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TMI Blog2016 (2) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in directing the AO to treat the income of Rs. 95,92,653/- as STCG against business income assessed by AO. 3. On the facts and circumstances of the case the ld. CIT(A) has erred in law in directing the AO to charge the amount of Rs. 90,180/- as Short Term Capital Gain under the head 'Capital Gains' and not under the head 'Income from Business income' whereas the amount of addition was Rs. 95,92,653/-. 4. The appellant craves leave to add, amend an\y / all the grounds of appeal before or during the course of hearing of the appeal." 3. The grounds raised in the Assessee's Cross Objection read as under:- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the eye of law. 5 (i) On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in making addition of Rs. 62,817/- invoking the provisions of Sec 14A of the Act. (ii) That the addition has been arbitrarily estimating the expenses related to exempt Income. 6. The respondent craves leave to add, amend or alter any of the grounds of cross objections. 4. The brief facts of the case are that the a search and seizure operation was initiated u/s. 132 in the Swastik Pipes Group of cases on 28.8.2008. The assessee company was covered in the search. Notice u/s. 153A was issued on 25.8.2010 and served. In response to the said notice, the assessee filed the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt term capital gain as business income. It was submitted by the learned DR that the AO has rightly assessed the income of Rs. 95,92,653/- as business income and the learned CIT(A) has erred in directing the AO to assess the same as short term capital gain. It was further submitted by him that in the assessee's Memorandum & Articles of Association in the object clause it has been stated that its business is investment in shares and debentures and hence the AO was right in assessing income arising from the investment in shares as business income. It was further submitted that AO has given cogent reasons for treating short term capital gain as business income. 8. On the contrary, the Ld. Counsel of the Assessee contended that the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitting investment in shares. Further there is no bar. A trader can also make investment in shares and can have two portfolios. In support thereof, he placed reliance on the Order of the ITAT in the case of ACIT vs. Ascot Investments, ITA No. 4691/Del/2011 dated 27.04.2015 and Omkareshwar Properties (P) Ltd. vs. ITO, ITA No. 5754/Del/2013 dated 23.10.2015. 10. We have heard both the parties and perused the paper book, assessment order and the order of the Ld. IT(A). In the Revenue's appeal, though it has raised four grounds of appeal but the only issue is treatment of income of Rs. 95,92,653/- as short term capital gain against business income though in ground no.3 the Revenue has stated that the learned CIT(A) has mentioned the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. There are no repeated transactions in the same script. There does not appear to be any organized activities as is normal in the case of a trader. There is no intra-day transaction. 12. The AO has referred to the Memorandum & Articles of Association to support its allegation that investment in scripts is the business of the assessee. We are of the view that this cannot be the basis for holding that the gain arising during the year is business income and not capital gain because the Memorandum of Association has an object of investment in equity shares, preference shares and debentures. Firstly even if such object is there in the Memorandum of Association i.e. to carry on the investment in shares, it does not debar a company from hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shares as capital asset in its books of accounts. The same has also been declared in the financial statements as capital asset. These financialstatements have been audited and also have been approved by the shareholders filed with the Registrar of Companies. The books of accounts and the audited financial statements have evidentially value and what is recorded therein cannot be disturbed lightly. The income arising on sale of capital asset, as stated hereinabove, has to be assessed under section 45(1) as capital gain and accordingly the CIT(A) was right in holding that gain arising on sale of investment will be chargeable as capital gain and not as business income. 15. In the background of the aforesaid discussions and precedent, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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