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TMI Blog2013 (8) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the disallowance of Rs. 50,979/- made by the Assessing Officer on account of depreciation and expenses on tractor. 2. deleting the disallowance of Rs. 18,18,750/- made b to on account of interest expenses. 3. deleting the addition of Rs. 18,16,662/- made by the Assessing Officer by treating short term capital gain on sale of shares as business income. 3. The Rival contentions have been heard and records perused. Facts in brief are that the assessee is engaged in the business of grains, pulses and oil seeds. During the course of assessment, the Assessing Officer disallowed assessee's claim of depreciation of Rs. 50,797/- in respect of tractor used by him in his business. The Assessing Officer has stated that the assessee owns a trac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any infirmity in the order of CIT(A) 6. The Assessing Officer has also disallowed interest expenditure of Rs. 18,18,750/-. The Assessing Officer has stated that the assessee in his books of account has debited a sum of Rs. 18,18,750/- on account of interest paid on unsecured loan taken from the persons covered under the provisions of Section 40A(2)(b); that the rate of interest on such loan is 18 % per annum; that on perusal of balance sheet of the assessee it was found that the funds have not been used for business purposes, rather it was parked in current account of the assessee, that since the use of the borrowed money was not established by the assessee, hence the amount of interest of Rs. 18,18,750/- paid is disallowed. 7. By the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inly finds strength from the decision in ITO vs. Chambamal Roopchand,(2001) 70 TTJ (ASR) 43 and Seth Faquirchand Karwa & Sons vs. CIT, (1996) 135 Taxman 126 (Chd. Trib.)." 8. We have considered the rival submissions and found from record that the assessee has borrowed funds for the purpose of business. Merely because of some of the occasion, there were credit balance in the current accounts, will not disentitle assessee's claim of interest on the fund borrowed for the purpose of business. The rate of interest on the unsecured loan taken from the relatives cannot be compared to the rate of interest on the funds borrowed from banks, in so far as borrowings from banks are always secured loan provided after taking collateral and other securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the gain was credited to capital account and not to profit and loss account. I am convinced that there is no merit in the contention of the Assessing Officer that the gain is assessable as business income. Hence, the addition made by the Assessing Officer is deleted." 10. We have considered the rival submissions and found from record that the assessee had shown investment in shares not as stock in trade, but as investment. When the assessee enters into transaction of purchase and sale of shares, its intention is to be seen alongwith frequency of transaction. The accounting entry made in the books of accounts is also relevant for determining the nature of income earned on shares. If shares are shown as investment and not as stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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