TMI Blog2015 (6) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... is lower which is the policy adopted by Assessee for value stock in trade. The submission of the Assessee that at the expiry of the lock in period i.e. on 02.04.2007, the shares of RPG Life Science Ltd. were transferred to stock in trade is not supported by any evidence more so when the Assessee is a limited Company and is required to follow certain guidelines, procedures prescribed under the Accounting Standards when there is transfer from "investment" to stock in trade. Further, it is also seen that under clause 12A of the Tax Audit Report for A.Y. 2008-09 which is placed at page 84, against the column with respect to particulars of capital asset converted into stock in trade, the auditor has mentioned as Nil meaning thereby that auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in the business of trading in shares. Assessee filed its return of income for A.Y. 2008-09 on 25.09.2008 declaring total loss of ₹ 80,03,910/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 20.10.2010 and the total income was determined at ₹ 8,08,300/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds;- 1. The Order passed by A.O. and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 158 per share during the F.Y. 2005-06 and the shares was held as investments and was also reflected as investments in the audit balance sheet for A.Y. 2005-06 2006-07. The submission of the Assessee that it had converted the shares into stock in trade as on 02.04.2007 was also not found acceptable to the A.O for the reason that in the tax audit report submitted by the Assessee, it was stated by the tax auditor that there was no conversion of capital assets into stock in trade during the year under consideration. Considering all the aforesaid facts, A.O concluded that the loss on sale of equity shares of RPG Life Sciences Ltd amounting to ₹ 88,12,209/- was a long term capital loss and cannot be considered as a business transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intention of the appellant was to purchase the shares as an investment. The claim that these were put in the investment portfolio for the sake of identification is an afterthought. The intention of the appellant is demonstrated by the fact that the shares are placed in the investment portfolio and were valued at cost. The shares were purchased for a consideration of ₹ 2,37,00,000/- and were shown i.e. at cost in accordance with the accounting policy for valuation of the investment. The fact that the shares have been bought in preferential allotment is also an indicator that this was intended to be an investment. Therefore, the A. O. was justified in treating the loss arising out of the sale of these shares as capital loss and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 192 ITR 365 (Calcutta). Ld. D.R. on the other hand pointed to the various findings of A.O and supported the order of A.O and ld. CIT(A). 8. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to the treatment of loss on sale of equity shares of RPG Life Sciences Ltd. which were allotted to the Assessee on 23.02.2006. From the perusal of the Balance sheet as on 31st March, 2007, it is seen that the shares of RPG Life Sciences Ltd of ₹ 2.37 crores are reflected under the head of investment and are valued at cost which is also in line with the accounting policies (as reflected in the annual accounts and placed at page 29 of the paper book,). On the other hand, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect to current investment in the Accounting Standard, it is stated that it has to be valued at lower of cost and fair value whereas on the other hand, the Assessee has in its books treated the shares as investment and accordingly valued the shares at cost and therefore its contention of holding the shares at stock in trade is also not supported by the method of accounting and its valuation. Before us, ld. A.R. has also not placed any material on record in support of its contention that for the sake of identification, the shares were placed in investment account. Before us, Assessee has also relied on the decision of Calcutta High Court in the case of CIT vs. Arvind Investments Ltd. (supra). We however, find that the aforesaid decision are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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