TMI Blog2016 (2) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case as is evident from the facts on record, the investments in shares were held as capital asset. The assessee has accounted for these investments in shares as capital asset in its books of accounts. The same has also been declared in the financial statements as capital asset. These financial statements 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)] has erred both on facts in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A and order passed by the learned Assessing Officer (AO) under Section 153A/143(3) is without jurisdiction. 2. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 3. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in ignoring the fact that the additions made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s. 143(2) on 20.9.2010 and u/s. 142(1) on 30.9.2010. These notices were duly complied with, and necessary details / clarifications were filed. The AO has completed the assessment at an income of ₹ 99,74,084/- as against returned income of ₹ 95,34,323/-. The assessee during the year has earned long term capital gain of ₹ 14,27,860/- and short term capital gain of ₹ 95,92,653/-. The AO held that the short term capital gain is a business income and has assessed it accordingly. The AO made certain other additions/disallowances vide order dated 28.12.2010 passed u/s. 143A r.w.s. 143(3) of the I.T. Act, 1961 5. Aggrieved with the aforesaid order of the AO, the assessee filed appeal before the Ld. CIT(A) challenging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee during the year has earned a total capital gain of ₹ 1,10,20,860/- which included long term capital gain of ₹ 14,27,860/- and short term capital gain of ₹ 95,92,653/-. He further stated that the AO has accepted the long term capital gain as is evident from the assessment order but has not accepted the short term capital gain and has treated the same as business income though both short and long term capital gain has arisen from investment in shares only. The learned Counsel of the Assessee invited our attention to the details of these capital gain placed at PB Page 83 in support of his contention that there were very few transaction as is evident from the details. The assessee all along has been holding investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short term capital gain instead of ₹ 95,92,653/-. During the course of the hearing both learned AR and learned DR clarified that this is a typographical error and the correct amount is ₹ 95,92,653/- which the AO has assessed as business income and the learned CIT(A) has directed to assess the same as short term capital gain. 11. It is an admitted fact that the assessee during the year has earned long term capital gain of ₹ 14,27,860/-. This long term capital gain has been accepted by the AO and whereas the short term capital gain has been assessed as business income. From the assessment order, we find that no reason has been given by the AO to treat these two differently. From the balance sheet of the assessee company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares as a capital asset. A company is entitled to carry on the business in shares as well as to hold shares as investment. The gain arising on shares held as investment will be chargeable as capital gain whereas the gain arising on sale of shares held as stock in trade as business income. This issue has come up before the ITAT in the case of Omkareshwar Properties (P) Ltd. vs. ITO (Supra) where it was held that if the assessee though having object clause of carrying on the business of real estate in the Memorandum Articles of Association, the land held as capital asset will not become stock in trade merely because the Memorandum Articles of Association has an object clause to carry on the business of real estate. 13. An income has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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