- (1.) The subject matter of challenge in the appeal is a judgment and order dated 12th November, 2010 pertaining to the assessment year 2007-2008. Views of the Tribunal precisely are as follows:-- "On the other hand, the Ld. Counsel for the assessee by referring the written submission made before the Assessing Officer at pages 30 to 32 and at pages 35 to 43, contended that since the assessee-company has maintained the accounts with applicable accounting standards, the investments which have been classified as long term or carried at cost whereas the shares kept in the portfolio of the stock-in-trade has been valued at market rate. He further submitted that the total number of transactions with purchases as well as sales are 220 in number and the ratio between purchase and sale is 59:41 and the holding period in respect of 77 sale transactions are more than 12 months and 13 transactions which is less than 12 months. Under these circumstances he requested to uphold the order to the Ld. CIT(A) and delete that of the Assessing Officer. After hearing the rival submissions and on careful perusal of the material available on record, keeping in view of the fact that the assessee has shown the shares which are declared by him either long term or short term capital gains in the investment portfolio and there is no dispute that the same are being valued at cost and on the share holding of the assessee which are stock-in-trade has been valued either at market rate or costs in trade. We find no justification of the Assessing Officer to treat the capital gains arising out of which are short term as well as long term investments portfolio to treat the same as business income. Therefore, we find no infirmity in the order of the Ld. CIT(A) to be inferred with."
(2.) Therefore, question for consideration was whether the benefit on account of short-term capital gain and long-term capital gain was properly claimed by the assessee. The revenue was unable to find fault with the claim of the assessee. The revenue was not in a position to support the judgment of the assessing officer who refused to treat the same the way the assessee wanted for the following reasons:-- "It is concluded that those shares were purchased and sold with the motive of earning profit and not with object of investing in those shares in order to derive income from that investments. The systematic, organized and planned manner of transactions together with volume and frequency of transactions point to the only conclusion that the shares could not have been purchased for investment. This conclusion is also strongly supported by the Hon'ble Supreme Court in the case of Dalhousie Investment Trust Co. Ltd. v. CIT, 1968 68 ITR 486). In view of the above discussion the total amount of Capital Gain for Rs. 39,18,709/- as shown by the assessee in its return of income is being taken as Business Income instead of Capital Gain as claimed by the assessee."
(3.) The assessing officer has laid stress on motive. To begin with motive is something, which is locked in the mind of the person. No direct evidence as regards motive is possible. Motive can be inferred from the conduct of the person concerned but that is bound to remain an inference, which may or may not be correct. We have today dictated a judgment in the case of CIT v. Merlin Holding Pvt. Ltd., (ITA 101 of 2011) wherein the following views have been expressed by us: "From the tenor of the submissions made by Mr. Saraf noted above, it appears that the case of the revenue is that in the facts of the case the finding that the income was earned from investment could not have been recorded. If that is the proposition then it is for the revenue to show that such a finding is not possible in law. That was not even suggested. What remains then is a question of appreciation of evidence, which has already been done. No fruitful purpose is likely to be served by remanding the matter. We do not find any issue, which has remained unattended. For the aforesaid reasons, we hold that the judgment under challenge is not perverse.";