TMI Blog2016 (1) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... ad shown certain loan, whereas the investment have been made through personal account which is reflected in the personal Balance sheet, wherein there are sufficient own fund for making the investment. Thus, on these facts and circumstances, we hold that the shares which have been held as “investment” in the Balance sheet are to be treated as assessable under the head “capital gain” and not as ‘business income’.- Decided in favour of assessee. Disallowance of depreciation - AO has made the disallowance as there was no business activity carried out by the assessee in his proprietary concern ‘Cherry International’ - Held that:- We find that assessee had shown loss from proprietary concern, M/s Cherry International. After including depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and in facts in disallowing depreciation of ₹ 3,85,043/- without conducting any business activities during the year. 2. The brief facts qua the first issue is that, assessee is an individual who has declared long-term-capital-gain in share transactions amounting to ₹ 13,05,45,813/- which was claimed as exempt u/s 10(38). The AO required the assessee to furnish the details of share transactions along with the copies of bills, demat account etc. In response to the show cause notice as to why the profit/gains declared as long-term-capital-gain should not be treated as business income, the assessee submitted that, in the earlier years, similar transaction of sale of shares and securities were assessed under the head capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of accessibility or its taxability and also referred to CBDT Instruction dated 16.05.2006. The AO noted that assessee had shown long-term-capital-gain on 6 scripts under the head long-term-capital-gain and the major gain has come from script named as Pyramid Saimira Theatre Ltd. For ₹ 12,96,87,900/-. The details of such scripts as noted by the AO are as under:- 1 Bausch Lomb ₹ 1,030/- 2 Genesys Security ₹ 6,47,135/- 3 P G Foils Ltd ₹ 1,94,155/- 4 PBA Infra Rs.(-) 5,46,618/- 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Initial Public Offer (IPO) was launched and assessee had been allotted shares from the promoters quota directly and also noted that SEBI has noted certain discrepancy and some kind of alleged forged letter managed by the promoter of the company in the name of SEBI to make an open offer of the share particulars of ₹ 250/- per share that is, sold for more than 4 times of the original market price/IPO. Ultimately, it was found that, no such letter was issued by the SEBI on this script and price was rigged to get higher price of the shares. After all these observations, ultimately the AO has simply made the addition by treating long-term-capital-gain as income from business. This action of the AO too has been confirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has earned dividend income of ₹ 23,300/- which the AO has held that assessee has not earned any dividend income. Lastly, in support of his contention that once the assessee has purchased these shares allotted through IPO, then it can be inferred as an investment in a capital asset, he filed various Tribunal decisions. 4. On the other hand, Ld. DR strongly relied upon the order of the AO and CIT(A). 5. We have heard the rival contentions and also perused the relevant material placed on record. Here in this case, the assessee had shown long-term-capital-gain mostly on sale of 3 scripts and particularly from the sale of script of M/S Pyramid Saimira. The assessee has bought these shares through IPO for sums aggregating ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred loss. On these facts and circumstances, it can be very well held that the assessee s intention for purchasing the shares was purely for investment and to earn gain on a long term investment. Not only this, in earlier years also the assessee s investment in shares have been held to be assessed under the head capital gain , because consistently assessee has been showing investment in shares in his personal Balance sheet purchased out of his own surplus fund. As pointed out by Ld. Counsel, the Ld. AO has misled himself by taking the Balance sheet of the Proprietary concern wherein the assessee had shown certain loan, whereas the investment have been made through personal account which is reflected in the personal Balance sheet, where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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