Smt Nikhat Fatima, Hyderabad v. Addl. CIT, Hyderabad

ITA 431/HYD/2009 | 2005-2006
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 43122514 RSA 2009
Bench Hyderabad
Appeal Number ITA 431/HYD/2009
Duration Of Justice 1 year(s) 10 month(s)
Appellant Smt Nikhat Fatima, Hyderabad
Respondent Addl. CIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-01-2011
Assessment Year 2005-2006
Appeal Filed On 31-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.431/H/2009 ASSESSMENT YEAR 2005-06 SMT. NIKHAT FATIMA HYDERABAD VS THE ADIT RANGE 9 HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.S. AJAY RESPONDENT BY : SMT. K. KAMAKSHI O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT(A) VIJAYAWADA DATED 30.1.2 009 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS AP PEAL IS WITH REGARD TO TREATMENT OF SURPLUS OF RS.1 01 60 240/- ARISING OUT OF SALE OF SHARES AS INCOME FROM BUSINESS AS AGAINST THE CLA IM OF THE ASSESSEE ON LONG TERM CAPITAL GAINS . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.12.2005 DECLARING TOTAL INCOME AT R S.1 08 05 820/- COMPRISING INCOME FROM BUSINESS CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE ASSESSEE HAS PURCHASED 58000 SHARES O F OFFSHORE FINVEST ON 21.3.2003 AND 6.5.2003 AT A COST OF RS.3 39 160/ AN D THEY WERE SOLD ON 24.8.2004 AND 13.9.2004 FOR A TOTAL CONSIDERATION O F RS.1 04 99 400/- . THE ASSESSEE CLAIMED THE EXCESS OF SALE PROCEEDS OV ER PURCHASE PRICE AS LONG TERM CAPITAL GAIN. BOTH THE ASSESSING OFFIC ER AND THE CIT(A) ARE OF THE OPINION THAT THE SAID INCOME OF THE ASSESSEE IS FROM BUSINESS INSTEAD ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 2 2 OF LONG TERM CAPITAL GAINS AS CLAIMED BY THE ASSESS EE. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A HOUSE WIFE AND SHE HAS INVESTED SURPLUS FUND IN THE SHARES AND SUBSEQUENTLY SOLD. THE INVE STMENTS IN SHARES ARE ONLY FOR THE PURPOSE OF INVESTMENT AND NOT FOR THE PURPOSE BUSINESS ACTIVITY. THEREFORE THE PROFIT ARISING OUT OF SAL E OF SHARES HAS TO BE CLASSIFIED AS LONG TERM CAPITAL GAIN AND NOT AS BUS INESS INCOME. FURTHER HE SUBMITTED THAT THE ASSESSEE HAS NOT BORROWED ANY MONEY FOR MAKING THIS INVESTMENT IN SHARES. IT IS HER OWN FUND USED FOR THE PURPOSE OF PURCHASE OF SHARES AND THE ASSESSEE HAS PURCHASED 5 8000 SHARES ONLY ON TWO COUNTS AND SOLD THEM AT TWO TIMES. THESE TRAN SACTIONS CANNOT BE CONSIDERED AS BUSINESS TRANSACTIONS. FURTHER HE S UBMITTED THAT THE ASSESSEE HAS FILED ALL THE DETAILS OF PURCHASE AND SALE OF SHARES IN THE PAPER BOOK WHICH CLEARLY SHOWS THAT THE ASSESSEE HA S INVESTED THE FUNDS ONLY FOR THE PURPOSE OF INVESTMENT AND NOT FOR THE PURPOSE OF BUSINESS. HE DREW OUR ATTENTION TO THE COPY OF THE BALANCE SHEET AS ON 31.3.2004 & 31.3.2005 FILED BY THE ASSESSEE WHICH FINDS PLACE I N THE PAPER BOOK AT PAGE NO.2 AND 5 RESPECTIVELY AND SUBMITTED THAT THE INVESTMENT IN SHARES HAS BEEN REFLECTED IN THE BALANCE SHEET AS EQUITY S HARES. ACCORDING TO AUTHORISED REPRESENTATIVE THE INCOME FROM SALE OF S HARES CANNOT BE CONSTRUED AS INCOME FROM BUSINESS. 5. HE PLACED RELIANCE ON THE ORDER OF THE TRIBUNA L DATED 31.12.2010 MUMBAI F BENCH IN ITA NOS.6556 AND 18 1/M/2010 FOR THE ASSESSMENT YEARS 2005-06 IN THE CASE OF SHRI VINOD K. NEVATIA AND ALSO PLACED RELIANCE ON THE ORDER OF THE TRIBUNAL DATED 10.2.2009 MUMBAI G BENCH IN ITA NO.4854/M/2008 FOR THE ASSESSMENT YEAR 2005-06 IN THE ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 3 3 CASE OF SHRI GOPAL PUROHIT VS. JCIT WHEREIN THE TRI BUNAL CONSIDERED SIMILAR ISSUES AND HELD THAT: IT IS THE INTENTION WITH WHICH THE ASSESSEE STARTS ITS BUSINESS ACTIVITY WHICH IS THE MOST IMPORTANT FACTOR WHICH HAS TO BE CONSIDERED KEEPING IN VIEW OF THE ADJOINING CIRCUMSTANCES. IF THE ASSES SEE PURCHASES SHARES FROM HIS OWN FUND WITH A VIEW TO KEEP THE FUNDS IN EQUIT Y SHARES TO EARN CONSIDERABLE RETURN ON ACCOUNT OF ENHANCEMENT IN TH E VALUE OF SHARE OVER A PERIOD THEN MERELY BECAUSE THE ASSESSEE LIQUIDATES ITS INVESTMENT WITHIN SIX MONTHS OR EIGHT MONTHS WOULD NOT LEAD TO THE CO NCLUSION THAT ASSESSEE HAD NO INTENTION TO KEEP THE FUNDS AS INVESTED IN E QUITY SHARES BUT WAS ACTUALLY INTENDED TO TRADE IN SHARES. MERE INTENTI ON TO LIQUIDATE THE INVESTMENT AT HIGHER VALUE DOES NOT IMPLY THAT THE INTENTION WAS ONLY TO TRADE IN SECURITY. HOWEVER IT CANNOT BE HELD THAT IN ALL THE CIRCUMSTANCES IF ASSESSEE HAS USED ITS OWN FUNDS FOR SHARE ACTIVI TY THEN IT WOULD ONLY LEAD TO INFERENCE OF INVESTMENT BEING THE SOLE INTENTION . IN SUCH CIRCUMSTANCES FREQUENCY OF TRANSACTIONS WILL HAVE TO BE CONSIDERE D TO ARRIVE AT PROPER CONCLUSION REGARDING THE TRUE INTENTION OF THE ASSE SSEE. HOWEVER IF THE ASSESSEE ON THE OTHER HAND BORROWS FUNDS FOR MAKIN G INVESTMENT IN SHARES THEN DEFINITELY IT IS VERY IMPORTANT INDICATOR OF I TS INTENTION TO TRADE IN SHARES. IN THE PRESENT CASE WE FIND THAT THE ASSE SSING OFFICER MERELY PROCEEDED ON THE ASSUMPTION THAT BORROWED FUNDS HAD BEEN UTILIZED FOR BUYING SHARES ON THE GROUND THAT FUNDS WERE COMMON AND COULD NOT BE SEGREGATED. BEFORE THE CIT(A) IT WAS CATEGORICALLY POINTED OUT THAT NO ART OF THE ASSESSEES INTEREST BEARING FUNDS WERE UTILIZED FOR ACQUISITION OF SHARES ON INVESTMENT ACCOUNT. THIS PLEA GAS BEEN ACCEPTED BY THE CIT(A) AND THE DEPARTMENT HAS NOT BROUGHT ON RECORD ANYTHING TO CO NTROVERT THE SAME. FURTHER IN THE CBDT CIRCULAR NO.4/2007 DATED 15.6. 2007 THE CBDT HAS EMPHASIZED THAT IT IS POSSIBLE FOR A TAX PAYER TO H AVE TWO PORTFOLIOS I.E. AN INVESTMENT PORTFOLIO COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSETS AND A TRADING PORTFOLIO COMPRISING O F STOCK IN TRADE WHICH ARE TO BE TREATED AS TRADING ASSETS. FURTHER THE ASSE SSING OFFICER HAS ACCEPTED THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN TO T HE EXTENT OF RS.2 CRORES WHICH IMPLIES THAT HE HAS ACCEPTED THE ASSESSEES C LAIM REGARDING HOLDING INVESTMENT PORTFOLIO. IN VIEW OF THE ABOVE DISCUSS ION WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY WE CONFIRM THE ORDER OF THE CIT(A). 6. HE SUBMITTED THAT IN THE CASE OF SHRI GOPAL PU ROHIT CITED (SUPRA) BOMBAY G BENCH WHEREIN THE TRIBUNAL AFTER C ONSIDERING THE CBDT CIRCULAR NO.4 OF 2010 HELD AS FOLLOWS: ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 4 4 AFTER CONSIDERING ABOVE RULINGS WE CULL OUT FOLLOW ING PRINCIPLES WHICH CAN BE APPLIED ON THE FACTS OF THE CASE TO FIND OUT WHETHER TRANSACTIONS IN QUESTION ARE IN THE NATURE OF TRADE OR ARE MEREL Y FOR INVESTMENT PURPOSES: 1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIME O F PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED AS STOCK IN TRADE OR INVESTMENT. WHETHER S HOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVEST MENT OR NON TRADING ASSET. 2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY MONEY IS BORROWED TO PURCHASE G OODS FOR THE PURPOSES OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. 3) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DISPOSA L IN THAT PARTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT OR THERE ARE SUBSTANTIAL TRANSACTIONS IN THAT ITEM IT WOULD IND ICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICAT IVE OF INTENTION OF TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY RATIO BETWEEN THE P URCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTING HIGH TRANSACTIONS AND LOW HOLDINGS INDICA TE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTM ENT). 4) WHETHER PURCHASE AND SALE IS FOR REALIZATION OF PRO FIT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE? FORMER WILL INDICATE INTENTION ON TRADE AND LATER AN INVESTMEN T. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIA L MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. 5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BA LANCE SHEET? IF THE ITEMS AT QUESTION ARE VALUED AT COST IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MARKET VALUE OR NET REALIZABLE VALUE (WHICHEVER IS LESS) IT WILL I NDICATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK IN TRADE. 6) HOW THE COMPANY IS AUTHORISED IN MEMORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION? WHETHER FOR TRADE OR FOR INVESTMENT? IF AUTHORISED ONLY FOR TRADE THEN WH ETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO C ARRY OUT INVESTMENTS IN THAT COMMODITY AND VICE VERSA. 7. FURTHER IT WAS HELD IN PARA 8.3. OF THE ABOVE ORDER AS FOLLOWS: ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 5 5 WHEN WE COMPARE THE FACTS OF THIS CASE WITH THAT C ASE WE FIND THAT FACTS OF BOTH CASE ARE ALMOST IDENTICAL. IN THE PR ESENT CASE THE ASSESSEE IS ALSO MAINTAINING SEPARATE RECORDS FOR B OTH TYPES OF TRANSACTIONS. FURTHER IN THE PRESENT CASE IT IS IMPORTANT TO NOTICE THAT THE ASSESSEE HAS ENTERED INTO TWO DIFFERENT TY PES OF TRANSACTIONS WHERE BOTH ACTIVITIES ARE ENTIRELY DIFFERENT IN NAT URE I.E. ONE ACTIVITY IS OF INVESTMENT IN NATURE ON THE BASIS OF DELIVERY AND SECOND ACTIVITY IS PURELY OF JOBBING (WITHOUT DELIVERING) WHICH PUT S ASSESSEES CASE ON A MORE STRONG FOOTING. HENCE IN OUR VIEW THE RAT IO OF THIS DECISION IS SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY WE HOLD THAT THE DELIVERY BASED TRANSACTION SHOULD BE TREAT ED AS OF THE NATURE OF INVESTMENT TRANSACTIONS AND PROFIT THEREFROM SHO ULD BE TREATED AS CAPITAL GAIN OR LONG TERM CAPITAL GAIN DEPENDING UP ON THE PERIOD OF HOLDING. 8. FURTHER HE SUBMITTED THAT AS PRUDENT PERSON THE ASSESSEE HAS SOLD THE SHARES WHEN THE PRICE ARE GOING UP WIT H AN INTENTION TO MAKE GAIN. REGARDING THE NON RECEIPT OF DIVIDEND HE SUB MITTED THAT DECLARATION OF DIVIDEND IS NOT UNDER THE CONTROL OF THE ASSESSE E IT IS THE DISCRETION VESTED WITH THE COMPANY. REGARDING SPECULATIVE TRAN SACTION CARRIED ON BY THE ASSESSEE HE SUBMITTED THAT THE SPECULATIVE TRA NSACTIONS CANNOT DETERMINE THE NATURE OF THE IMPUGNED TRANSACTION TO TREAT THE SAME AS BUSINESS TRANSACTION AND NO INFERENCE CAN BE DRAWN ON THE BASIS OF THE SPECULATIVE TRANSACTIONS. THE ASSESSEE IS NOT PROHI BITED FOR CARRYING OUT THE INVESTMENT ACTIVITIES AS WELL AS SPECULATIVE TR ANSACTIONS. FOR THIS PURPOSE HE RELIED ON THE BOARD CIRCULAR NO.4 OF 20 07 DATED 15.6.2007. FINALLY HE SUBMITTED THAT THE ASSESSEE HAS USED HE R OWN FUND TO INVEST IN SHARES AND NOT BORROWED ANY FUNDS FOR MAKING INVEST MENT IN THE SHARES AND THEREFORE PROFIT ARISING OUT OF THE SALE OF SH ARES HAS TO BE TREATED AS CAPITAL GAIN. 9. ON THE CONTRARY THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT FOR THE PURPOSE OF CLASSIFICATION OF PROFIT ON SHARES EITHER AS BUSINESS INCOME OR AS CAPITAL GAIN THE INTENTION O F THE ASSESSEE AT THE TIME OF PURCHASE OF PRICE HAS TO BE SEEN. DRAWING OUR ATTENTION TO THE ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 6 6 PURCHASE AND SALE OF SHARES THE LEARNED DEPARTMENT AL REPRESENTATIVE POINTED OUT THAT THE INTENTION OF THE ASSESSEE IS N OT TO KEEP THE SHARES AS INVESTMENT THE VERY FACT THAT THE ASSESSEE PURCHAS ED THE SHARES AND SOLD THE SAME FOR PROFIT IN ITS ENTIRETY. THE INTENTION OF THE ASSESSEE IS ONLY TO DO BUSINESS AND NOT TO KEEP IT AS INVESTMENT. FURT HER HE SUBMITTED THAT THE ASSESSEE HAS ALSO INVOLVED IN SPECULATIVE TRANS ACTION. ACCORDING TO HIM THIS WILL STRENGTHEN THE CONTENTION OF THE DEP ARTMENT THAT THE ASSESSEE HAS INVOLVED IN BUSINESS ACTIVITIES IN SHA RES. ACCORDING TO LEARNED DEPARTMENTAL REPRESENTATIVE THE SPECULATIV E TRANSACTION HAS TO BE SEEN TO HOLD THAT THE ASSESSEE HAS CARRIED ON BUSIN ESS IN SHARES. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE T HROUGH THE CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WITH REFERENCE TO THE ALL THE GROUNDS RAISED BY THE ASSESSEE IN THE GROUNDS OF AP PEAL BEFORE US. THE ASSESSEE HAS PURCHASED AND SOLD SHARES AS FOLLOWS: S.NO. DATE OF PURCHASE SCRIPT QUANTITY AMOUNT(RS.) 1 21.4.2003 OFF SHORE LTD. 40000 2 12 800 2 6.5.2003 -DO- 18000 1 26 360 TOTAL 68000 3 39 160 S.NO. DATE OF SALE SCRIPT QUANTITY AMOUNT(RS.) 1 24.8.2004 OFF SHORE LTD. 40000 72 00 000 2 13.9.2004 - DO - 18000 32 99 400 TOTAL 58000 1 04 99 400 11. THE ASSESSEE HAS NOT ONLY DEALT WITH THESE TR ANSACTIONS BUT ALSO INVOLVED IN SPECULATIVE TRANSACTIONS WHICH RES ULTED IN THE INCOME OF RS.1 18 880/-. THIS SHOWS THAT THE INTENTION OF TH E ASSESSEE IS NOT HOLDING THE SHARES AS INVESTMENT BUT ONLY TO DEAL I N SHARES AS BUSINESS ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 7 7 VENTURE. IT IS WELL SETTLED PRINCIPLES OF LAW THAT THE INTENTION OF THE ASSESSEE HAS TO BE ASCERTAINED AT THE TIME OF PURCH ASE OF SHARES TO POINT OUT WHETHER THE ASSESSEE HAS INVESTED IN SHARES OR TRADING IN SHARES. IN THIS CASE AT THE TIME OF PURCHASE OF SHARES THE A SSESSEE KNOWS VERY WELL THAT IT AS TO SELL THE SHARES. IN OTHER WORDS THE INTENTION OF THE ASSESSEE IN PURCHASE OF SHARES IS TO DO BUSINESS IN PURCHASE AND SALE OF SHARES AND NOT AS AN INVESTOR. WE HAVE CAREFULLY GONE THROUGH THE TRIBUNAL ORDERS CITED BY THE ASSESSEE. IN THOSE ORDERS IT WAS FOUN D OUT THAT THE ASSESSEE WAS HOLDING THE SHARES AS A CAPITAL ASSET. THEREFO RE THE TRIBUNAL CAME TO THE CONCLUSION THAT INCOME ARISE OUT OF THOSE SHARE S ARE TO BE CONSIDERED AS CAPITAL GAIN. IN THE PRESENT CASE THE ASSESSE E PURCHASED AND SOLD THE SHARES. IN FEW INSTANCES THE ASSESSEE HAS CARRIED ON SPECULATIVE TRANSACTIONS AND THE INTENTION OF THE ASSESSEE IS T O TRADE IN SHARES AND NOT TO KEEP THE SHARES AS INVESTMENT AND ALSO REFLECTED IN THE STATEMENT OF AFFAIRS OF THE ASSESSEE AS ON 31.3.2004 AND 31.3.20 05 THE SHARES AS EQUITY SHARES ONLY. IN OTHER WORDS IT WAS NOT SHOWN THE SHARES AS INVESTMENT. NOW COMING TO THE CONTENTION OF THE ASSESSEE IS THA T NO BORROWED FUNDS WAS INVESTED IN SHARES AND ONLY HER OWN FUNDS USED FOR THE INVESTMENT IN SHARES THEREFORE IT HAS TO BE TREATED AS INVESTMENT . IN OUR OPINION THIS ARGUMENT OF THE ASSESSEE HAS NO MERIT AT ALL. THIS ISSUE WAS DISCUSSED BY THE MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF SH RI VINOD K. NEVATIA (SUPRA). THE MUMBAI BENCH OF THIS TRIBUNAL FOUND T HAT THE INTENTION OF THE ASSESSEE HAS TO BE GATHERED FROM THE CIRCUMSTAN CES OF THE CASE. IF THE ASSESSEE PURCHASES THE SHARES FROM ITS OWN FUND WIT H A VIEW TO KEEP THE FUNDS IN EQUITY SHARES TO EARN CONSIDERABLE RETURNS ON ACCOUNT OF ENHANCEMENT IN THE VALUE OF SHARES OVER A PERIOD TH AN MERELY BECAUSE THE ASSESSEE LIQUIDATES ITS INVESTMENT WITHIN 6 TO 8 MO NTHS WOULD NOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAS NO INTENTION TO KE EP THE FUNDS AS INVESTOR IN EQUITY SHARES. IT IS ALSO OBSERVED BY THE TRIBUNAL THAT IT CANNOT BE HELD IN ALL CIRCUMSTANCES IF THE ASSESSEE USED I TS OWN FUNDS FOR SHARE ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 8 8 ACTIVITY THAT THE INVESTMENT IS ONLY FOR INVESTMENT PURPOSE. THE MUMBAI BENCH FURTHER OBSERVED THAT THE FREQUENCY OF TRANSA CTION THE INTENTION OF THE ASSESSEE HAS TO BE GATHERED FROM THE FACTS OF T HE CASE. THE MUMBAI BENCH INDICATED THAT THE BORROWED FUNDS IN MAKING I NVESTMENT IN SHARES MAY BE ONE OF THE INDICATORS TO SHOW THAT THE ASSES SEE IS TRADING IN SHARES. THEREFORE IT IS OBVIOUS THAT INVESTMENT OF ITS OWN FUNDS DOES NOT AUTOMATICALLY LEAD TO PRESUMPTION THAT THE ASSESSEE HAS INVESTED FUNDS AS INVESTOR. THE FREQUENCY OF TRANSACTION AND THE IN TENTION OF THE ASSESSEE IS MORE IMPORTANT THAN THE USAGE OF FUNDS EITHER OWN F UNDS OR BORROWED FUNDS. AS OBSERVED BY THE MUMBAI BENCH OF THIS TRI BUNAL THE BORROWED FUNDS MAY BE ONE OF THE INDICATORS TO SHOW THAT THE ASSESSEE IS TRADING IN SHARES. IN OUR OPINION IT SHOWS THAT THE INTENTIO N OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES SHOW THAT THE ASSESSEE I S DEALING IN SHARES. FURTHER HAD SHE BEEN AN INVESTOR SHE WOULD NOT HA VE SOLD THE ENTIRE SHARES AND SHE WOULD HAVE WAITED FOR RECEIPT OF DIV IDEND ON THE IMPUGNED SHARES. ALSO IT IS A FACT AS RECORDED BY THE LOWER AUTHORITIES THAT SHE HAS BEEN ACTUALLY BUYING AND SELLING THE SHARES WITHOUT TAKING THE DELIVERY AND INVOLVED SPECULATIVE BUSINESS AND SHE HAS NO IN TENTION OF HOLDING THE SHARES FOR HER SELF. BEING SO WE ARE OF THE OPINI ON THAT THE LOWER AUTHORITIES ARE RIGHTLY TREATED THE PROFIT ON SALE OF SHARES AS BUSINESS INCOME AND WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LOWER AUTHORITIES. ACCORDINGLY THE ORDER OF THE LOWER A UTHORITIES IS CONFIRMED. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31. 1.2011 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 31 ST JANUARY 2011 ITA NO.431/H/2009 SMT. NIKHAT FATIMA HYDERABAD 9 9 COPY FORWARDED TO: 1. SMT. NIKHAT FATIMA 18-5-534/12/A/1 EDI BAZAR HYDERABAD 2. THE ADIT RANGE 9 HYDERABAD 3. CIT(A)- VIJAYAWADA. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP