TMI Blog2018 (5) TMI 1977X X X X Extracts X X X X X X X X Extracts X X X X ..... same were converted into investments on 1.4.2002 - CIT(A) bringing to tax net the benefit taken by the assessee in earlier years at the time of conversion of stock in trade into investment - HELD THAT:- As on 31/03/2002, assessee had shown stock in shares at market or cost, whichever is lower, thereafter, assessee converted the stock of shares into investment. As and when assessee has treated the shares as stock in trade, the benefit of lower of cost or market price was taken, accordingly, profit of that year was reduced. During the year under consideration when the assessee had sold those shares, the excess over the cost price is liable to be taxed as capital gain / loss. However, the benefit already taken by the assessee by valuing these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... converting stock-in-trade into investment was with the sole purpose of avoiding payment of taxes. Therefore, the AO held that the income arising out of sale of shares was taxable as business income. 3. By the impugned order, CIT(A) after following the order of the Tribunal in assessee s own case for the A.Y.2004-05 held that the profit on sale of shares was liable to tax under the head capital gains. Revenue is in further appeal before us. 4. We have considered rival contentions and carefully gone through the orders of the authorities below and found that issue is squarely covered by the decision of the Tribunal in assessee s own case for the A.Y.2004-05 vide order dated 06/03/2013, precise observation wherein is as follows:- 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument /he Ld.DR that such conversion is to be treated as a sham transaction based on the decision of the jurisdictional High Court in the case of Twin star Holdings Ltd Vs Anand Kedia (260 ITR 6 Bom), we are of the view that the ratio of the said decision is not applicable to the facts in the present case as the former relates to such conversion by three investment companies and transmission of shares thereon. 6.3 Regarding the third issue whether the assessee can be an Investor as well as a speculator in shares simultaneously, the Ld.CIT(A) has relied on the decision of the Tribunal in the case of Vesta Investments Trading Co.(P) Ltd (70 ITD 200)(Chd) wherein if has been held that in the case of assessee holding both shares as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en heard and record perused. In the instant case, the assessee converted his stock-in-trade into investment on 01/04/2002 at cost. Prior to the said date, the stock was held as stock-intrade. In other words, as on 31/03/2002, the value appearing in the books was cost or market, whichever was less. As the assessee had converted the stock-in-trade into investment at cost, the question which arose was how the difference between the cost and market rate was accounted for in the books of accounts. AO added the difference in assessee s income on the plea that assessee has already taken the benefit of reduction in market value as on the last date of balance sheet as compared to actual cost. 9. By the impugned order, CIT(A) brought to tax the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to incometax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. 2.7. From the above provisions, it is very clear that if a person obtains any benefit in cash or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en assessee has treated the shares as stock in trade, the benefit of lower of cost or market price was taken, accordingly, profit of that year was reduced. During the year under consideration when the assessee had sold those shares, the excess over the cost price is liable to be taxed as capital gain / loss. However, the benefit already taken by the assessee by valuing these shares at cost or market whichever is lower in the earlier years when shares were treated as stock in trade is liable to be assessed as business income and CIT(A) had correctly brought the difference to tax net u/s.41(1) of the IT Act. The case law relied on by learned AR is distinguishable on facts, accordingly, we confirm the action of CIT(A). 12. In the result, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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