TMI Blog2012 (3) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... Rohit Garg, Sr. D.R. ORDER PER SHAMIM YAHYA: AM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals) dated 19.5.2010 pertaining to assessment year 2007-08. 2. The first issue raised is that Ld. Commissioner of Income Tax (Appeals) erred in deleting the disallowance of depreciation of Rs. 3,07,707/- out of Rs. 4,10,227/-. 3. In this case Assessing Officer observed that assessee has claimed depreciation of Rs. 410277/- on various fixed assets as follows:- i) Plant and machinery - Rs. 11,509/- ii) Office equipments - Rs. 65,011/- iii) Furniture and fixtures - Rs. 18,704/- iv) Vehicles - Rs. 3,15,053/- Rs. 4,10,277/- 3.1 Assessing Officer further observed that during the year assessee has carried on its core manufacturing activity of textile on a very marginal scale. The main focus of the assessee company during the year has been real estate development. The total amount spent by the assessee on real estate operations and which have been shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that assessee is not claiming them as expenses in profit and loss account is wrong. Ld. Commissioner of Income Tax (Appeals) observed that the entire items of plant and machinery, office equipments, furniture and fixtures and vehicles have been used by the assessee in the course of carrying out of its business during the period under consideration. Ld. Commissioner of Income Tax (Appeals) further observed that Assessing Officer cannot invoke the provision of section 38(2) in the case of the assessee because under the said provision, she can restrict the deduction under clause (ii) of clause (a) and clause (c) of section 30, clause (i) and (ii) of section 31 and clause (ii) of sub-section (1) of section 32 only in those cases where any building, machinery, plant or furniture is not exclusively used for the purpose of business or profession. Ld. Commissioner of Income Tax (Appeals) further placed reliance the decision of the Hon ble Delhi High Court in the case of C.I.T. vs. Bharat Aluminium Co. Ltd. (2010) 187 Taxman 111(Delhi); Hon ble Bombay High Court in the case of C.I.T. vs. GR Shipping Ltd. ITA no. 598 of 2009, Hon ble ITAT, Chandigarh decision in the case of Gulati Sari Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, as on 31.3.2007, the assessee is holding shares worth Rs. 8,17,13,852/- whose purchase value is not included in the sale / purchase value of about Rs. 16.92 crores mentioned above. Assessing Officer observed that the number of companies whose share have been purchased and sold, the short period of holding between the dates of purchase and sales, the value of transactions involved, shows that the motive of the assessee in purchasing the shares is not for investment purposes and to earn dividend income but to hold these shares for a short period of time and make a profit. Assessing Officer further observed that the dividend income earned is Rs. 13,60,511/- and the profit in share trading is Rs. 69,68,996/-. Therefore, Assessing Officer held that this profit in share trading has to be treated as part of business income and not short term capital gain taxable at a concessional rate of 10%. Therefore, Assessing Officer added Rs. 69,68,996/- to the business income. 10. Before the Ld. Commissioner of Income Tax (Appeals) assessee submitted that Assessing Officer has wrongly held that the profit on sale of shares and mutual funds purchased as business income instead of short term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utual Funds of the value of Rs. 447.69 Lacs were held as investment as on 31st March,2007. I have also noticed that appellant company further invested a sum of Rs. 516.42 lac in equity shares scripts of different listed companies during the period July'2006 till 31st March'2007. 0ut of the said investment, in Equity Shares, Equity Shares having cost price of Rs. 147.19 Lacs were sold for Rs. l5l.17 Lacs and earned net gain of Rs. 3.99 Lacs. Remaining Equity Shares scripts of different companies of the value of Rs. 369.23 Lacs were held as investment on 31st March,2007. Ongoing through the complete set of facts, it is seen that the appellant had sold share scripts of different listed companies only on 12 occasions during the year under consideration and has not made sale purchase transactions of shares on regular basis. It is seen that the frequency or transactions of purchase and sale of shares is not high. The investment has not been rotated frequently as all the shares/mutual funds purchased by the appellant were not sold, rather the same were held for quite number of days. The appellant earned dividend income of Rs. 13,60,511/- from investment in such shares and mutual funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions of shares and mutual funds carried out by the appellant company during the year under appeal should be treated as Investment and the profit on sale of shares/redemption of mutual funds shall be assessed under the head 'Capital Gain' as Short Term Capital Gain and not 'Business Income'. The Assessing Officer is, therefore, directed to assess Rs. 69,68,996/- as short term capital gain taxable u/s 111A @10%. As a result, this ground of the appellant is allowed. 11. Against the above order the Revenue is in appeal before us. 12. We have heard the rival contentions in light of the material produced and precedent relied upon. 12.1 We find that Ld. Commissioner of Income Tax (Appeals) has observed that assessee has made investment out of its own fund and not borrowed any funds for making such investment. In its books and accounts, balance sheet, assessee has disclosed the same as investment also. Ld. Commissioner of Income Tax (Appeals) has given a finding that assessee has sold shares of different listed companies only on 12 occasions during the year under consideration and has not made sale purchase transactions of shares on regular basis. Ld. Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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