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TMI Blog2012 (11) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... nts are being maintained and separate trading account and investment accounts are maintained in the books. The department has earlier accepted the assessee’s practice and treatment under heads of capital gains and business. Appeal decides in favour of assessee. - ITA No. 3379/Del/10 - - - Dated:- 20-7-2012 - SHRI R.P. TOLANI AND SHRI T.S. KAPOOR JJ. Appellant by : Shri Sanjay Pandey Sr. DR Respondent : Dr. Rakesh Gupta Adv. Sh. Somil Aggarwal CA O R D E R PER R.P. TOLANI, J.M:: This is revenue s appeal against CIT(A) s order dated 26-4-2010 relating to A.Y. 2007-08. 2. Various grounds are raised, which mainly raise following effective ground: The Ld. CIT(A) erred in law and on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere distinctly and separately entered respective portfolios and the profits have been accordingly offered as business income and capital gains as done in earlier years also. The shares in investment portfolio were purchased out of own funds only and no interest bearing funds were utilized for such investment purchases; this itself indicated that this portfolio was maintained by the assessee as investment out of his own money. 3.3. The assessee has maintained separate de-mat accounts in respect of shares held on investment a/c and trading a/c. 3.4. All these factors i.e. the own funds utilized, the separate de-mat accounts, not only in this year but also earlier years, clearly indicate that assessee was holding both the portfolios ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is further advised that no single principle would be decisive and the total effect of all the principles should be considered to determine whether, in a given case, the shares are held by the appellant as investment or stock-in-trade. 3.7. Board Circular, inter alia, refers to CIT Vs. NSS Investment (P) Ltd. 277 ITR 149 3.8. CIT(A) relied on: (i) CBDT Instruction no. 1827 dated 31-8-1989 (ii) CIT Vs. Associated Industrial Development Co. (P) Ltd. 82 ITR 586 (SC), holding: Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a mater which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant and observe that the 3Cd report as duly signed. The appellant has asserted that the Profit Loss account and balance sheet are the part of audit report and were prepared by the same auditor. I am convinced with the contention of the appellant. Further, the Assessing Officer observed that the balance sheet as on 31-3-2007 did not show investment. The appellant submitted that when entire investment in shares were sold during the year, the question of showing investment in shares in the balance sheet do not arise. This fact established that the observation of the AO was based on hypothecation and was unjustified. The other observation that investment as on 31-3- 2006 was ₹ 15,78,752/- whereas annexure of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 15-6-2005 establishing that the shares were held for more than 12 months and were having distinctive numbers. The appellant has also relied on the following cases: Smt. Sanat Kumar Jayanti Lal vs. CIT 211 ITR 755 (Guj) Smt. Roda Vs. ITO 90 TTJ 1048 (Ahd.) CBDT director number 768 dated 24-6-1998 reported in 147 ITR 203. Therefore, I observe that the additions made by the AO fails the test of judicial scrutiny and therefore cannot be sustained. Concerning ground of appeal no. 3(iv) it is contended that the AO has ignored the speculation loss of ₹ 12,09,910/- as claimed in the revised return. The AO has not given any reason for not allowing this loss. In the assessment order page-1, therefore is a mention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and various case laws. Therefore, there is no merit in the argument of the ld. DR that the sole intention of the assessee was to carry out business activity and there was camouflage in accounts. Since many years AO has been accepting the trading and investment income under distinct and separate heads. Order of CIT(A) is relied on. 6. We have heard rival contentions and gone through the relevant material available on record. CBDT by way of above Circular has allowed the assessee to maintain two types of portfolios in their books of accounts one on account of investment and the other on account of trading. It is not the case that the assessee started these activities in the year under consideration. The practice is supported by earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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