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2017 (1) TMI 776 - AT - Income TaxPurchase-sale of securities - whether is a business profit or capital gain ? - Held that:-On perusal of final accounts of the assessee, for the assessment year under consideration and immediately preceding assessment year 2004-05 we find that the assessee has been showing all the securities as investment in its books of accounts. The corresponding income on sale and purchase of securities has been offered under the head of capital gain by the assessee for both the years. The AO has merely treated the transaction of sale purchase of securities as an adventure in the nature of trade merely on the ground of magnitude and frequency of the transaction. The securities in the books of accounts maintained by the assessee were classified as investment. Thus in our considered view the AO cannot step into the shoes of the assessee to decide the business decisions for purchase and sale of securities. It is the discretion of the assessee to carry out the activity to the best of his wisdom. Therefore we do not find any substance in the case before us. We are of the opinion that the income shown by the assessee under the head of capital gain is consistent with the accounting treatment made in the books of accounts. Income from undisclosed source - Held that:- As there was no fault on the part of the assessee we are inclined to reverse the order of lower authorities. Hence this ground of appeal of the assessee is allowed. Disallowance of dividend income from UTI master value fund wherein the amount was invested - Held that:- We find that assessee has made investment on 07.02.2005 for ₹ 75,000/- and on same day the dividend income was received from UTI as evident from the account statement. We also find that the same amount of dividend is also reflecting in the bank statement of assessee and said amount was credited in the bank of assessee on 19.02.2005 through account payee cheque. To this point, Ld. DR for the Revenue has not brought anything on record to contradict the argument made by Ld. AR. Considering the facts and circumstances of the case, we reverse the order of Ld. CIT(A) and this ground of assessee is allowed.
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