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TMI Blog2012 (12) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... he stamp of the office of CIT(A) nor there is any covering letter from CIT(A) enclosing therewith copy of balance sheet. Therefore, it is not established whether the balance sheet for the assessment year 1995-96 now being filed is copy of balance sheet filed during the assessment proceedings for the assessment year 1995-96. Thus the matter requires verification at the level of CIT(A) restore the matter back to CIT(A) for passing a fresh order - in favour of assessee for statistical purposes. - ITA No. 6164/Mum/2010 - - - Dated:- 18-7-2012 - SHRI D. MANMOHAN AND SHRI RAJENDRA SINGH, JJ. Appellant by : Shri P. Pardiwalla Respondent by : Shri C.S.K. Nani ORDER PER RAJENDRA SINGH, AM: This appeal by the assessee is directed against the order dated 2.7.2010 of CIT(A) for the assessment year 1996-97. The only dispute raised by the assessee in this appeal is regarding disallowance of loss of Rs.66,00,000/- claimed by the assessee as share trading loss. 2. The facts in brief are that the assessee for the assessment year 1996-97 had filed return of income on 28.11.1996 declaring total income of Rs.7,75,094/-. The return had been accepted under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 1995-96, he had shown dividend of Rs.6,92,692/-. 2.3 The AO observed that though the assessee claimed that he was doing business in shares since assessment year 1991-92 till 1996-97 there was no evidence produced to substantiate the same. It was also observed by him in the original balance sheet of 1996-97, the shares had been declared as investment but in the recast balance sheet, the same was shown as trading. There was also no evidence produced to show that investment in shares of GVMCL had been converted into stock-in-trade. The AO therefore, did not accept the genuineness of claim of the assessee that shares of GVMCL had been held as stockin- trade. The AO disallowed loss of Rs.60.00 lacs claimed by the assessee as trading loss treating the same as short term capital loss and computed total income at Rs.1,27,18,520/-. 3. The assessee disputed the decision of AO and submitted before CIT(A) that the assessee had produced evidence before AO to show that he was carrying on share trading business since 1991. It was also submitted that shares of GVMCL had been acquired from the rights issue and same were shown as trading stock in assessment year 1995-96. It was po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the balance sheet for assessment year 1995-96. The assessee in the balance sheet had not given any schedule to give further break-up of investment and work-in-progress . CIT(A) also observed that during the proceedings under section 154 for assessment year 1995-96, the assessee had been asked to explain as to why dividend income and interest income should not be treated as income from other sources and claim for deduction under section 80IA should not be disallowed to that extent. But the assessee never stated that the shares of GVMCL were held as stock-in-trade. The same was the position in assessment year 1996-97 in which a sum of Rs.24,73,49,656/- was shown against investment and work-inprogress and there was no mention of stock-in- trade. CIT(A) therefore, concluded that the assessee had nowhere shown the shares of GVMCL as stock-in-trade and had also not shown the conversion of shares into stock-in-trade. The assessee filed the recast balance sheet only before the Hon ble High Court which was not the same balance sheet as filed during the assessment proceedings. The AO also pointed out that in the return for the assessment year 1997-98 the assessee had again declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97-98. A copy of the return for the assessment year 1997-98 has been enclosed with the affidavit to show that the assessee in that year had not declared any capital loss. 4.1 The ld. AR for the assessee further submitted that the assessee in the balance sheet for the assessment year 1991-92 a copy of which is placed on page-74 of the paper book had shown the stock-in-trade of Rs.8,45,080/- of 27 companies break-up of which is available at page 76 of the paper book. Further, copies of P L account for the assessment years 1994-95, 1995-96 placed at pages 268-269 of the paper book also show that the assessee had declared loss on sale of shares of Rs.4,400/- in assessment year 1994-95 and profit of Rs.1,75,573/- in assessment year 1995-96, which show that the assessee was doing business of dealing in shares. It was accordingly urged that the claim of share trading loss should be allowed. 4.2 The ld. DR on the other hand supported the orders of authorities below. It was submitted that in the Schedule-B of the audited accounts for the assessment year 1996-97 placed at page-54 of the paper book, the assessee had declared loss on sale of investment of Rs.66.00 lacs which clearly show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork in progress 14,13,16,612.00 c) Stock in Trade (84350 shares of Rs.10/- Good Value Marketing Co. Ltd.) 42,17,500.00 TOTAL 24,73,49,656.00 5.1 The AO in the fresh assessment has held that the re-cast balance sheet filed by the assessee for the assessment year 1996-97 was only an after thought. The assessee claimed that he was doing business in shares from assessment year 1991-92 to 1996-97 but no evidence had been produced. AO has also noted that in assessment year 1995-96 and 1996-97, the assessee had declared only dividend income and interest income. The assessee also could not show that the assessee had converted the shares acquired in rights issue in assessment year 1995-96 into stock-in-trade. The AO has, therefore, treated the shares of GVMCL as investment and loss of Rs.66.00 lacs as short term capital loss. 5.2 The assessee disputed the claim of AO that he had not produced evidence of share trading business . It was submitted before CIT(A) that the assessee had given details of share business done in the earlier years. It was claimed that the assessee in the balance sheet for assessment year 1991-92 a copy of which has been placed at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of account and that the assessee himself in assessment year 1997-98 had declared, capital loss from sale of GVMCL shares. As regards the finding of capital loss for assessment year 97-98, the ld. AR has filed the copy of the return filed for assessment year 1997-98 which does not show any capital loss declared by the assessee. Thus the only issue which is required to be addressed is whether the assessee had declared the rights share in assessment year 1995-96 as stock-in-trade. 5.6 The case of the assessee is that he was promoter of GVMCL and shares acquired as promoter of the company had been declared as investment in the balance sheet. The company had come out with rights issue in February 95 and assessee had subscribed to rights issue only with the intention of selling the rights shares. The intention of the assessee can be gathered from the nature of entry made in the books of account at the time acquisition of rights shares in February/March, 1995. Normally, a promoter does not acquire the shares of his own company for the purpose of trading. But in case the assessee had acquired the shares with the intention to sell and not to hold as investment, the entry in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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