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TMI Blog2010 (12) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... wn the shares in the balance sheet as stock-in-trade year after year. Moreover, the assessee had utilised the borrowed money for the acquisition of shares. Borrowed money could be utilised for acquisition of shares only when a person is dealing in shares. He therefore submitted that the AO rightly treated the profit from the sale of shares as business income and the CIT(A) without properly appreciating the facts of the case held the same to be capital gain. He therefore submitted that the order of the CIT(A) should be reversed and that of the AO may be restored. 4. It is submitted by the learned counsel that the assessee had acquired these shares long back, approximately five to ten years before. That the assessee had always shown shares in the balance sheet as "investment". However, in the schedule of the investment, due to some clerical error by the staff of the chartered accountant, the shares were shown as stock-in-trade. However, the shares were always held as investment and were also shown as investment in balance sheet. He produced copy of the balance sheet from F.Y.1996-907 (relevant to the A.Y.1997-98) to F.Y.2004-05 (relevant to the A.Y.2005-2006). He also pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the details furnished by the A.R., it is seen that the appellant was not engaged in the business of buying and selling of shares and the investment made in shares were held as vestments right from origin in their respective years of acquisition. In fact the A.O. treated the investment in shares as business income on the ground that it had been shown as stock in-trade for the year chided on 31-3-2004, but as admitted by the appellant, there was an unintentional mistake committed by the appellant in preparation of accounts/balance sheet, whereby it was shown wrongly as stock in trade instead of investments. Since the appellant was engaged in the business of giving building on rent and investments in shares & securities and it was holding these shares Continuously in the same quantity and no business activity in shares and securities has been done in any of the shares during its investment period, the action of AO in treating the profit on sale of shares held by the appellant as business income is held to be riot justified and hence he is directed to treat the same as long Term Capital Gain as claimed by the appellant" After considering the arguments of both the sides and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the sum of ₹ 25 lakhs in National Housing Bank. That the entire transaction of receipt of the debentures from the Raymond Woolen Mills Ltd. by the assessee and other shareholder of the Indian Chronicle Ltd. is duly supported by the MOU between the Raymond Woolen Mills Ltd. and the Indian Chronicle Ltd. That the debentures were redeemed and the assessee received ₹ 25 lakhs from such redemption. Since entire amount was invested by the assessee in the bonds of National Housing Bank entire capital gain of ₹ 25 lakhs was exempt under Section 54EC. That in the assessment order, the AO has mentioned that he is making addition for unexplained investment under section 69, but while computing the income, he had in fact disallowed the claim under Section 54EC. No addition is made under Section 69. He has stated that the entire transaction of redemption of debenture and investment in National Housing Bank is made by the cheque and duly accounted for in the assessee's books of accounts. Therefore, there is neither any justification for addition for unexplained investment under Section 69 nor for denial of exemption under Section 54EC. 9. We have carefully considered the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and the submissions of the A R. of appellant I am in agreement with the contention of appellant that there cannot be any unexplained funds as books of accounts and vouchers were duly audited as per Companies Act It is further seen that the appellant had two options either to claim it as Long Term Capital Gain or claim exemption u/s. 54EC, it had opted to claim exemption u/s. 54EC of the I.T. Act, which is correct From the details submitted by the A.R. during the appellate proceedings, it is seen that the claim of appellant u/s. 54EC in respect of consequential difference in long terns capital gain was correctly made, as the conditions laid down in the said section have been fulfilled and the appellant furnished the details of investments made. 3.4 The appellant during the course of appeal hearing filed additional evidence under Rule 46A of I.T. Rules in form of copy of letter dated 2-11-1999 along with necessary evidences as per pages 44 to 50 of the paper hook and it wits submitted that on account of insufficient dine given by the A.O. and because of dispute amongst the brothers of director of the appellant company the same could not be filed before the A.O. The said addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 69 of the I.T.Act and he also directed the AO to allow the claim of ₹ 25 lakhs under Section 54EC of the Act. The Revenue is in appeal, but has not challenged the finding of the CIT(A) for allowing the exemption under Section 54EC. So far as the addition under Section 69 is concerned, we find that while computing the income of the assessee no such addition is made and therefore this ground of the Revenue is infructous. Even otherwise, the CIT(A) has recorded the finding that the investment in National Housing Bank is duly debited in the assessee's books of accounts and the same has been made by cheque. This finding has not been controverted before us. The learned DR has also challenged the admission of the additional evidences by the CIT(A). However, we find that the CIT(A) has recorded the reasons for admitting the additional evidences under Rule 46A and has also allowed opportunity to the assessee to examine such evidences and submit the remand report. In view of the above, we find no infirmity in the order of the CIT(A) on this point, the same is sustained and the Ground No.2 of the Revenue's appeal is rejected. 10. In the result, the Revenue's appeal is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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