HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE D.B.: HON'BLE MR. S. C. SHARMA AND HON'BLE MR. VIRENDER SINGH, JJ INCOME TAX APPEAL No. 54 / 2019 DR. RAJEEV CHOUDHARY VS. ASSISTANT COMMISSIONER OF INCOME TAX-2(1), INDORE ORDER ( 17/09/2019) PER : S. C. SHARMA, J :- present appeal has been filed u/S. 260A Income Tax Act, 1961 against order dated 10/01/2019 passed by Income Tax Appellate Tribunal, Indore Bench, Indore in I.T.A.No. 293/Ind/2012 for assessment year 2008-09. Facts of case as stated in appeal reveal that appellant is Eye Surgeon and is running Centre in name of Choudhary Eye & Retina Research Centre and is Income Tax Payee. appellant filed his Income Tax Return for Assessment Year 2008-09 on 29/5/2008 declaring total income at Rs.3,14,17,278/- which, inter-alia, included income from his profession as Eye Surgeon, ---2--- Long Term Capital Gain, derived as result of equity share, as also short term capital at Rs.1,18,57,282/- derived as result of purchase and sale of shares. case of assessee was selected for scrutiny and Assessing Officer completed assessment u/S. 143(3) Income Tax Act, 1961 vide assessment order dated 21/12/2010. It has been stated in appeal that Assessing Officer, while completing assessment, accepted and assessed long term capital gain derived as result of sale of shares, but treated short term capital gain derived from purchase and sale of shares, as income from business only on ground that there were large number of transactions and ignoring fact that appellant is regular investor in shares for past many years. assessing officer levied tax at higher rate of 30% on such income and against 10% leviable on short term gain which resulted in additional demand of Rs.37,33,743/-. Being aggrieved by assessing order dated 21/12/2010, appellant preferred appeal before Commissioner of Income Tax (Appeals) on various grounds --- 3 --- and Commissioner of Income Tax (Appeals), as earlier similar orders were passed on 30/5/2011 in case of assessee for assessment year 2004-05, has allowed appeal by by order dated 5/3/2012. Department being aggrieved by order dated 5/3/2012 passed by Commissioner of Income Tax (Appeals) for assessment year 2008-09, preferred appeal before Income Tax Appellate Tribunal and matter was heard at length. Income Tax Appellate Tribunal has allowed appeal and has restored order of Assessing Officer treating short term capital gain as business income of appellant. Mr. P. M. Choudhary, learned senior counsel appearing with Mr. Anand Prabhawalkar, Advocate for petitioner has vehemently argued before this Court that earlier also Commissioner of Income Tax (Appeals) has passed order on 30/5/2011 in respect of financial year 2004-05 and similar view was taken by Commissioner of Income Tax (Appeals) by passing subsequent order dated 5/3/2012 and, therefore, Income Tax Appellate --- 4 --- Tribunal should not have interfered with order passed by Commissioner of Income Tax (Appeals). It has been argued that once issue was already decided in favour of appellant which was consistently accepted and followed by Department for various assessment years, non- acceptance of same by impugned order is unsustainable. appellant has filed chart in respect of earlier assessment years and has stated that once in his own case findings have been arrived at by appellate authority, different view could not have been taken in manner and method it has been done. Learned counsel for petitioner has placed reliance upon judgment delivered in case of Commissioner of Income Tax Vs. Om Prakash Suri reported in (2012) 19 ITJ 326 (MP); Deepaben Amitbhai Shah Vs. Dy. Commissioner of Income Tax reported in (2017) 397 ITR 687 (Gujarat); Commissioner of Income Tax Vs. Gopal Purohit reported in (2011) 336 ITR 287 (Bombay); Principal Commissioner of Income Tax Vs. Hiren M. Shah reported in (2019) 413 ITR 143 (Bom); and judgment delivered by this Court in --- 5 --- case of Income Tax Vs. Anoop Karwa (I.T.A.No. 47 / 2014, decided on 19/12/2014) and it has been argued that substantial questions of law arise in present appeal and, therefore, appeal should be admitted. Learned counsel for respondent Department has vehemently opposed prayer made by petitioner and it has been argued that assessee has not borrowed money from investing into business of shares and he was carrying out regular business of trading of shares. He has not kept designated employees / portfolio managers to take care of investment and as there were huge number of transactions of regular purchase / sale of equity shares of various listed Companies which were carried out by assessee and assessee has earned income from futures and option transaction of equity shares, same has to be assessed as business of share trading. He has also argued that frequency of transactions carried out during year shows that approximately 288 transactions took place for purchase of equity shares through out year and about 162 transactions of sale have been entered with various --- 6 --- share brokers including Arihant Capital; JM Finance P. Ltd., etc., and in those circumstances assessee has entered into multiple transactions for various listed Companies and in those circumstances it was regular feature of assessee to trade in shares to obtain short term gain and, therefore, short term gain has rightly been included as business adventure and had rightly been included in income of assessee. It has been argued that Assessing Officer and Tribunal were justified in treating income arrived at from short term gain as income keeping in view intention behind gain and intention behind sale. It has been stated that no question of law arise in present appeal and as no question of law arise, appeal deserves to be dismissed. It has been further argued that only because appellate authority, in case some other assessment order has granted relief, it does not mean that assessee can escape from paying income tax for financial year which is subject matter of present appeal and orders passed by Commissioner (Appeals) are not at all binding upon --- 7 --- Income Tax Appellate Tribunal. Learned counsel for respondent Department has placed reliance upon following judgments : 1. Manoj Kumar Samdaria Vs. Commissioner of Income Tax-I reported in MANU/DE/1115/2014; 2. P.V.S.Raju Vs. Addl. Commissioner of Income Tax reported in MANU/AP/457/2011; 3. Commissioner of Income Tax (Central) Calcutta Vs. Associated Industrial Development Co. P. Ltd., reported in MANU/SC/0268/1971; 4. P. M. Mohammad Meerakhan Vs. Commissioner of Income Tax, Kerala reported in MANU/SC/0227/1969; 5. Khan Bahadur Ahmed Alladin & Sons Vs. Commissioner of Income Tax, Andhra Pradesh reported in MANU/SC/0161/1967; 6. G. Venkataswami Naidu & Co. Vs. Commissioner of Income Tax reported in MANU/SC/0065/1958; 7. Municipal Corporation of City of Thane Vs. Vidyut Metallics Ltd., and ors., reported in MANU/SC/7899/2007; and, --- 8 --- 8. Premji Bhimji Vs. Commissioner of Income Tax reported in MANU/WB/0144/1970 Heard learned counsel for parties at length and perused record. undisputed facts of case reveal that for assessment year 2008-09, assessee has filed return of income on 29/5/2008 declaring total income of Rs.3,14,17,278/- which included income from his Eye profession as Surgeon, long term capital gain derived as result of capital equity as also short term capital of Rs.1,18,57,282/- derived as result of purchase and sale of shares. case of assessee was selected for scrutiny and order was passed u/S. 143(3) on 21/12/2010. Assessing Officer while passing order accepted assessed long term capital gain derived as result of sale of shares but treated short term capital gain derived from purchase and sale of shares as income from business only. assessing officer levied tax @ 30% on such income against 10% leviable on short term gain and same has resulted in additional demand of Rs.37,33,743/-. Against --- 9 --- order dated 21/12/2010 appeal was preferred and same was allowed against which Department has preferred appeal and appeal preferred by Department has been allowed by Income Tax Appellate Tribunal. order passed by Income Tax Appellate Tribunal, in paragraphs 10, 12, 16, 17, 18 and 19 reads as under: 12. It is established fact that issue relating to taxability of gain/loss from purchase/sale of equity shares is purely matter of fact and treatment of such gain/loss can be decided only on basis of facts of particular assessee. Though Ld. Counsel for assessee has relied on many judgments but in our humble view decision cannot be applied squrely on facts of Rajeev Choudhary ITA Nos.293/Ind/2012& C.O.No.65/Ind/2012 assessee. Though facts before Hon'ble High Court of Bombay in case of ITO vs. Gopal Purohit are similar to considerable extent but view cannot be applied on facts of assessee because it does not fulfill rule of consistency. In case of assessee in preceding year there was meager income from purchase and sale of equity shares which considerably increased from year to year with fact that assessee also start share trading business as well as trading of future & options (F&O). For this very reason rule of consistency cannot be applied. Even otherwise case of assessee was never subject to scrutiny for examining this issue of purchase and sale of shares and it was only for A.Y. 2004-05 that case was reopened and assessing officer therein has decided that gain from purchase and sale of shares held for less then one year is to be taxed as business income. Therefore, we are inclined to adjudicate issue raised before us by --- 10 --- Revenue purely on basis of following facts of instant appeal emerging from perusal of records:- a. Paper book page 117 reveals that assessee sold securities worth Rs. 12,41,10,593/- and claimed deduction for purchase valuing at Rs.11,17,26,044/- and cost of transfer at Rs.5,27,267/-. b. In audited profit and loss account appearing at page 50 of paper book dated 23.05.2018, equity shares held as on 1st April, 2007 have been shown under head opening stock along with purchase of Rs.12,02,54,265/-, sales at Rs.14,20,85990/- and Rajeev Choudhary ITA Nos.293/Ind/2012& C.O.No.65/Ind/2012 closing stock at Rs.3,99,59,591/-. c. On income side of profit and loss account along with opening stock, purchases sales and closing stock of equity shares, income from dividend, assessee has also shown profit from share trading byway of profit and loss from future & option (F & O) transactions, Profit and loss account JMMSFS Ltd. F & O, shown under head share trading, profit/loss. It shows that assessee is suo moto accepting that regular business transactions of share trading are carried out by him. d. profit and loss account has been audited by Chartered Accountant firm in order to certify transactions shown under head opening stock, purchase direct expenses, indirect income, share trading profit, F & O profit and closing stock. e. Moving on to frequency of transactions carried out during year ledger account of investment in shares purchases placed at pages 24 to 39 of paper book dated 23.05.2018 shows that approx. 288 transactions took place for purchase of equity shares which have been carried out throughout year. Similarly, around 162 transactions for sales have been entered with various share brokers including Arihant Capital Market Ltd., J.M. Finance P. Ltd. etc. Undisputedly assessee had entered into multiple transactions for various listed companies however in case of BOC India Ltd. around 70 transactions of sales took place during year and assessee purchased 1,07,640 equity share valuing at Rajeev Choudhary ITA Nos.293/Ind/2012& C.O.No.65/Ind/2012 Rs.1,58,73,054/- and sold equity shares of same quantity. In case of Escorts Ltd. 253934 equity shares were purchased and sold during year on 52 occasions. In case of Fortis Health Care Ltd. 1,88,690 equity shares were purchased and --- 11 --- sold scattered over on 31 transactions. 16. Frequency of transactions also plays vital role in examining taxability of such transactions. Though it is pleaded that assessee is very busy Doctor engaged in professional work but what transpires from records is that assessee is devoting his time and knowledge for regular purchase and sale of equity shares round year. Even otherwise there is no Estoppel by law on Rajeev Choudhary ITA Nos.293/Ind/2012& C.O.No.65/Ind/2012 1 assessee to carry more than one business or profession. There are innumerable instances where particular individual carries on multiple businesses from multiple locations then why cannot assessee. 17. There seems to be consistent touch of assessee with equity market as frequent transactions of purchase and sale of same script are done during year which normally is not practice of investor because investor usually invests and then wait for considerable time and reason for such waiting is that investor who is normally engaged in other business or profession make such investments to fetch some income without investing much time on trading such investments on regular basis. For this reason investors invests money in fixed deposits Public Provident funds as well as equity shares and other investments options. 18. But situation in case of assessee seems to be different because assessee is keeping continuous watch on share market. He selects various scripts for regular purchase and sale and he is also engaged in future and option market. Hundreds of transactions have been entered with same brokers for purchase/sale. No separate demat account have been kept by assessee relating to alleged investment in equity shares and profit and sale from share trading and future and option. In these given facts it is hard to believe that such gain from such magnitude Rajeev Choudhary ITA Nos.293/Ind/2012& C.O.No.65/Ind/2012 2 of transactions can be taxed under head of short term capital gain. --- 12 --- 19. Ld. AO was fair enough to give benefit of exemption for long term capital gain but as regards alleged income of Rs.1,18,57,282/-, we find merit in finding of Ld. AO and are inclined to hold that alleged income of Rs.1,18,57,282/- is purely income from business from purchase/sale of shares and therefore, is to be taxed as business income. We, therefore, allow grounds raised by revenue and dismiss ground no.1 raised in cross objection filed by assessee. Tribunal, thus, keeping in view number of frequency of transaction has rightly arrived at conclusion that Assessing Officer was justified in giving benefit of exemption for long term capital gain and was also justified in treating income as business income in respect of purchase / sale of shares (short term gain). aforesaid findings of Assessing Officer which have been affirmed by Income Tax Appellate Tribunal are purely findings of facts. Learned counsel for appellant placed reliance upon judgment delivered in case of Hiren M. Shah (supra) and facts of case are distinguishable especially keeping in view frequency of transactions in respect of short term gain as it was certainly business adventure on part of assessee. --- 13 --- In case of Gopal Purohit (supra), frequency of purchase of share has not at all been considered. Similarly, in case of Om Prakash Suri (supra) and in case of Anoop Karwa (supra), decided by this Court, similar issue was not at all involved. findings of fact in respect of numerous transactions have not been touched in any of judgment relied upon by learned senior counsel for appellant and, therefore, judgment relied upon by learned counsel for petitioner are of no help to petitioner. On other hand, learned counsel for respondent Department has placed reliance upon judgment delivered in case of Manoj Kumar Samdaria Vs. Commissioner of Income Tax-I reported in MANU/DE/ 1115/2014; P.V.S.Raju Vs. Addl. Commissioner of Income Tax reported in MANU / AP / 457 / 2011; Commissioner of Income Tax (Central) Calcutta Vs. Associated Industrial Development Co. P. Ltd., reported in MANU/SC/0268/1971; P. M. Mohammad Meerakhan Vs. Commissioner of Income Tax, Kerala reported in --- 14 --- MANU/SC/0227/1969; Khan Bahadur Ahmed Alladin & Sons Vs. Commissioner of Income Tax, Andhra Pradesh reported in MANU/SC/0161/1967; G. Venkataswami Naidu & Co. Vs. Commissioner of Income Tax reported in MANU/SC/0065/1958; Municipal Corporation of City of Thane Vs. Vidyut Metallics Ltd., and ors., reported in MANU/SC/7899/2007; and, Premji Bhimji Vs. Commissioner of Income Tax reported in MANU/WB/0144/1970. This Court has carefully gone through aforesaid judgments and is of considered opinion that no substantial question of law arises in present appeal. frequency of transaction carried out during year shows that approximately 288 transactions took place for purchase of equity shares through out year and about 162 transactions of sale have been entered with various share brokers including Arihant Capital; JM Finance P. Ltd., etc., and, therefore, as assessee has entered into multiple transactions for various listed Companies, it was regular feature of assessee to trade in shares to obtain short term --- 15 --- gain and, therefore, short term gain has rightly been included as business adventure and has rightly been included in income of assessee. It is purely finding of fact arrived at by Assessing Officer as well as by Income Tax Appellate Tribunal. No substantial question of law arises in present appeal. Accordingly, admission is declined. (S. C. SHARMA) (VIRENDER SINGH) JUDGE JUDGE KR Digitally signed by Kamal Rathor Rajeev Choudhary v. Assistant Commissioner of Income-tax-2(1), Indore