOS. 3494&3430(DEL)2010 18 RELEVANT PROVISIONS BUT ALSO TO THE CONTEXT. REFE RRING TO THIS DECISION THE AO HAS OBSERVED THAT THE ASSESSEE COMPANY HAS WRONG LY INTERPRETED THE MEANING OF INVESTMENT AND CAPITAL ASSETS AND USED IT FOR ITS BENEFIT TO DEFLATE ITS TAX LIABILITY; AND THAT IT WAS NOT ACTU ALLY AN INVESTMENT BUT A WRONG INTERPRETATION ADOPTED BY THE ASSESSEE. THIS HOWEVER AS DELIBERATED UPON HEREINABOVE HAS NOT BEEN FOUND TO BE THE CASE . TO REITERATE THE ASSESSEE HAS ALL THROUGH MAINTAINED THAT THE SHARES HELD BY IT WERE HELD BY WAY OF INVESTMENT. THEY WERE SHOWN AS SUCH IN ITS BALANCE SHEET. THE PROFIT THEREON WAS OFFERED UNDER THE HEAD CAPITAL GAIN. THE AO HAS FAILED TO MAKE OUT THE CASE AS TO HOW THE ASSESSEE HAS RES ORTED TO A WRONG INTERPRETATION AND THAT IT WAS NOT ACTUALLY AN INVE STMENT. THEREFORE CIT/WT V. P. MANONMANI(SUPRA) ALSO DOES NOT DAMA GE THE CASE OF THE ASSESSEE. 28. IN CIT & ANOTHER V. MALABAR INDUSTRIAL CO. LTD . 320 ITR 486(KARN) WHICH IS THE NEXT DECISION TO BE RELIED ON BY THE DEPARTMENT THE ASSESSEE WAS AN INVESTMENT AND FINANCE COMPANY. ITS MAIN OBJECT WAS TO BUY HOLD AND SELL SHARES. WITH THE INTENTION TO P ROMOTE A COMPANY A THE ASSESSEE PURCHASED SHARES IN THAT COMPANY FOR A SUM OF ` 45 52 870/-. THE SHARES WERE HELD FOR A PERIOD OF 8 YEARS WHEREAFTE R THEY WERE SOLD FOR ` 15 96 000/- WHEREBY IT WAS PUT TO A NET LOSS OF ` 29 56 870/-. THE AO ITA NOS. 3494&3430(DEL)2010 19 DISALLOWED THE SHARE LOSS IN RESPECT OF A. THE CI T(A) AND THE TRIBUNAL HELD THAT HOLDING OF SHARES BY THE ASSESSEE IN PURSUANCE OF ITS OBJECT SHOULD BE TREATED AS FOR THE PURPOSE OF BUSINESS AND ACCORDIN GLY HELD THAT ANY LOSS ON SALE OF SUCH SHARES SHOULD BE TREATED AS BUSINESS L OSS AND NOT AS CAPITAL LOSS. THE HONBLE KARNATAKA HIGH COURT HELD THAT THE ASSE SSEE HAD PURCHASED SHARES BY INVESTING SUM OF ` 45 52 870/- BUT WHILE SELLING SUCH SHARES THEY COULD FETCH A PRICE OF ONLY ` 15 96 000/- WHEREBY THEY WERE PUT TO A NET LOSS OF ` 29 56 870/-; AND THAT THEREFORE THE LOSS INCURRED BY THE ASSESSEE ON SALE OF SHARES HELD BY IT SHOULD NOT BE TREATED AS BUSIN ESS LOSS OF THE ASSESSEE. 29. THIS DECISION IS DISTINGUISHABLE ON FACTS. TH E ASSESSEE CLAIMED LOSS AS A BUSINESS LOSS. THE AO TREATED IT AS A CAPITA L LOSS. AS PER THE ASSESSEE THE SHARES WERE SHOWN AS THE INVESTMENT IN THE BALA NCE SHEET. HOWEVER THE BUSINESS OF THE ASSESSEE ITSELF WAS INVESTMENT IN S HARES AND PROMOTION OF THE INDUSTRIAL ENTERPRISE. THE LOSS WAS ALLOWED AS A BUSINESS LOSS BY THE TRIBUNAL. THESE EVIDENTLY ARE NOT THE FACTS HER E. CIT & ANOTHER V. MALABAR INDUSTRIAL CO. LTD.(SUPRA). AS SUCH IS NO T APPLICABLE. 30. IN CIT V. ROHIT ANAND 327 ITR 445(DEL) THE H ONBLE DELHI HIGH COURT APPROVED THE DECISION OF THE TRIBUNAL REPORT ED AS ITO V. ROHIT ANAND 34 SOT 42(DEL) WHERE THE TRIBUNAL HAD HELD THAT THE ASSESSEE DID NOT INTEND TO TREAT THE SHARES AS BUSINESS ASSET AN D INVESTED IN SHARES OUT OF ITA NOS. 3494&3430(DEL)2010 20 ITS OWN FUND TOOK DELIVERY AFTER PAYMENT AND HELD THE SHARES FOR A PERIOD THE TRANSACTION GAVE RISE TO A CAPITAL GAIN AND NOT BUSINESS INCOME. THE FACTS HEREIN ARE AKIN TO THOSE IN ROHIT ANAND(SUP RA). 31. IN CIT VS. GOPAL PUROHIT 228 CTR(BOM)582 TH E HONBLE BOMBAY HIGH COURT UPHELD THE TRIBUNALS FINDINGS THAT THE ASSESSEE WAS ENGAGED IN TWO DIFFERENT TYPES OF TRANSACTIONS I.E. INVESTME NT IN SHARES AND DEALING IN SHARES FOR THE PURPOSE OF BUSINESS AND THAT THE DEL IVERY BASED TRANSACTIONS WERE TO BE TREATED AS INVESTMENT TRANSACTIONS AND T HE PROFIT THEREFROM WAS TO BE TREATED AS SHORT TERM OR LONG TERM CAPITAL GAIN DEPENDING ON THE PERIOD OF HOLDING THE SHARES AND THAT THERE OUGHT TO BE UNIFO RMITY IN TREATMENT AND CONSISTENCY IN VARIOUS YEARS WHEN THE FACTS AND CI RCUMSTANCES WERE IDENTICAL. IN THE PRESENT CASE ON THE SAME SET O F FACTS THE AO ACCEPTED THE GAINS ON MUTUAL FUNDS AS INCOME FROM CAPITAL GAINS WHEREAS APROPOS THE GAINS ON SHARES WERE TREATED AS BUSINESS INCOME. THIS DESPITE THE FACT THAT FOR ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS ACCEP TED THE TRANSFER OF SHARES AND TREATED AS CAPITAL GAIN. CIT VS. GOPAL PUR OHIT(SUPRA) IT IS SEEN IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CAS E. 32. THE DEPARTMENT HAS SOUGHT TO PLACE RELIANCE ON CBDT CIRCULAR NO. 4/2007 DATED 15.6.2007 WHICH GIVES THE FACTORS WH ICH CAN DECIDE WHETHER TRADING OF SHARES CAN BE TREATED AS CAPITAL GAIN OR BUSINESS INCOME. THIS ITA NOS. 3494&3430(DEL)2010 21 CIRCULAR HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER . IN THE FACTS OF THE CASE AS DISCUSSED HEREINABOVE IT IS SEEN THERE IS NO C ONTRAVENTION OF THE SAID CBDT CIRCULAR. 33. THE DEPARTMENT ALSO SEEKS TO PLACE RELIANCE ON CBDT INSTRUCTION NO. 1827 DATED 31.8.89 WHEREBY IT WAS BROUGHT TO THE NOTICE OF THE AO THAT THERE IS A DISTINCTION BETWEEN THE SHARES HELD AS I NVESTMENT AND THOSE HELD AS STOCK-IN-TRADE. THIS CIRCULAR HAS ALSO BEEN DISCU SSED BY THE AO. HOWEVER AGAIN IN THE FACTS OF THE ASSESSEES CASE NO CO NTRAVENTION OF SUCH DISTINCTION BY THE ASSESSEE STANDS BROUGHT OUT. 34. LIKEWISE RELIANCE BY THE DEPARTMENT ON CBDT GU IDE-LINES ISSUED VIDE OFFICE MEMORANDUM DATED 13.12.2005 WHICH HAVE ALSO BEEN CONSIDERED BY THE AO IS MISPLACED TOO. THE GUIDE -LINES ARE ON TESTS FOR DISTINCTION BETWEEN SHARES HELD AS STOCK-IN-TRADE A ND SHARES HELD AS INVESTMENT. THE ASSESSEES CASE NOWHERE FALLS WIT HIN THE TREATMENT OF SHARES AS STOCK-IN-TRADE AS DELIBERATED UPON HEREI NABOVE. 35. FOR THE ABOVE DISCUSSION WE DO NOT FIND ANY ER ROR IN THE ORDERS OF THE LD. CIT(A). IT HAS BEEN CORRECTLY DIRECTED TO TREA T THE INCOME AS SHORT TERM CAPITAL GAIN INSTEAD OF INCOME FROM BUSINESS. THA T BEING SO THE GROUNDS RAISED BY THE DEPARTMENT CARRY NO FORCE AND ARE REJ ECTED. ITA NOS. 3494&3430(DEL)2010 22 36. IT MAY BE REITERATED HERE THAT THE FACTS IN BOT H THE APPEALS ARE EXACTLY SIMILAR. THEREFORE OUR ABOVE OBSERVATIONS SHALL APPLY EQUALLY MUTATIS MUTANDIS TO BOTH THE APPEALS. 37. IN THE RESULT BOTH THE APPEALS FILED BY THE DE PARTMENT STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2011. SD/- SD/- (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31.03.2011. *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR