Serial No.06 Final Hearing HIGH COURT OF JAMMU AND KASHMIR AT SRINAGAR ITA No.07/2013 Date : 14.07.2017 Commissioner of Income Tax Appellant. V. Amrit Lal Batra Respondent. Coram: Hon ble Mr. Justice Badar Durrez Ahmed, Chief Justice Hon ble Mr. Justice Ali Mohammad Magrey, Judge Appearing counsel: For appellant(s) : Mr. J. A. Kawoosa, Advocate. For respondent(s) : Mr. Z. A. Shah, Sr. Advocate, with Mr. A. Hanan, Advocate. i) Whether to be reported in Press/Media. Yes/No ii) Whether to be reported in Digest/Journal. Yes/No. Per Badar Durrez Ahmed, CJ. (Oral) 01. This appeal is directed against order dated 27.06.2013 passed by Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, in ITA No.211(Asr)/2013 pertaining to assessment year 2007-08. 02. On 18.12.2014, present appeal was admitted to hearing and following substantial questions of law were framed for determination: - 1. Whether in facts and circumstances, ITAT (Income Tax Appellate Tribunal) was competent to delete additions made by Assessing Officer on account of transaction on sale and purchase of shares? 2. Whether ITAT was right in law to delete additions made by Assessing Officer on account of legal expenses? ITA NO.07/2013 1 OF 3 03. It may be relevant to point out that issue with regard to shares held by way of investment or by way of stock-in-trade is quite often mixed question of fact and law and not purely question of law or fact. In present case also, we find that certain facts need determination before said question no.1 can be answered. 04. tribunal while examining issue has referred to decision of Delhi High Court in case of Commissioner of Income Tax v. Vinay Mittal : [2012]208 Taxmann 106 (Delhi). In that decision, there is also reference to Gujarat High Court decision in case of Commissioner of Income Tax v. Rewashanker A. Kothari : [2006] 283 ITR 338, wherein various tests were formulated in order to determine whether assesse could be said to be carrying on business of sale and purchase of various securities or whether said assesse was holding them as investment. One of most important tests outlined in that decision was as to whether transactions in shares were of large volume and were frequent and whether there was continuity and regularity in such transactions of purchase and sale. It was noted that if there was repetition and continuity coupled with magnitude of transactions bearing reasonable proportion to holding then it would be important circumstance in considering such activity to be in nature of trade and business. 05. This aspect pertaining to volume of transactions, frequency of transactions and continuity and regularity of purchase and sale of shares which was highlighted in Gujarat High Court decision as also ITA NO.07/2013 2 OF 3 in Delhi High Court decision and which was specifically taken note of by tribunal, has not been examined in facts of present case. It appears that tribunal was impressed by fact that similar treatment had been given and accepted by department in earlier assessment years. But in our view, that alone cannot form basis of conclusion as to whether said shares were bought and sold as part of trading activity or as part of investments. All circumstances outlined in decision of Delhi High Court and that of Gujarat High Court as also guidelines of Central Board of Direct Taxes referred to in impugned order needed to be considered and then view was required to be taken on totality of circumstances. Unfortunately, that has not been done. It is for this reason that we feel that present appeal ought to be disposed of by setting aside impugned order and by remitting matter to tribunal for fresh consideration in manner indicated above. It is ordered accordingly. Since we are in any event remitting matter with regard to nature of transaction concerning sale and purchase of shares, we also set-aside finding with regard to legal expenses and that also ought to be considered afresh. Parties shall be entitled to raise all contentions available to them in law. 06. appeal stands disposed of. (Ali Mohammad Magrey) (Badar Durrez Ahmed) Judge Chief Justice Srinagar 14.07.2017 Abdul Qayoom, PS ITA NO.07/2013 3 OF 3 Commissioner of Income-tax v. Amrit Lal Batra