9911796707
TMI Blog2012 (11) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... No.666/Del/2010. He has produced before us copy of the said order by which the Tribunal has decided this appeal of the revenue in favour of the assessee and revenue's appeal has been dismissed. A copy of the said order was also given to the learned DR. 3. On the other hand, the learned DR relied upon the order passed by the Assessing Officer. 4. We have heard both the parties and their contentions have carefully been considered. It is seen that while deciding the issue in favour of the assessee learned CIT (A) has followed the order of the CIT (A) passed in the case of the assessee for Assessment Year 2005-06 and the relevant observations of the CIT (A) as contained in para 6 of the impugned order are as under:- "6. Therefore, the A.O. is directed to assess the profits arisen on sale of shares held under the investment portfolio under the head "Capital gain" whether the short term or long term depending upon the duration of holding of shares. In the Assessment Year 2005-06, for the first time the A.O. had treated the short term capital gain on sale of shares as business income, but the CIT (Appeals) vide order dated 12th November, 2009 has accepted the appellant's contention an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 293175/- 12. State Bank of India 500 289885/- 13. Tata Power Co. Ltd. 1250 471437/- 14. TV Today Network Ltd. 2500 237500/- 15. Tata Tele Services Ltd. 20000 324000/- 16. Talbros Automotive Components Ltd. 82143 2063843/- 17. VSNL Ltd. 1600 285680/- 18. Wipro Ltd. 200 272240/- Total 133667 7973293/- 3. The value of acquisition of these shares was taken to be the market value as on 31.3.2004 and as per submissions of the assessee the difference between purchase price of the script and the market value as on 31.3.2004 was taken into account while working out the profits of the year ending as on 31.3.2004 and these findings are recorded by the conclusion drawn by CIT(A) in the impugned order in para 5. It is further observed by ld. CIT(A) that it is clear from the balance sheet for F.Y. 2003-04 that the market value of these shares as on 31.3.2004 has been taken into account by working out of the closing stock of the shares and this has been taken into account for working out the profits for that year. It has been further found by the ld. CIT(A) that the market value as on 31.3.2004 has been taken as the cost of acquisition of these shares and the difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies including of Dabur India Ltd. as investment since long back. The assessee was also engaged in purchase and sale of shares and mutual funds mostly of Blue Chip Companies as stock-in-trade. During the year under consideration, assessee has transferred the shares of certain company as held in stock-in-trade upto 31.3.2004 at cost price as on 1.4.2004 as under:- Sl.No. Name of the company Quantity Amount 1. Morgain Stanlay 5000 30000/- 2. Nestle India Ltd. 500 303310/- 3. Biocon Ltd. 1250 393750/- 4. HDFC Ltd. 400 245536/- Total 7150 972596/- 4. Assessing Officer further noted that apart from the shares of the four companies transferred to investment account as on 1.4.2004 from stock-in-trade as on 31.3.2004, the assessee has made purchases shares/ mutual funds of 51 companies. Thereafter, Assessing Officer held that considering the facts and judicial principles and explanation relating to the treatment by the assessee with respect to the gain derived from sale of shares transferred from stock in trade to the investment account and further purchase and sale of shares during the year on voluminous scale is bereft of any plausible explanation and not acceptable. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o into investments. the matte was put before the Board in the Annual General Meeting to convert the shares from stock in trade to investments. This resolution was approved by the Board and the market value as on 31st of March, 2004 was taken as the cost of acquisition of these shares were transferred to the investment portfolio. Later on the appellant had followed the same method of valuation at cost price on permanent basis. Part of theses shares were sold by the appellant during the year. The appellant had taken the closing value as on 31.3.2004 as the cost of acquisition and without taking the benefit of indexation, the difference between the sale price and the cost of acquisition has been offered for taxation as short term capital gain. It is worth mentioning here that whereas the shares held by the company in the trading account were transferred to the investment portfolio, however, the trading in mutual funds continues to be business activity of the company. In view of the facts discussed above and decision of the Hon'ble ITAT in the case of ACIT vs. Bright Star Investment Pvt. Ltd. and M/s Sarnath Infrastructure Pvt. Ltd. it is held that the appellant is a regular investor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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