TMI Blog2015 (11) TMI 1658X X X X Extracts X X X X X X X X Extracts X X X X ..... KOL/2010 (in ITA No. 1279/KOL/2010) - - - Dated:- 27-11-2015 - Shri P.M. Jagtap, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member Shri Niloy Baran Som, JCIT, Sr. D.R., for the Department Shri S.L. Kochar, Advocate and Shri Anil Kochar, Advocate, for the assessee O R D E R Per Shri P.M. Jagtap:- This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-VI, Kolkata dated 30.03.2010 for the assessment year 2006-07 and the same is being disposed of along with Cross Objection filed by the assessee being C.O. No. 120/KOL/2010. 2. In the solitary ground in its appeal, the Revenue has challenged the action of the ld. CIT(Appeals) in treating the profit of ₹ 22,27,819/- arising to the assesese from sale of certain shares as long-term capital gain as claimed by the assessee and not business income as held by the Assessing Officer. 3. The assessee in the present case is a Company, which is engaged in the business of leasing, finance and investment. The return of income for the year under consideration was filed by the assessee on 30.11.2006 declaring total income of ₹ 40,23,001/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Order for A.Y. 2005-06. This order was passed on 21.5.2008. The CIT (A) has relied on the CBDT circular/instruction No.1827 dt. 31.8.1989 and held that huge number of shares was acquired and also sold on different occasions, so main motive was to earn profit by dealing in shares. The CIT(A) has not specifically discussed in the order regarding the validity of conversion of shares from Trading A/c to investment account. The CIT (A) order concluded that the profit earned by the assessee company in share transaction constitute business income and accordingly, assessed under the head business and the claim of the assessee company to treat the same as capital gain denied. As seen from Income Tax Act, the IT Act does not contain any provisions prohibiting the conversion of shares from Trading Account to Investment Account. The ITAT Mumbai H Bench in the case of ACIT vs. Bright Star Investments Pvt. Ltd. [2/07/2008] in their order held that assessee converted same shares from stock in trade to investment on 1st April 1998 at Book Value, thereafter sold them and claimed the receipts as long term capital gains A.O. applying Section 45(2), treated the receipts as business income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith himself and in turn such profit cannot be taxed. If such shares be disposed of at a value other than the value at which it was transferred from the business stock, the question of capital loss or capital gain would arise. In the present case the conversion of shares from trading account to investment account was done at stock exchange quoted rates as on 1.4.2004. The shares of Chambal Fertilizers were sold in the month of February, 2006 and the shares of Eveready Industries limited in the month of December, 2005. The claim of the appellant for capital gain in respect of shares of these two companies is acceptable. In view of the above discussion, in my opinion the conversion of shares of the two companies from Trading account to Investment account is legitimate and the A.O. is directed to treat the income on-sale of these 2 shares as income from long term capital gains. This ground of appeal is allowed . Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal. 6. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the ld. D.R., the order of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. The appeal of the Revenue is accordingly allowed. 7. As regards the Cross Objection filed by the assessee, it is observed that there is a delay of 21 days on the part of the assesese in filing this Cross Objection. In this regard, the ld. Counsel for the assesese has filed an application seeking condonation of the said delay and keeping in view the reason giving therein, which are duly supported by an affidavit filed by the assessee, we are satisfied that there was a sufficient cause for the delay on the part of the assessee in filing this C.O. before the Tribunal. We, therefore, condone the same and proceed to decide the Cross Objection filed by the assessee on merit. 8. At the time of hearing before us, ld. Representatives of both the sides have agreed that the solitary issue involved in the C.O. of the assessee relating to the disallowance made by the Assessing Officer under section 14A and sustained by the ld. CIT(Appeals) is squarely covered by the decision of the Tribunal in assessee s own case for assessment year 2005-06 (supra), wherein a similar issue has been restored by the Tribunal to the file of the Assessing Officer vide paragraph no. 6 of its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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