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TMI Blog2018 (2) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... ty rather than the trading activity that would require larger infrastcuture; and lastly, whether the behaviour of the assessee is such as to disclose income/earning has objective i.e. “obtaining dividend” rather than trading. This Court notes that all the tests and the relevant rulings were noticed by both the authorities below, who had applied their mind and held that the AO’s approach in singular fixing scrutiny to the shifting and regulations of some shares to treat as business income, was erroneous. Reporting of mercantile interest of doubtful debts - Held that:- The question is covered by the decision of this Court in Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. (2010 (11) TMI 88 - Delhi High Court). The Court had appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had holdings, were treated as stock in trade. The assessee shifted some of the shares to its investment account and later sold them during the Assessment Year. The AO rejected the assessee s claim and held the profits to be business income. In doing so, the AO relied upon the judgment of the Supreme Court in Dalhousie Investment Trust Co. Ltd. v. CIT, Central Calcutta , (1968) 68 ITR 486 (SC) and other rulings. The CIT(A) upon re-appraisal of the facts and consideration of the authorities, held as follows : 4.3 I have carefully considered the facts of the case, order of the AO and submissions made by the ld. AR. The central point of dispute in this ground of appeal is regarding the head of income under which the profit earned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant company had distinct portfolio of shares and mutual funds under two categories i.e investments and stock in trade. The contention of the ld. AR, that it is not open for the AO to summarily reject the decisions of the Board of directors of the company as it is their prerogative to decide as to whether the company would earn income under the head capital gains or business income from sale of shares, also appears correct. In the instant case during the last few years too, the appellant company had followed the same practice of holding certain shares under the head investments and some shares as stock in trade. Therefore, under these circumstances the action of the AO treating the entire income as business income is not justified, henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred to Capital Reserve (Refer Annexure-2) 2,078,066.000 32,767,348.61 Transferred to Capital Reserve on Amalgamation 287,500.000 662,500.00 Sale of Shares (on cost) (Refer Annexure-3) 2,244,050.254 41,425,034.89 Closing stock of Shares held as Stock (Refer Annexure-4) 8,421,487.000 99,149,290.00 14. There is absolutely no allegation by Ld. AO regarding these facts as observed by Ld. CIT(A). We are therefore, of considered opinion that Ld. AO proceeded to compute sale of shares as business income merely on the basis of notes prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court notes that all the tests and the relevant rulings were noticed by both the authorities below, who had applied their mind and held that the AO s approach in singular fixing scrutiny to the shifting and regulations of some shares to treat as business income, was erroneous. In the opinion of the Court, these findings are not only factual but sound, as they are based upon appreciation of facts at two levels and application of the settled law. No error of law is apparent; no question of law arises. 6. As far as the question with respect to reporting of mercantile interest of doubtful debts is concerned, the question is covered by the decision of this Court in Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. (ITA 552/2005 and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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