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TMI Blog2011 (5) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord and the decisions relied upon by them. Ground No.1:- The assessing officer disallowed the claimed depreciation on car amounting to ₹ 3,72,725/- on the basis that the car was not owned by the assessee-company. He noticed that the depreciation was claimed on the vehicle registered in the name of one of its Directors. In support, he placed reliance on the decision of Pune Bench of the Tribunal in the case of Sunnet Engineering Pvt. Ltd. Pune vs. ACIT, Circle 6, Pune (ITA No.778/PN/2004). The learned CIT (A) has however deleted the disallowance following the later decision of the Pune Bench of the ITAT in the case of Rohan Builders Developers Pvt. Ltd. in ITA No.942/PN/2006 wherein discussing its earlier decision in the case of Sunnet Engineering Pvt. Ltd.. (supra), the Tribunal has held that the depreciation in respect of vehicles owned by the company and used for its business was allowable though it was registered in the name of the Directors. 3. In support of the ground, the learned Departmental Representative has basically placed reliance on the assessment order, which we have already discussed herein above. The learned AR, on the other hand, tried to justify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the learned CIT (A) are distinguishable on facts and hence they are not helpful to the assessee. He submitted that there are several factors to come to a conclusion as to whether the transaction in shares is with the intention to investment or to trade them. The learned Departmental Representative submitted that the factors like substantial nature of transaction, manner of maintaining books of account, magnitude of purchase and sales were to be seen by the learned CIT(A) to determine the nature of the transaction. The learned CIT (A) failed to appreciate that most of the shares were sold within 30 to 40 days of its purchase. Thus, it is obvious that the intention of the assessee behind the transaction in question was to gain profit in business of trading in shares and not investment in shares. It is also worth noting that the dividend was earned only from Finolex shares. He placed reliance on the following decisions:- i) Ajinkya Electromeit Pvt. Ltd. vs. ACIT (ITA No. 1519/PN/08 assessment year 2005-06 order dated 30-7-2010 ii) Smt Sadhana Nabera vs. ACIT (ITA 2586/Mum/09 - Asst. year 2005-06) order dated 27-3-2010. iii) Som Nath Maini v CIT 306 ITR 414 (P Ht) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry fruits having turnover during the year at around ₹ 60 crores whereas the turnover in the transaction of shares is around ₹ 2 crores only. In the Memorandum of Association of the Company, no object of trading in shares has been shown but clause 10 talks about the investment in shares. He referred page No.50 of the paper book to support his contention that frequency in the transaction of shares was very low. He referred para 6.9 of the first appellate order wherein the learned CIT (A) made observations regarding frequency of transaction in shares. He submitted that there are total number of 20 instances of purchase in 12 different scrips during the year and there are 15 sales instances in 11 scrips in this year. Neither can it be treated as high volume of purchase and sales when the total amount of turnover is considered, nor it can be treated as high frequency. The number of transactions around 15 to 20 per year cannot be treated as regular business activity on day to day basis having very high frequency. Similarly, in respect of last year i.e., 2004-05 also neither the frequency nor the turnover in respect of shares purchase/sales would be higher when compared to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instances. The total profit of ₹ 77,87,001/- has been calculated after adjustment of profit of ₹ 83,24,918/- against the loss of ₹ 5,37,917/-. Thus, ₹ 97,87,000/- has been claimed under the head short term capital gains . Out of these 14 companies scrips, in respect of two companies i.e., Global Boards Limited and M/s Kitply Industries limited, the shares were actually purchased in the months of November and December 2003 i.e., purchases in the last assessment year 2004-05 and it constituted 4 instances of purchases. Therefore, the total number of purchases for this year were of 12 scrips and in 20 transactions, and the total amount of purchases were of ₹ 1,62,75,704/-. 9. So far as sales are concerned out of 14 scrips shown under the investment portfolio, no sales have been made in respect of M/s Global Boards limited, G.V. Films Limited and G-Tech Infotra Limited i.e., sales have been made in respect of 11 scrips resulting in a total number of 15 transactions of sales amounting to ₹ 2,18,35,113/-. As against this amount of sales of shares, the total sale turnover of the assessee in respect of its main business of dry-fruits and spices, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/- was only relating to the transactions under the head profit and gains of business and the remaining amount of ₹ 76,97,491/- is to be taxed as short-term capital gains. The learned CIT (A) has treated ₹ 89,509/- as business income on he basis that the purchases of 3888 shares of TISCO were made on 17-5-2004 for ₹ 9,53,587/- on the same date i.e., on 17-5-2004 itself all the shares were sold for ₹ 10,43,096/-. Thus, he treated these transactions as day-trading in common parlance. The profit of ₹ 89,509/- is treated as gain out of business was resultant of the said day trading. In view of the above, the first appellate order on this issue is upheld. Ground No.2 is accordingly rejected. Ground No.3: The relevant facts are that the assessing officer disallowed 20% of the claimed amount of ₹ 16,21,422/- on account of traveling and conveyance expenses. The assessing officer made the disallowance of ₹ 3,24,284/- in this regard on the basis of the possibility of personal user thereof. The learned CIT (A) noted that the amount of ₹ 11,37,500/- included in the travelling and conveyance expenditure of ₹ 16,21,422/- was related to ..... 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