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TMI Blog2010 (12) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet as stock-in-trade year after year. Moreover, the assessee had utilised the borrowed money for the acquisition of shares. Borrowed money could be utilised for acquisition of shares only when a person is dealing in shares. He therefore submitted that the AO rightly treated the profit from the sale of shares as business income and the CIT(A) without properly appreciating the facts of the case held the same to be capital gain. He therefore submitted that the order of the CIT(A) should be reversed and that of the AO may be restored. 4. It is submitted by the learned counsel that the assessee had acquired these shares long back, approximately five to ten years before. That the assessee had always shown shares in the balance sheet as investment . However, in the schedule of the investment, due to some clerical error by the staff of the chartered accountant, the shares were shown as stock-in-trade. However, the shares were always held as investment and were also shown as investment in balance sheet. He produced copy of the balance sheet from F.Y.1996-907 (relevant to the A.Y.1997-98) to F.Y.2004-05 (relevant to the A.Y.2005-2006). He also pointed out that the allegation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details furnished by the A.R., it is seen that the appellant was not engaged in the business of buying and selling of shares and the investment made in shares were held as vestments right from origin in their respective years of acquisition. In fact the A.O. treated the investment in shares as business income on the ground that it had been shown as stock in-trade for the year chided on 31-3-2004, but as admitted by the appellant, there was an unintentional mistake committed by the appellant in preparation of accounts/balance sheet, whereby it was shown wrongly as stock in trade instead of investments. Since the appellant was engaged in the business of giving building on rent and investments in shares securities and it was holding these shares Continuously in the same quantity and no business activity in shares and securities has been done in any of the shares during its investment period, the action of AO in treating the profit on sale of shares held by the appellant as business income is held to be riot justified and hence he is directed to treat the same as long Term Capital Gain as claimed by the appellant After considering the arguments of both the sides and the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested the sum of ₹ 25 lakhs in National Housing Bank. That the entire transaction of receipt of the debentures from the Raymond Woolen Mills Ltd. by the assessee and other shareholder of the Indian Chronicle Ltd. is duly supported by the MOU between the Raymond Woolen Mills Ltd. and the Indian Chronicle Ltd. That the debentures were redeemed and the assessee received ₹ 25 lakhs from such redemption. Since entire amount was invested by the assessee in the bonds of National Housing Bank entire capital gain of ₹ 25 lakhs was exempt under Section 54EC. That in the assessment order, the AO has mentioned that he is making addition for unexplained investment under section 69, but while computing the income, he had in fact disallowed the claim under Section 54EC. No addition is made under Section 69. He has stated that the entire transaction of redemption of debenture and investment in National Housing Bank is made by the cheque and duly accounted for in the assessee s books of accounts. Therefore, there is neither any justification for addition for unexplained investment under Section 69 nor for denial of exemption under Section 54EC. 9. We have carefully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation as per statement 111362 Less: Disallowance as discussed above 109307 2055 4205278 Income from Capital Gain Sale of item as per statement 2500000 Less: exemption claimed u/s.54EC as discussed above Nil 2500000 7629479 Income from other sources: Dividend income (being exempt u/s.34 383427 Nil Total Income 7629479 Rounded off 7629480 From the above, it is evident that there is a contradiction between the finding in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce the evidence and the case of the appellant did not fall under rule 46(l) whereby admission of additional evidence can be allowed The A.O. in his report also stated that the source of investment of ₹ 25 lakhs in the Bonds of NHB was not forthcoming from the letter dt: 22-11-1999 The report of A.O. was given to the AR for rebuttal. The AR submitted that even though the appellant was given time to file the evidence, it could not file the same due to severe disputes between two brothers of the family and the ground of insufficient time was taken because for such details, not only sufficient but substantial time was required as details were not kept handy and were to be called from out of city and the Rule 46A was introduced exceptionally for such cases. The A.R., therefore, pleaded that the additional evidence be admitted and genuine claim of exemption u/s.54E be granted. Considering the facts mentioned by the A.R. in his reply to remand report of A.O., I am of the opinion that the appellant was prevented by sufficient cause in not furnishing the evidence in time, due to severe dispute prevailing in the family at that time and the evidences were not handy and the same were to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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