TMI Blog2012 (7) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ual of income on government bonds - 8% GOI Bonds - assessee submitted that the interest as per scheme of GOI Bonds would accrue on 30th June and 31st December of every year and interest accrued and received as on 31/12/2005 was offered for taxation and the interest for the period from 1/4/2006 to 31/3/2006 would only accrue on 30th June as per the scheme and, therefore, the appellant has not accounted for the same and the said interest is offered for taxation as and when accrued and due to the appellant's wife – Held that:- AO has not incorporated the explanation of the appellant on this point in the assessment order - Without a legally enforceable right, it cannot be said that the income has accrued. As the interest relating to the period 1/1/2006 to 31/3/2006 was not yet accrued as on 31/3/2006 but would accrue only on 30th June, 2006 - AO directed to delete the addition and the same will be brought to tax in the next year on accrual basis. - IT APPEAL NOS. 5290 (MUM.) OF 2008 & 6430 (MUM.) OF 2009 - - - Dated:- 29-7-2011 - R.S. SYAL, N.V. VASUDEVAN, JJ. K. Shivram and Sanjay Parikh for the Appellant. Abani Kanta Nayak for the Respondent. ORDER N.V. Vasudevan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 566.85 Dividend on shares 74,325/- Bank fixed deposit interest 2196/- PPF Interest 32,163 ICICI bond interest 1,751/- Total 4. The further description of the transaction in the order of assessment is as follows: "In addition to this as shown in the statement of short term capital gains from 1/4/04 to 30/9/04 assessee has purchased 104311 number of shares for Rs. 2,70,43,150.39 and sold the same for Rs. 2,84,09,548.64/- thereby earning a profit of Rs. 13,66,398.25. These scrips pertained to 34 companies and total no. of transactions done by the assessee were 56. further, as shown in the statement of short term capital gains from 1/10/04 to 31/3/05 assessee has purchased 447383 number of shares for Rs. 3,28,07,877.21/- and sold the same for Rs. 3,46,00,415.54/- thereby earning a profit of Rs. 17,92,538.33. These scrips pertained to 82 companies and total no. of transactions done by the assessee were 173." 5. As can be seen from the above details culled out by the AO in the order of assessment the details do not tally with the statement of total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operly considered by the AO and CIT(A) and their ultimate conclusions on the question whether the income in question was income from business or income from capital gains is erroneous. 10. We have considered the submissions and are of the view that the stand taken by the assessee is well founded. In this regard we find that Courts have laid down principles for deciding the question as to when income from sale of shares can be said to be income from business. The following are some of the important decisions in this regard: ( a ) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the nature of investments is mixed question of law and fact. Learned CIT(A) v. H. Holck Larsen , [1986] 60 ITR 67/26 Taxman 305 (SC). ( b ) It is possible for an assessee to be both an investor as well as a dealer in shares. Whether a particular holding is by way of investment or formed part of stock in trade is a matter which is within the knowledge of the assessee and it is for the assessee to produce evidence from his records as to whether he maintained any distinction between shares which were hold by him as investments and those hold as st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and the appellant was living in Challenger Tower flat. He further noticed that in the statement of total income, the appellant had offered only house property income in respect of flat at Pune at Rs. 50,000/-, net of deduction u/s. 24 as per assessment order for A.Y 2004-2005. Thus, the AO found that the appellant did not offer any notional income in respect of flat at Oberoi Park View, Kandivali. He further found that for A.Y 2005-06 the notional income from the above house property was estimated at Rs. 1 lac after deduction u/s. 24 and the same was confirmed on appeal by CIT(A). He therefore, assessed notional erent of Rs. 1,10,000/- from Oberoi Park View property and further assessed Rs. 75,000/- in respect of Pune flat considering the rise in the rental value. 8.2 At the time of hearing the, the representative submitted that the appellant did not offer any income in respect of flat at Oberoi Park View, Kandivali as the possession was not yet received as on 31/3/2006. He further submitted that this was also explained to the AO but since the addition was made in the last year and confirmed by CIT(A), the AO repeated the same addition. He submitted that the above flat was book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Rs. 50,000/- on estimate basis and, therefore, there is no necessity to disturb the same. I, therefore, direct the AO to accept the notional rent of Rs. 50,000/- after deduction u/s. 24 as admitted by the appellant." In AY 05-06, the Assessee claimed Flat No.2302, Obroi Park View Tower as self occupied property, whereas in A.Y 2006-07 the Pune property has been claimed as self occupied property. Moreover, the facts as stated by the Assessee in AY 06-07 was raised for the first time in that year only. Since new facts have been raised in AY 06-07 contrary to facts in AY 05-06, we deem it fit and proper to set aside the order of the CIT(A) on this issue in both the AYs and direct the AO to examine the correct facts and consider the issue afresh. We, set aside the issue to the AO for fresh examination in accordance with law after ascertaining the correct facts. 13. The other grounds of appeal is with regard to charging of interest which is purely consequential. 14. In the result, the appeal by the assessee is treated as allowed for statistical purposes. ITA 6430/M/09:Revenue's Appeal: 15. In this assessment year the very same issue as to whether income declared by ..... 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