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2016 (1) TMI 643 - AT - Income TaxSale of shares - long-term-capital-gains or profit and gains of the business - Held that:- The assessee’s intention for purchasing the shares was purely for investment and to earn gain on a long term investment. Not only this, in earlier years also the assessee’s investment in shares have been held to be assessed under the head “capital gain”, because consistently assessee has been showing investment in shares in his personal Balance sheet purchased out of his own surplus fund. As pointed out by Ld. Counsel, the Ld. AO has misled himself by taking the Balance sheet of the Proprietary concern wherein the assessee had shown certain loan, whereas the investment have been made through personal account which is reflected in the personal Balance sheet, wherein there are sufficient own fund for making the investment. Thus, on these facts and circumstances, we hold that the shares which have been held as “investment” in the Balance sheet are to be treated as assessable under the head “capital gain” and not as ‘business income’.- Decided in favour of assessee. Disallowance of depreciation - AO has made the disallowance as there was no business activity carried out by the assessee in his proprietary concern ‘Cherry International’ - Held that:- We find that assessee had shown loss from proprietary concern, M/s Cherry International. After including depreciation, the loss has increased to ₹ 2,83,490/-. Even if there was a temporary lull in the business that does not mean depreciation on the assets appearing in the Balance sheet have to be disallowed especially when it has been brought on record that in the subsequent years the assessee’s business has again taken-up at a very high scale from where the assessee had shown huge profits. Thus, it cannot be held that simply there was temporarily lull in the business activity in this year the depreciation claimed on the assets is to be disallowed. Accordingly, depreciation claimed by the assessee is allowed. - Decided in favour of assessee.
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