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TMI Blog2012 (10) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact and in the circumstances of the case, and in law, the Id. CIT(A) erred in accepting additional evidence with regard to cost of improvement and allowing the same under section 54 of the Income Tax Act 1961 ." 4. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to accept the claim of Short Term Capital Gain of Rs.85,42,914!- on profit arriving from purchase & sale of shares instead of business income treated by the A.O. without appreciating the fact that the assessee is dealing in large volume of shares, most of the shares are bought and sold within short period, while some are not sold due to market conditions and their holding with assessee remains beyond few days, it will not change the nature of transactions and the assessee is very well engaged in the business of share trading, which denote that the motive of the assessee is to carry on business in shares to book profit rather than investment in shares." 3 Ground no.1 is regarding indexation of property. 3.1 The Assessing Officer noticed that the assessee sold her ½ shares of the property in question which was received by her and her son as per the family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or clause (vi)] 28[or clause (via)] 29[or clause (viaa)] 30[or clause (vica) or 30a[clause (vicb)] of section 47]; (iv) such assessee being a Hindu undivided family, by the mode referred in sub-section (2) of section 64 at any time after the 31st day of December, 1969,] The cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. Explanation:- In this sub-section the expression "previous owner of the property in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) or clause (iv) of this sub section." 5.1 The cost of acquisition of the asset which is acquired by means of inter-alia any distribution of any asset on the total or partial partition of a HUF, shall be deemed to be the cost which the previous owner of the property acquired it, as increased by the cost of any improvement of the asset incurred or borne by the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of flat also includes the cost of car parking and therefore, allowed exemption u/s 54 in respect of the amount which was paid for car parking. The findings of the CIT(A) in para 4.3 of the impugned order is reproduced as under: "4.3 I have considered the submissions of the representative and the stand taken by the Assessing Officer I accept the plea of the representative that the payment towards car parking will form an integral part of the cost of purchase of the flat. The appellant cannot park the car inside the flat and naturally has to purchase separately the car parking area. The appellant has also filed a separate agreement for car parking area from the same builder from whom the flat was purchased. In the circumstances, there is no justification for not allowing exemption u/s.54 in respect of Rs.1,00,000/- paid towards car parking area and the Assessing Officer is directed to allow the same." 7.1 It is an universally accepted fact that the car parking in a society cannot be separately purchase but it is attached with the flat in the society. Therefore, when any flat in the society is purchased along with car parking, then the investment in the flat and car parkin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to the assessee to explain and justify the claim and also without examining the relevant material. The CIT(A) has decided this issue in para 4.4 as under: 4.4. Regarding cost of improvement, it is seen that the A.O. did riot even examine the books of accounts. The appellant has and the expenditure was incurred by means of account payee cheques for purchasing aluminium material and other fittings from M/s B. .P Techno Products Pvt Ltd and purchase of central air-conditioning plant from whetherite Air conditioning Pvt Ltd and further towards carpentry work. Further, it is seen that the appellant has filed balance sheet alongwith the return of income. As per the above balance sheet the value of Kandivali flat is shown at Rs.97,68,219/- which means that the appellant actually incurred the cost of improvement but the A.O. did not conduct any enquiry with reference to the books of accounts and rejected the claim of cost of improvement on the ground that no documentary evidence was filed even without indicating when he required the appellant to file documentary evidence. In the above circumstances, 1 find that the appellant is entitled to cost of improvement except the air-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has carried out sale and purchase transaction in shares in large volume. He has pointed out that the assessee has purchased 1072750 shares of Rs.13,96,79,729/- and sold at 9,72,390 shares of Rs.14,52,98,229/- during the year under consideration. The volume of the transaction and the period of holding clearly shows by the assessee was primarily engaged in the activity of trading in shares and not investment. The intention of the assessee was not to retain or hold the shares for a long time to earn the dividend or appreciation in the value; but to earn profit at the earliest possible time period. He has relied upon the order of the Assessing Officer. 13.1 On the other hand, the ld AR has submitted that the assessee has carried out only 109 transactions of purchase and sale. He has referred the details recorded by the CIT(A) and submitted that only in case of few transaction, holding period is less than one month and even only few transactions, holding period is less than three months. In case of other transactions, the holding period is more than 3 months and upto one year. Therefore, the majority portion of the short term capital gain was earned by holding the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.9,045/-. 15.1 Similarly, 15 transactions having holding period from one month to 2 months and the rest of the transactions, the holding period is from 3 months to one year. We further note that there is no case of repetitive transactions in same script. Though the assessee has purchased the shares of same script on more than one occasion and also sold on more than one occasion; but the sale is only subsequent to the purchase of particular shares. Therefore, even the sale and purchase in the single script is made on more than one occasion but it was not in repetitive nature; to say that the assessee has purchased the shares of a particular script then sold it and then again purchased it. 16 In the case of the assessee, the shares of scripts were first purchased and only after the last purchase, the assessee has sold the shares in parts and not in one go. Further, there is no dispute on the point that the assessee has not taken any loan for purchase of shares. It is clear that the number of transactions during the year is only 109 therefore it cannot be said that the assessee has carried out large number of transactions. The assessee has shown the shares as investment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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