Smt. Rekhaben Hasmukhlal Jariwala, Surat v. The ACIT.,Circle-3,, Surat

ITA 3487/AHD/2008 | 2000-2001
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 348720514 RSA 2008
Assessee PAN ACRPJ9028N
Bench Ahmedabad
Appeal Number ITA 3487/AHD/2008
Duration Of Justice 2 year(s) 2 month(s) 30 day(s)
Appellant Smt. Rekhaben Hasmukhlal Jariwala, Surat
Respondent The ACIT.,Circle-3,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 21-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2000-2001
Appeal Filed On 22-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.3487-3491/AHD/2008 ASSESSMENT YEARS :2000-01 TO 2004-05 DATE OF HEARING:6.1.11 DR AFTED:12.1.11 SMT. REKHABEN HASMUKHLAL JARIWALA 89 NEHRUNAGAR SOCIETY ICHCHHANATH ROAD SURAT PAN NO.ACRPJ9028N V/S . ACIT CIRCLE-3 SURAT (APPELLANT) .. (RESPONDENT) ITA NO.3492-3493/AHD/2008 & ITA NO.3660-3661/AHD/2008 ASSESSMENT YEARS: 2005-06 & 2006-07 SMT. REKHABEN HASMUKHLAL JARIWALA 89 NEHRUNAGAR SOCIETY ICHCHHANATH ROAD SURAT PAN NO.ACRPJ9028N ACIT CIRCLE-3 SURAT V/S . V/S . ACIT CIRCLE-3 SURAT SMT. REKHAABEN H JARIWALA 89 ANKUR NEHRU NAGAR SOCIETY ICHHANATH ROAD SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI D.K. PARIKH AR REVENUE BY:- SHRI RABINDRA KUMAR CIT-DR O R D E R PER BENCH:- ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 2 OUT OF THESE NINE APPEALS SEVEN BY ASSESSEE AND T WO BY REVENUE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-II SURAT IN APPEAL NOS.CAS/II/426-432/2007-08 BY DIFFERENT DATE I.E.13-08-2008 14-08- 2008 & 11-08-2008. THE ASSESSMENTS WERE FRAMED BY A CIT CIRCLE-3 SURAT U/S143(3) R.W.S 153AOF THE INCOME-TAX ACT 1961 (HE REINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS OF EVEN DATE 27-12-2007 FOR ASSESSMENT YEARS 2000-01 TO 2006-07 RESPECTIVELY. 2. THE FIRST COMMON LEGAL ISSUE RAISED BY ASSESSEE IN HER APPEALS IS REGARDING JURISDICTION IS THAT THE ASSESSING OFFIC ER HAS WRONGLY INVOKING THE PROVISION OF SECTION 153A(A) OF THE ACT AND FRAMED ASSESSMENTS AS THERE WAS NO SEARCH WARRANT IN THE CASE OF ASSESSEE. FOR THIS ASSESSEE HAS RAISED THE COMMON GROUND IN THESE APPEALS AND FOR THE SAKE OF CLARITY WE ARE REPRODUCING THE GROUND AS RAISED IN ITA NO.3487/AHD/2008 FOR ASSESSMENT YEAR 2000-01:- 1. THAT THE CIT(A) ERRED IN LAW & FACTS IN CONFIRM ING THE INVOCATION OF PROVISIONS OF SECTION 153A(A) OF THE ACT. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SHRI D.K. PAREKH STATED THAT ONCE THERE IS NO SEARCH WARRANT ISSUE U/S 132 OF TH E ACT NO ASSESSMENT CAN BE FRAMED BY INVOKING THE PROVISION OF SECTION 153A (A) OF THE ACT BUT HE STATED THAT THE ISSUE ON MERITS THE ASSESSEE HAS A CASE I N ALL THESE ASSESSMENT YEARS AND ACCORDINGLY HE IS NOT INTERESTED IN PROS ECUTING THIS LEGAL ISSUE. AS THE ASSESSEES COUNSEL HAS NOT PRESSED THIS LEGAL I SSUE THE SAME IS DISMISSED IN ALL THESE YEARS. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IN ITA NO.3487/AHD/2008 IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISA LLOWANCE OF EXPENSE OF RS.23 170/-. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING O FFICER HAS OBSERVED THAT ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 3 ASSESSEE IS RUNNING A PROPRIETARY CONCERN IN THE NA ME AND STYLE M/S. FAIRDEAL TEXTILE BUT NO INCOME HAS BEEN SHOWN IN THE SAME A CCORDINGLY AO DISALLOWED THE EXPENSE OF RS.23 170/-. AGGRIEVED A SSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN PARA-10 OF HIS APPELLATE ORDER:- 10. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS . I FIND THAT THE AR HAS NOT FURNISHED ANY DETAIL OR ANY EVIDENCE TO SHOW TH AT SUCH EXPENSES NECESSARILY HAD TO BE INCURRED DURING THE YEAR EVE N THOUGH THERE WAS NO BUSINESS ACTIVITY. IN THE ABSENCE OF ANY SUCH DE TAIL OR EVIDENCE I HAVE NO OTHER OPTION BUT TO CONFIRM THE ADDITION OF RS.23 170/-. WE FIND THAT THERE IS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH THAT BUSINESS EXPENSES ARE NOT ALLOWABLE AND EVEN ASSESS EE HAS CLAIMED THAT BUSINESS WAS CARRIED OUT BY HER IN THE NAME & STYLE OF FAIRDEAL TEXTILE AND THESE EXPENSES ARE ON ACCOUNT OF CERTAIN FIXED AND OVERHEAD EXPENSES. WE ARE OF THE CONSIDERED VIEW THAT THESE EXPENSES ARE ALLOWABLE AS THE SAME ARE INCURRED DURING THE COURSE OF BUSINESS INCOME. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IN ITA NO.3487/AHD/2008 IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISAL LOWANCE OF EXPENSES. 7. THE ASSESSING OFFICER NOTED THE FOLLOWING LIABIL ITIES:- (I) RUSHABH INVESTMENT : RS. 5 980 (II) ZENITH PROCESSING MILLS : RS.10 872 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPL AIN WHY THESE LIABILITIES SHOULD NOT BE DISALLOWED U/S 41(1) OF THE ACT. THE ASSESSEE EXPLAINED THAT THE BALANCE OF RS.10 872/- IN THE NAME OF ZENITH PROCES SING MILLS WAS STILL A BALANCE OUTSTANDING AND THE FURTHER A SUM OF RS.5 9 80/- ON ACCOUNT OF M/S. RUSHABH INVESTMENT A BROKER WAS ALSO A BALANCE UNDE R LITIGATION. THE ASSESSEE HAS NOT CLAIMED OF THIS BALANCE AND ACCORD INGLY THIS CANNOT BE ADDED U/S 41(1) OF THE ACT. THE CIT(A) CONFIRMED TH E ADDITION MADE BY ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 4 ASSESSING OFFICER BY GIVING FOLLOWING FINDINGS IN PARA-14 OF HIS APPELLATE ORDER:- 14 I HAVE CAREFULLY CONCEDED BOTH THE POSITION. FR OM THE NATURE OF THE AMOUNTS ONE BEING PAYABLE TO A BROKER AND THE OTHE R BEING PAYABLE TO A FAMILY CONCERN THE CREDITS CLEARLY APPEAR TO BE TRADE CREDITS WHICH MEANS THAT THE ASSESSEE WOULD DEFINITELY HAVE HAD C LAIMED DEDUCTION OF SUCH AMOUNTS IN THE EARLIER YEARS. THESE AMOUNTS WERE NOT LOANS OR DEPOSITS. THE AR HAS CLAIMED TO HAVE ENCLOSED THE A CCOUNTS OF THESE TWO PARTIES ALONG WITH THE WRITTEN SUBMISSIONS. I H AVE GONE THROUGH THE DETAILS FURNISHED BY THE AR AND I DO NOT FIND ANY C OPY OF ANY ACCOUNT OF THE SAID CREDITORS. THEREFORE THE AUTHORIZED REPRES ENTATIVE'S CONTENTIONS ARE REJECTED AND THE ACTION OF THE AO I S SUSTAINED WHICH MEANS THAT THE ADDITION OF RS.16 852/- IS CONFIRMED . WE FIND THAT THESE LIABILITIES ARE NOT WRITTEN OFF IN THE BOOKS OF ACCOUNT AND SAME CANNOT BE DISALLOWED BY INVOKING THE PROVISION S OF SECTION 41(1) OF THE ACT. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. NOW COMING TO ASSESSEES APPEAL IN ITA NO.3488/AHD/ 2008. 8. THE SECOND ISSUE IN THIS APPEAL OF ASSESSEE IS A GAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES. 9. AT THE OUTSET IT IS TO BE STATED THAT THIS ISSU E WE HAVE ALREADY DECIDED IN ITA NO.3487/AHD/2008 IN PARA-5 OF THIS ORDER AND THE FACTS BEING EXACTLY IDENTICAL IN THIS YEAR ALSO WE ALLOW THE CLAIM OF ASSESSEE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 10. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS.16 000/-. 11. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS DISALLO WED A SUM OF RS.16 000/- BY INVOKING THE PROVISIONS OF SECTION 14A AND STATI NG THAT THE EXPENDITURE INCURRED WAS ON ACCOUNT OF ACCOUNTS FEES POSTAGE & TELEGRAM CHARGES AND ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 5 DEMAT CHARGES WHICH ARE RELATABLE TO EXEMPT INCOME . THE ASSESSEE CONTENDED THAT THESE EXPENSES ARE NOT AT ALL RELATA BLE TO THE EXEMPT INCOME AND THESE ARE ARISING OUT OF BUSINESS OF ASSESSEE. HENCE NO DISALLOWANCE SHOULD BE MADE. WE FIND THAT THE PLEA OF THE ASSESS EE IS REASONABLE AND THERE IS NO NEXUS THAT ASSESSEE HAS EARNED EXEMPT I NCOME. WE FURTHER FIND THAT THE PLEA OF ASSESSEE IS QUITE REASONABLE AND W E ALLOW THE CLAIM OF ASSESSEE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWE D. 12. THE NEXT COMMON ISSUE IN THESE APPEALS OF ASSES SEE IN ITA NO.3489- 3493/AHD/2008 AND THAT OF REVENUES APPEALS IN ITA NO.3660- 3661/AHD/2008 IS AS REGARDS TO ASSESSEES ASSESSMENTS OF SHORT T ERM CAPITAL GAIN (STCG FOR SHORT) OR LONG TERM CAPITAL GAIN (LTCG FOR SHORT) AS DECLARED BY ASSESSEE AND ASSESSED BY ASSESSING OFFI CER AS BUSINESS INCOME AND THEREBY DISALLOWANCE OF THE EXPENSES. W E WILL TAKE THE FACTS FROM ITA NO.3489/AHD/2008 AND DECIDE THE COMMON ISSUE IN ALL THE YEARS. 13. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE ASKING THE ASSESSEE TO F URNISH THE RELEVANT EVIDENCES AND ALSO EXPLAIN AS TO WHY THE STCG SHOUL D NOT BE TREATED AS INCOME FROM BUSINESS. THE ASSESSEE ARGUED THAT SHE HAD MADE THE INVESTMENTS IN SHARES AND UNITS FROM OUT OF HER OWN CAPITAL WHICH SHE HAD INHERITED FROM HER FATHER AND DISPOSED OF SUCH SHAR ES AND UNITS AS AND WHEN THEY APPRECIATED AND THUS EARNED CAPITAL GAIN. IT W AS SUBMITTED THAT WHENEVER SHE PURCHASED AND SOLD SHARES ON A DAILY BASIS WITH THE MOTIVE TO EARN PROFITS SUCH PROFITS HAD BEEN SHOWN IT AS BUSINESS INCOME A ND MOST OF THE TRANSACTIONS HAD HOLDING PERIOD OF 25 TO 376 DAYS. THE ASSESSEE WAS A HIGH NET WORTH INDIVIDUAL AND THEREFORE IT IS HER FREEDO M TO INVEST HER MONEY IN WHATEVER INSTRUMENT SHE WANTED TO. NO ONE WAS IN A POSITION TO DICTATE HER OR ANY LAW OF LAND TO STOP HER FROM DOING SO. WHATEVER INVESTMENTS SHE HAD MADE WAS FOR THE PURPOSE OF EARNING APPRECIATION IN LINE WITH THE RISK INVOLVED. SUCH A PRACTICE COULD NOT BE TREATED AS A BUSINESS ACTIVITY. WHENEVER THE RISK ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 6 GETS APPRECIATED AND THE RETURN OR THE RISK GOES BE YOND THE TOLERANCE LEVEL ANY PRUDENT INVEST OR WOULD ALWAYS ENCASH THE INVES TMENT ON ASSESSEE AND THE RISK AT A GIVEN POINT IN TIME OR WOULD INVEST THE SAME IN OTHER OPPORTUNITIES. HOWEVER THE ASSESSING OFFICER REJEC TED ASSESSEES SUBMISSION AS HER FIRST GROUND WAS THE MOTIVE BEHIND THE INVES TMENT/PURCHASE. DURING THE YEAR THE ASSESSEE HAD EARNED DIVIDEND OF RS.1 74 1 20/- AND THIS CLEARLY SHOWED THAT THE MAIN PURPOSE OF THE INVESTMENTS WAS TO EARN PROFITS FROM TRANSACTING IN THE SHARES AND RATIO OF DIVIDEND TO PROFIT WAS 1:30. THE MOTIVE THEREFORE WAS CLEARLY TO EARN PROFITS FROM SUCH TRA NSACTIONS IN A REGULAR AND SYSTEMATIC MANNER. THE SECOND GROUND WAS THE FREQUE NCY OF TRANSACTIONS THE ASSESSEE HAD ENTERED INTO MORE THAN 281 TRANSACTION S DURING THE YEAR AND IN THIS RESPECT OF 65 SCRIPTS THE ASSESSEE HAD PURCHAS ED AND SOLD EACH SCRIPT MORE THAN THREE TIMES. THEREFORE ACCORDING TO ASSES SING OFFICER SUCH TRANSACTIONS COULD NOT BE TREATED AS AN ACTIVITY OF INVESTMENTS. ACCORDINGLY AO TREATED THE ASSESSEES STCG OF BUSINESS INCOME A ND NOT ACCEPTED THE PLEA OF ASSESSEE OF INVESTMENT. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) CONFIRMED THE ADDITION BY GIVING FOLLOWING FINDINGS IN PARA- 10.5 TO 10.7 OF HIS APPELLATE ORDER:- 10.5 I FIND THAT THE AR HAS MADE VERY BASIC SUBMIS SIONS WHICH ARE ESSENTIALLY REPETITIONS OF WHAT HAD BEEN SATED BEFO RE THE AO. HE HAS NOT BEEN ABLE TO REBUT THE DETAILED FINDINGS AND SP ECIFIC OBSERVATIONS OF THE AO ON VARIOUS POINTS. IT HAS THUS BEEN POINTED OUT BY THE AO THAT THE ASSESSEE HAD DEALT IN 65 SCRIPTS AND UNITS AND HAD ENGAGED IN MORE THAN 281 TRANSACTIONS DURING THE YEAR RESULTI NG IN EACH SCRIP BEING BOUGHT AND SOLD MORE THAN FIVE TIMES. THIS IS SUE HAS NOT BEEN ADDRESSED BY THE AR. AS ALREADY POINTED OUT ABOVE IN THE WORDS OF THE ASSESSEE AND THE AR THEMSELVES SUCH TRANSACTIONS W OULD CLEARLY BE IN THE NATURE OF BUSINESS. DEALING IN THE SAME SHARE O R PURCHASING AND SELLING THE SAME SHARE MORE THAN ONCE ON THE SAME D AY MEANS THAT THE OWNER OF THE SHARE HAS BEEN ATTEMPTING TO RIDE THE VOLATILITY IN THE MARKET SINCE MULTIPLE TRANSACTIONS WOULD MEAN BUY ING THE SHARES WHEN THE PRICE IS LOW AND SELLING WHEN THE PRICE IS HIGH. THIS COULD BE DONE ONLY WHEN THE MARKET GOES UP AND DOWN SEVERAL TIMES ON THE SAME DAY. WHAT IS FREQUENTLY STATED BY INVESTMENT G URUS IS THAT WHEN THE MARKET IS VOLATILE ANY RETAIL OR SMALL TIME IN VESTOR SHOULD STAY AWAY FROM THE MARKET AND HOLD ON TO THE INVESTMENTS UNTI L THE MARKET STABILIZES. A PERSON WHO TRANSACTS IN TIMES OF MARK ET VOLATILITY IS A HIGH- ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 7 RISK TAKER WHO SEEKS TO REAP PROFITS FROM SUCH TURB ULENCE. A NORMAL HOUSEHOLD INVESTOR CANNOT BE EXPECTED TO RIDE SUCH A VOLATILE MARKET. THUS THE VOLUME OF THE TRANSACTIONS THE FREQUENCY AS ALSO THE MAGNITUDE OF THE TRANSACTIONS CLEARLY INDICATE AND POINT TO THE FACT THAT THE ASSESSEE WAS NOT A SMALL TIME HOUSEHOLD INVESTO R BUT A PERSON WHO WAS INVOLVED IN THE BIG TIME BUSINESS OF SHARE TRADING. 10.6 IT WAS ALSO CLEARLY BROUGHT OUT BY THE AO THAT THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES INCLUDING A SINGLE LOAN FROM SMT. S.A. JARIWALA OF RS.78 48 067 FOR THE PURPOSE OF TRADIN G IN THE SHARES AND UNITS. ONCE AGAIN THE AR HAS NOT COMMENTED OR MADE ANY OBSERVATION ON THIS ISSUE. THIS IMPORTANT FINDING OF THE AO CLE ARLY CONTRADICTS THE ASSESSEES AND THE AR'S CLAIM THAT SHE HAD INVESTED HER OWN FUNDS WHICH SHE HAD INHERITED FROM HER FATHER. THE FACT T HAT THE ASSESSEE HAD TAKEN SUCH SUBSTANTIAL LOANS TO BUY THE SHARES CLE ARLY SHOWS THAT IT WAS ESSENTIALLY A BUSINESS ACTIVITY THAT SHE WAS ENGAGE D IN. NO PRUDENT PERSON WOULD TAKE LOANS FROM THE MARKET OR EVEN FRO M KNOWN PERSONS AND RELATIVES WHERE INTEREST RATES ARE 15% AND UPWA RDS TO EARN SIMPLE APPRECIATION ON INVESTMENTS WHICH IN PERCENTAGE TER MS WOULD ALWAYS BE BELOW THE COST OF SUCH BORROWINGS UNLESS OF COU RSE SUCH BORROWINGS WERE MADE FOR THE PURPOSE OF EARNING PROFITS FROM A VOLATILE MARKET. THIS FACT OF THE BORROWINGS BY THE ASSESSEE ALONG WITH THE OTHER FACTS SUCH AS THE ELABORATE ESTABLISHMENT MAINTAINED BY T HE ASSESSEE THE ENGAGEMENT OF A RENEWED BROKER AND THE MAINTENANCE FOR THREE DIFFERENT BANK ACCOUNTS WITH THREE DIFFERENT BANKS AND THE OTHER FACTS PERTAINING TO THE LAST NUMBER OF TRANSACTIONS INVOL VING LARGE NUMBER OF SCRIPTS WITH AVERAGE HOLDING PERIOD OF LESS THAN 45 DAYS AS ALSO THE TOTAL TURNOVER OF THE TRANSACTIONS CLEARLY LEAD TO THE IRREFUTABLE CONCLUSION THAT THE STCG THAT THE ASSESSEE HAD CLAI MED OF RS.1 74 120 WAS ESSENTIALLY THE ASSESSEES INCOME F ROM THE BUSINESS OF SHARE DEALINGS/TRANSACTIONS. THE ASSESSING OFFIC ER'S ACTION IN TREATING THE SUM OF RS.1 74 120 AS INCOME FROM BUSINESS IS T HEREFORE SUSTAINED. THE EXPENSES CLAIMED WILL NOT BE ALLOWED SINCE AS MENTIONED BY THE A.O THE SAME HAD BEEN CLAIMED AND ALLOWED AGAINST SPECULATION INCOME. 10 7 IN THE WRITTEN SUBMISSIONS THE ASSESSEE HAS A RGUED THAT THE LONG TERM CAPITAL LOSS OF RS.29 99 119 CARRIED FORWARD B Y THE AO WAS ERRONEOUS. FROM THE APPEAL MEMO HOWEVER IT IS SEEN THAT THIS GROUND OF APPEAL WAS NOT PREFERRED NOR WAS ANY ADDITIONAL GROUND PREFERRED IN COURSE OF THE APPELLATE PROCEEDINGS. THEREFORE THE AUTHORIZED REPRESENTATIVE'S ARGUMENT REGARDING THE CARRIED FOR WARD LTCL CANNOT BE ENTERTAINED AND IS THEREFORE REJECTED. ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 8 14. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SHR I D.K. PARIKH STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSE E AND AGAINST THE REVENUE FOR THE DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. SUSHILABEN H JARIWALA V. ACIT SURAT IN ITA NO.3494/AHD/2008 FOR ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 08-10-2010 AS UNDER:- 5. WE FIND FROM RECORD THAT THE ASSESSEE ALSO SUB MITTED PAPER BOOK FROM WHERE AT PAGE 15 IT IS NOTICED THAT ASSESSEE H AD MAINTAINED BOTH THE PORTFOLIOS AND WHEN THESE SHARES WERE HELD FOR A PERIOD OF 4-5 YEARS OR EVEN 10-12 YEARS IT WAS ALWAYS TREATED AS INVES TMENTS ON LTCG BASIS AND IN RESPECT OF STCG THE INVESTMENT WAS REA LIZED WHEN THERE WAS FAVOURABLE MARKET QUOTATION. WE FIND THAT IN RE SPECT OF LTCG WHEN THE HOLDING PERIOD HAS BEEN MORE THAN 365 TO 376 DA YS THAT THE ENTIRE GAIN HAS BEEN TREATED AND CONFIRMED AS BUSINESS INC OME BY THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE ASSESSEE CONSISTENTLY HAD TREATED INVESTMENT PORTFOLIO AS SE PARATE AND DISTINCT AND EVEN IN EXACTLY IDENTICAL SITUATION FOR ASSESSM ENT YEAR 2004-05 IN THE SCRUTINY ASSESSMENT U/S.143(3) DATED 06-12-2006 THE INCOME FROM SHARE TRANSACTIONS HAS BEEN ACCEPTED AS CAPITAL GAI N. THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05 IS PLACED AT PAGE 22 AND 23 OF ASSESSEES PAPER BOOK WHEREIN AT PARA-4 OF ASSESSM ENT ORDER AFTER VERIFICATION OF DETAILS OF PURCHASE AND SALE OF SHA RES AND DETAILS OF TRANSACTION WITH REGARD TO CAPITAL GAIN WAS ACCEPTE D AS PER RETURN. THE DETAILED STATEMENT OF INCOME FOR ASSESSMENT YEAR 20 04-05 IS AT PAGE 76-90 OF ASSESSEES PAPER BOOK WHEREIN ALSO EVEN W ITH THE FREQUENCY OF TRANSACTIONS THE TRANSACTIONS WERE ON INVESTMEN T ACCOUNT STCG AND LTCG WERE ACCEPTED. WE ARE OF THE VIEW THAT EXA CTLY ON THE SAME FACTS THERE WAS NO JUSTIFICATION FOR TAKING DIFFER ENT VIEW TO TREAT THAT CAPITAL GAIN AS BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER CIT(A) FAILED TO APPRECIATE THE VARIOUS CA SE LAWS ON CONSISTENCY WHICH WEE BROUGHT TO HIS NOTICE PARTI CULARLY THE DECISION OF THE SUPREME COURT IN THE CASE OF RADHASWAMI SATSANG V. CIT 100 CTR 367 (SC) 193 ITR 321 (SC) WHICH WAS BROUGHT TO HIS NOTICE AT PAGE 14 OF ASSESSEES PAPER BOOK. HOWEVER THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD TAKEN SUBSTANTIAL LOAN TO BUY THE SHAR ES AND INTEREST AT 15% WAS BORNE BY THE ASSESSEE AS THIS OBSERVATION I S WHOLLY INCORRECT AND QUITE CONTRARY TO THE FACTS ON RECORD. WE FIND FROM PROFIT AND LOSS ACCOUNT AT PAGE 29 OF ASSESSEES PAPER BOOK THAT NO T A SINGLE RUPEE BY WAY OF INTEREST HAS EVER BEEN EXPENDED OR PAID AND PARTICULARS OF PROFIT AND LOSS ACCOUNT ARE ALREADY THERE AT PAGE 28 AND S TATEMENT OF INCOME AT PAGE 52-75 CLEARLY SHOWS THAT OUT OF THE VARIOUS EXPENSES MENTIONED AT PAGE 28 OF ASSESSEES PAPER BOOK. THE ASSESSEE H AS CLAIMED ONLY EXPENSES OF RS.35 546/- AND THAT TOO ONLY AGAINST O THER INCOME OF SPECULATION WHICH IS SEPARATELY KEPT IN THE PORTFO LIO. IN THIS REGARD DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF CIT V. GOPAL PUROHIT 228 ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 9 CTR 582 (BOM) WHICH IS PLACED AT PAGE 13-14 OF ASSE SSEES PAPER BOOK-II WHEREIN THE HONBLE HIGH COURT HAS OBSERVE D THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT THERE OUGHT TO BE UNIFO RMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE ID ENTICAL. UNDER THE ABOVE CIRCUMSTANCES THE CAPITAL GAIN OFFERED OUGHT TO HAVE BEEN ACCEPTED INSTEAD OF TREATING THE LTCG AS WELL AS ST CG AS BUSINESS INCOME. WE FIND THAT CBDT CIRCULAR HAS LAID DOWN CR ITERIA FOR ASSESSING SHARE INCOME AS LTCG AND STCG AND ALSO VARIOUS CASE LAW HAVE BEEN RELIED UPON PARTICULARLY IN THE CASE OF GOPAL PUROHIT (SUPRA) AND IN THE CASE OF NSS INVESTMENT 158 TAXMAN PAGE 38 (MAD) . WE FIND THAT IN A SERIES OF CASES THE ISSUE HAS BEEN CONSIDERED BY VARIOUS BENCHES OF TRIBUNAL OF MUMBAI AS WELL AS AHMEDABAD AND HON BLE COURTS HAVE TAKEN A VIEW THAT ONE CANNOT GO TO DECIDE MERELY ON THE BASIS OF FREQUENCY OR VOLUME OF TRANSACTIONS IN THE CURRENT SCENARIO IN WHICH THE PERSONS ARE INVESTING MORE AND MORE AS AN INVEST OR IN THE STOCK MARKET. MOST CRUCIAL IS THAT ASSESSEE HAS CONTINUOU SLY SHOWN INVESTMENT IN THE BALANCE SHEET WHICH IS MADE OUT O F HER OWN CAPITAL AND SHOWN GAIN ON SALE OF SHARES AS EITHER STCG OR LTCG EVEN FOR ASSESSMENT YEARS 2003-04 AND 2004-05 AND HENCE WITH OUT THERE BEING ANY CHANGE IN THE FACTS A CONSISTENT VIEW NEEDS TO BE ADOPTED. THIS HAS BEEN SO HELD IN THE CASE OF GOPAL PUROHIT (SUPRA) 6. WE FURTHER FIND FROM THE FACTS THAT EVEN THE INC OME EARNED BY WAY OF CAPITAL GAIN ON UNITS OF UTI HAVE BEEN TREATED AS B USINESS INCOME THOUGH CIT HAS IN PARA 6.8 OF HIS APPELLATE ORDER O BSERVED THAT IF STT HAS BEEN PAID IN RESPECT OF LTCG ON UNITS THE SAME SHOULD BE TREATED AS EXEMPT. ACCORDINGLY WE DIRECT THE ASSESSING OFF ICER TO TREAT LTCG OF RS.1 82 098/- AND RS.2 88 697/- AS MENTIONED BY ASSESSING OFFICER AT PAGE 22 AT ITEM (VII) AND (IX) EXEMPT U/S.10(38) . SIMILARLY IN RESPECT OF STCG ALSO IT IS DIRECTED THAT THE SAME SHOULD BE HELD TO BE STCG AS AGAINST BUSINESS INCOME. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO TREAT THE CAPITAL GAIN DECLARED BY ASSESSEE IN HER RETURN OF INCOME AS IT IS AND NO ADDITION IS REQUIRED TO BE MADE BY MAKIN G DISALLOWANCE. 15. ON THE OTHER HAND LD CIT-DR RELIED ON THE ASSES SMENT ORDERS AND THE ORDERS OF CIT(A) IN THESE APPEALS. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND ON THE GIVEN FAC TS AND CIRCUMSTANCES AS NARRATED IN BRIEF THAT EXACTLY ON SIMILAR FACTS TH E TRIBUNAL IN ONE GROUP OF CASES HAS TAKEN A VIEW THAT THIS IS INVESTMENT MAD E BY ASSESSEE AND IT IS NOT A BUSINESS OF THE ASSESSEE OF SALE & PURCHASE OF SH ARES. TAKING A CONSIDERED ITA NO.3487-93/AHD/2008 & 3660-61/AHD/2008 A.YS.00-01 TO 06-07 SMT. REKHABEN H JARIWALA V. ACIT CIR-3 SRT PAGE 10 VIEW AND RESPECTFULLY FOLLOWING THE TRIBUNALS DECI SION IN THE CASE OF SMT. SUSHILABEN H JARIWALA (SUPRA) WE ALLOW THE CLAIM OF ASSESSEE. ACCORDINGL Y THIS COMMON ISSUE IN THESE APPEALS OF THE ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. 18. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED AND T HAT OF REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/01/2011 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 21/01/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-II SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD