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TMI Blog2011 (5) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... dure laid down in Section 250 of the Income Tax Act, 1961. (3) For that the order of the Ld. CIT(A) is in violation of the Instructions No.20/2003 [F. No.279/Misc. 53/2003/ITJ] dated 23.12.2003 of the Central Board of Direct Taxes u/s. 119 of the Income Tax Act, 1961 and hence the appeal should be treated to have allowed by the Ld. CIT(A). (4) For that the Ld. CIT(A) erred in confirming the disallowance of ₹ 11,61,266/- made by the A.O. by applying he provisions of Section 14A. (5) For that the Ld. CIT(A) ought to have accepted the submissions of the appellant that the disallowance of ₹ 11,61,266/- made by the A.O. was totally uncalled for and otherwise heavy and excessive and was without any feasible basis. (6) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed as not pressed. 5. Ground Nos. 4 5 is relating to disallowance of ₹ 11,61,266/- made by the Assessing Officer and confirmed by the Ld. CIT(A) by applying provisions of Section 14A of the Act. 6. At the time of hearing, Ld. Counsel appearing on behalf of the assessee submitted that there was some arithmetical mistake by the Assessing Officer in his assessment order wherein he has treated the long term capital gain as ₹ 77,13,674/- whereas actual long term capital gain is ₹ 60,17,764/- only. Hence, it is submitted that the issue may be restored to the file of the Assessing Officer for recomputation. For which Ld. Departmental Representative has not made any serious objection to restore this issue to the file o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in subsection (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in- trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stockin- trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. Thus, the A.O. has accepted the proportion in law that capital asset may get color of stock-in-trade. But then the A.O. says that there is no provision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- I have considered the submission of A/R of the appellant and also gone through the assessment order and finding of assessing officer and also CBDT Circulars and judicial pronouncements. The CBDT instruction No 1827 dated 31.08.1989 had laid down certain tests to distinguish between the shares held as stocks in the trade and shares held as investments. The following supplementary instruction provided in this regard as for the further guidelines for determining whether a person is a trader in stocks or an investor in stocks. i) Whether the purchase and sale of. securities was allied to his usual trade or business/was incidental to it or was an occasional independent activity. From the details it is observed that assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction is an adventure in the nature of trade. So as per principle laid down by Hon ble Supreme Court it is seen that : i) The assessee company purchased the share was as a trader and dealer in shares and purchase of shares and its resale were allied to its usual trade or business. ii) The shares were acquired in large number of quantity with the object to resale. iii) The purchase and sale of shares clearly indicate repetition of the share transactions. So it is very clear that assessee company trading in shares. The Hon ble Supreme Court in the case of Sarder Indra Singh Sons Ltd vs. CIT (1953) 24 ITR 415 also held that the surplus resulting from sale of shares and securities constituted business income. The object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions and perused the material available on record. We find that the CIT (A), by following the CBDT Instruction No.1827 dated 31.08.1989 which laid down certain tests to distinguish between the shares held as stocks in the trade and shares held as investments and he has also followed the judgment of Hon ble Apex Court in the case of G. Venkataswami Naidu Co. vs. CIT reported in 35 ITR 594 which laid down certain principles in deciding the character of transaction. It appears that there is no provisions in the Income Tax Act in respect of conversion of stock in trade into investment and its treatment. Hence, the lower authorities rightly made the addition as there was under statement of income by analyzing the assessee s tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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