9911796707
TMI Blog2012 (7) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... SE 500 scrip) 1,850,732 NIL Long Term Capital Gain (from 1/4/2004 To 31/3/2005) 2,079,230 Less: Exempt u/s.112 2,079,230 NIL Short Term Capital Gain (from 1/4/2004 To 30/9/2004) 1.119.956 Short Term Capital Gain (from 1/10/2004 To 31/3/2005) 3,857,123 4,977,080" 3. The question before the AO was as to whether the income declared by the assessee under the head income from capital gain has to be assessed as income from business or income from capital gain. While deciding this issue the AO has referred to the transaction and the profit made by the assessee as follows: "In the return of income assessee has declared income from business and profession at Rs. 7,47,743/-, income from capital gains upto 30.9.04 Rs. 13,66,398/- short term capital gains after 1.10.2004 at Rs. 17,92,538/-, and income from other sources at Rs. 36,014/-. In the income and expenditure account filed along with the return of income assessee has credited the following amounts: Profits from trading in shares (equity) 57,903.74 Loss from trading in shares (F&O) - 9,21,146.78 Short ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchased shares of six companies totaling 27200 for a price of Rs. 11,79,152/-. They were sold for a sum of Rs. 32,66,290/-, resulting in a gain of Rs. 20,79,230/-. It can thus be seen that the number of transactions, the quantity of purchases and sales as well as value as declared by the assessee and as considered by the AO are totally different. 6. The AO was of the view that the assessee was carrying on business of trading in shares and in this regard relied on several judicial pronouncements, besides Circular of the CBDT namely Circular No.4/2007 dated 15/6/2007. In the light of the principles emerging from those decisions, the AO concluded that the income returned by the assessee under the head income from capital gains has to be assessed under the head income from business. Since the income was considered as income from business, the claim of exemption of long term capital gains made by the assessee was also denied. 7. On appeal by the assessee the CIT(A) confirmed the order of the AO. In doing so the CIT(A) also considered the transactions as done by the AO in the order of assessment. 8. Aggrieved by the order of the CIT(A) the assessee has preferred the ITA NO.5290/M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahadur Ram v. CIT [1965] 57 ITR 21 (SC). 11. The application of the principles as set out above will require reexamination of the correct facts that prevails in the case of the Assessee. Since, the Revenue authorities have proceeded on wrong facts and figures, we, deem it fit and proper to set aside the order of the CIT(A) and remand the issue to the AO for fresh consideration in accordance with law after taking into consideration the correct facts. Thus ground No.1 to 4 raised by the assessee in its appeal are allowed for statistical purposes. 12. In ground Nos.5 & 6 the assessee is aggrieved by the action of the AO in determining the income from house property in respect of Kandivili and Pune properties despite the fact that the same ought to have been considered as self occupied property and interest income determined at Rs. Nil. This ground can be conveniently disposed off together with ground No.4 of Revenue's appeal for AY 06-07. On this issue we find that in A.Y 2006-07 on the very same issue the CIT(A) has held as follows: "8. Income from House Property:- 8.1 The A.O noticed from the balance sheet that the appellant was owning three flats, namely flat at Challenger Towe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet of the appellant as on 31/3/2006 shows that the value of the flat in Oberoi Park View is shown at Rs. 76,17,180/- under the head 'Fixed Assets" and as on 31/3/2005, the value of the flat was shown at Rs. 58,58,908/-. Both these balance sheets are available with the AO forming part of the accompanying statements filed with the return of income. Thus it is clear that the appellant was making payment during this year towards cost of construction of the above flat and the final payment was made only in the month of February, 2006 as per the ledger account copy. In the circumstances, I accept the plea of the representative that possession of the lat was not received till the end of the year and the same was received only in the next year and consequently there is no justification for addition Rs. 1,10,000/- towards notional rent from the above flat and the same is deleted. Regarding the Pune property, I accept the plea of the representative that notional rent is to be determined on the basis of municipal valuation and it cannot be enhanced based on the general increase in the market value. As contended by the representative, if the municipal valuation is adopted, the notional rent m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest as per scheme of GOI Bonds would accrue on 30th June and 31st December of every year and interest accrued and received as on 31/12/2005 was offered for taxation and the interest for the period from 1/4/2006 to 31/3/2006 would only accrue on 30th June as per the scheme and, therefore, the appellant has not accounted for the same and the said interest is offered for taxation as and when accrued and due to the appellant's wife. He submitted that as per the scheme of GOI Bonds, the appellant has the right to receive the interest only on 30th June and, therefore, the AO was not justified in brining to tax this amount. 7.3 I have considered the submissions of the representative and the stand of the AO. The AO has not incorporated the explanation of the appellant on this point in the assessment order. As contended by the representative, if the scheme of GOI Bonds provide for payment of interest on 30th June and 31st December, the right to receive the amount accrues only on these dates. Without a legally enforceable right, it cannot be said that the income has accrued. As the interest relating to the period 1/1/2006 to 31/3/2006 was not yet accrued as on 31/3/2006 but would accrue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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