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TMI Blog2016 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee Treating the stock-in trade of shares as investment - treatment merely on the basis of a notice of closure u/s.176(3) - Held that:- We find identical issue had come up before the Tribunal in the case of the assessee for the A.Y. 2007- 08 wherein held that the finding given by the learned CIT(A) that assessee has duly given the notice of discontinuation of business vide letter dated 7-11-06 filed before the AO on 12-04-06 which is within the prescribed period of time as per section 176(3) of the Income Tax Act could not be controverted by the learned DR. Further it has been categorically submitted by the assessee before the lower authorities that he has discontinued the share trading business and the closing stock in shares as on 31-03-06 has been transferred to his capital account at cost and the same also remains uncontroverted.It has been held by the Mumbai Bench of the Tribunal in the case of ACIT Vs. Bright Star Investment Pvt. Ltd. (2008 (7) TMI 442 - ITAT BOMBAY-H ) that receipt from sale of shares after conversion from stock in trade to investment has to be held as capital gain in absence of provision like sec. 45(2)- Decided in favour of assessee - ITA No.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case for A.Y. 2006-07, A.Y. 2007-08 and A.Y. 2008-09, held the gains/loss in respect of investments through PMS taxable as business income and allowed the related expenditure, viz PMS fees as deduction for the year under consideration. 4. In appeal the Ld.CIT(A) following the decision of the Tribunal in assessee s own case for A.Y.2008-09 vide ITA No.1569/PN/2011 and other connected appeals order dated 27-09-2012 held that the activity of transactions in shares/mutual funds by engaging PMS was an investment activity and the resultant gain is assessable under the head capital gains. 5. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 6. After hearing both the sides, we find the issue stands decided in favour of the assessee and against the revenue by the decision of the Tribunal in assessee s own case for A.Y.2008-09 which has been followed by the CIT(A). We find following the above decision the Tribunal in the case of Smt. Sadhana Ashok Kumar Patni and other connected appeals vide ITA No.1835 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014 for A.Y. 2009-10 has held that activity of transaction in shares/mutual funds by engaging PMS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and other related cases in ITA Nos. 1534, 1535, 1568, 1569, 1570 and 1571/PN/11. The Hon ble ITAT held as under : 10. After hearing both the sides, we find no infirmity in the order of the CIT(A). The learned CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule 8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. Under these circumstances, we hold that the learned CIT(A) was justified in deleting the disallowance made by the AO. Grounds raised by the revenue are accordingly dismissed. In view of the above facts, the disallowance made of ₹ 13,16,563/- is directed to be deleted. 10. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 11. After hearing both the sides we find the issue stands decided in favour of the assessee by the decision of the Tribunal in assessee s own case for A.Y.2008-09 vide ITA No.1568/PN/2011 and other connected appeals order dated 27-09-2012 wherein the Tribunal at Para 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the stock-in trade of shares as investment merely on the basis of a notice of closure u/s.176(3) of the Act and also on wrongly relying upon the decision of Bright Star Investment Pvt. Ltd.(2009) 17 DTR 399 (Mum Trib.). 14. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has closed its share trading business in F.Y. 2005-06 and all the stocks were transferred at cost to the investment account. The stand of the assessee was not accepted by the AO in the order passed u/s.143(3) during A.Y. 2006- 07 by holding that merely showing the stock of shares as on 31-03- 2006 as investment may not be treated as closure of business. Since the shares have remained in the same Demat account and merely by passing the book entries the nature of scrips cannot indicate a change, the AO treated the shares sold by the assessee out of stock in the earlier year as business income/loss for the current year as well as in the forthcoming assessment years. Following the above reasons, the AO treated the capital loss of ₹ 13,06,713/- as business income. 15. In appeal the Ld.CIT(A) following his order in A.Y. 2007-08 decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observing as under : 13. After hearing both the sides we do not find any infirmity in the order of the learned CIT(A). The finding given by the learned CIT(A) that assessee has duly given the notice of discontinuation of business vide letter dated 7-11-06 filed before the AO on 12-04-06 which is within the prescribed period of time as per section 176(3) of the Income Tax Act could not be controverted by the learned DR. Further it has been categorically submitted by the assessee before the lower authorities that he has discontinued the share trading business and the closing stock in shares as on 31-03-06 has been transferred to his capital account at cost and the same also remains uncontroverted. It has been held by the Mumbai Bench of the Tribunal in the case of ACIT Vs. Bright Star Investment Pvt. Ltd. (Supra) that receipt from sale of shares after conversion from stock in trade to investment has to be held as capital gain in absence of provision like sec. 45(2). Respectfully following the above decision of the Mumbai Bench of the Tribunal in the case of Bright Star Investment Pvt. Ltd. (Supra) and in view of the detailed order passed by the learned CIT(A) on this issue we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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