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2017 (2) TMI 1183 - ITAT RAJKOTRevision u/s 263 - whether the order of the AO is open to attack as erroneous in so far as prejudicial to the interests of the Revenue in terms of section 263 of the Act when the STCGs returned by the assessee has been accepted by the AO in the given facts? - Held that:- AO has noted that necessary details and evidences thereof have been furnished by the assessee. In the circumstances, it is difficult to accept the allegation that the action of the AO was without requisite enquiry and application of mind on facts. Possibly, the CIT is not happy with the quality of the outcome on the enquiry. However, this by itself would not give occasion to the CIT to pass order under s.263 of the Act. On facts, we note from the order of the CIT itself that the assessee has maintained separate records whereby intention to hold certain shares as capital assets as compared to other class of trading assets of similar nature can be deciphered. This act of the assessee by itself is a strong indicator of the declaration of the underlying intention of the assessee. We also take note of the fact that Circular No.4 of 2007 dated 15/06/2007 issued by the CBDT clearly lays down that it is possible for a taxpayer to have two types of portfolios simultaneously, i.e. an investment and trading portfolio. We simultaneously note that substantial majority of the transactions giving rise to the capital gains are mere resale of shares acquired in the initial public offer for allotment of shares by companies. Thus, shares were acquired in the primary market and sold in the secondary market after obtaining delivery thereof. The transactions involving purchase and sales are limited in number and does not indicate any continuous and systematic course of activity or conduct with set purpose. We observe that the manner in which the books of accounts are kept is an important piece of evidence for determination of the factual issue in hand. The shares held at the end of the year towards investment has also not been shown to be valued at cost or market price whichever is lower. We also notice that the investments giving rise to the capital gains are not driven primarily by the borrowed funds which were claimed to be not obtained on commercial basis. In these facts, the action of the AO accepting the capital gain declared by the assessee as such cannot be faulted per se. The view of the AO on the issue is clearly a plausible view which in our view cannot be toppled and substituted by the opinion of the CIT in this regard.- Decided in favour of assessee.
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