TaxTMI 
TaxTMI 
2017 (4) TMI 300
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....facts and circumstances of the case the Tribunal erred in affirming the order of the AO disregarding the conversion of the trading shares into investment shares and treating the long term capital gain of Rs. 22,27,819/- arising from the sale of those shares as profit of trading in shares and bringing the same to tax?" The assessee is a company which is engaged in the business of leasing, finance and investment. On 1st April, 2004, i.e. during the previous assessment year 2005-06 the following shares were transferred by the assessee from its trading stock into investments:- 1. Hind Lever Chem Limited 10,370 shares; 2. Chambal Fertilisers Chem Limited 38,000 shares; 3. Eveready Industries Limited 14,580 shares; a....
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.... despite there being no specific provision to recognize such conversion. However, in asessee's own case, the Tribunal has not accepted such conversion in the immediately preceding year, i.e. A.Y. 2005-06 and it, therefore, follows that the shares sold by the assessee during the year under consideration continued to constitute its stock-in-trade and not investment. Consequently the profit arising from the sale of the said shares, in our opinion, is chargeable to tax in the hands of the assessee as its business income as rightly held by the Assessing Officer and not longterm capital gain as held by the ld. CIT(Appeals). We, therefore, set aside the impugned order of the Ld. CIT(Appeals) on this issue and restore that of the Assessing Officer.....
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....ere is profit then to be assessed as capital gain. That if 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. He also relied on the case of CIT vs. Dhanuka & Sons reported in (1980) 124 ITR 24 (Cal) by which a Division Bench of this Court on considering Kikabhai Premchand (supra) and several other judgments had expressed:- "14. Further, in our view, there cannot be any actual profit or loss in such transfers where no third party is involved and the items are kept in a different account of the assessee himself. The question of gain or loss would arise in the facts of the instant case only in future when the stocks transf....
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....fact in an earlier year are not binding in the assessments in subsequent years and can be resisted on new evidence." Mr. Lodhe, learned Advocate appeared on behalf of the Revenue and submitted that neither the above questions were substantial questions of law nor were they involved in this case because when in the previous assessment year the claim of conversion by the assessee was turned down by the Tribunal, the assessee's delayed appeal was dismissed by a Division Bench of this Court on 5th May, 2015 on the reason of choice made by the assessee. "The petitioner made a conscious choice of not preferring an appeal and accepting the order, which is now sought to be challenged. When the petitioner chose not to prefer an appeal at....
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....n of stock-in-trade into capital asset. Whether or not such omission would operate as a bar on an assessee is a question that can be answered on the basis of a view taken by a learned Single Judge of this Court in the case of Maniruddin Bepari vs. The Chairman of the Municipal Commissioners, DACCA decided on 16th April, 1935 and reported in 40 Calcutta Weekly Notes (CWN) 17 being as follows:- "It is a fundamental principle of law that a natural person has the capacity to do all lawful things unless his capacity has been curtailed by some rule of law. It is equally a fundamental principle that in the case of a statutory corporation it is just the other way. The corporation has no power to do anything unless those powers are confe....
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....bha Chhindwara reported in AIR (1964) SC 1013 in which the Supreme Court said, inter alia, as follows:- "........Where the liability of a tax for a particular year is considered and decided does the decision for that particular year operate as res judicata in respect of the liability for a subsequent year? In a sense, the liability to pay tax from year to year is a separate and distinct liability; it is based on a different cause of action from year to year, and if any points of fact or law are considered in determining the liability for a given year, they can generally be deemed to have been considered and decided in a collateral and incidental way. The trend of the recent English decisions on the whole appears to be, in the words....