TaxTMI 
TaxTMI 
2015 (11) TMI 1658
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....ith 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 Rs. 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 Rs. 40,23,001/-. On 01.04.2004, i.e. during the previous assessment year 2005-06, the following shares were transferred by ....
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....ing the profit arising from the sale of shares of Chambal Fertilisers Chem Limited and Eveready Industries Limited as business profit thereby denying its claim for exemption on account of long term capital gain was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) accepted the claim of the assessee that the said profit representing long-term capital gain was exempt from tax for the following reasons given in his impugned order:- "I have also gone through the order of the CIT (A) on the Assessment Order for A.Y. 2005-06. This order was passed on 21.5.2008. The CIT (A) has rel....
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....f a specific provision to deal with this type of situations, a rational formula should be worked out to determine the profits and gains on transfer of the asset. We are also conscious about the judgement in cases of Sir Kakabhi Premchand vs. CIT (1952) 24 ITR 506 (SC), CIT V. Dhanuka and Sons ITR 24 (Cal) which it has been held that there cannot be an actual profit or loss of such transfer when no third party is involved and the items are kept in a different account of the assessee by himself. The acquisition of gain or loss would arise only in future when, the stock transferred to the investment account might be dealt with by the assessee. If such shares be disposed off at a value other than the value at which it was transferred from the b....
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.... 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 ....
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....respective of the decision of the Tribunal in assessee's own case for A.Y. 2005-06 rejecting the claim of the assessee for conversion of shares from stock in trade into investment. We are unable to accept this contention of the ld. Counsel for the assesese. It is true that in the various judicial pronouncements cited by the ld. Counsel for the assesese, the conversion of shares from stock in trade into investment has been accepted despite there being no specific provision to recognize such conversion. However, in assessee'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 conti....
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.... (supra), wherein a similar issue has been restored by the Tribunal to the file of the Assessing Officer vide paragraph no. 6 of its order, which reads as under:- "6. At the time of hearing, Ld. Counsel appearing on behalf of the assessee submitted that there was some arithmetical mistake by the Assessing Officer in his assessment order wherein he has treated the long term capital gain as Rs. 77,13,674/- whereas actual long term capital gain is Rs. 60,17,764/- only. Hence, it is submitted that the issue may be restored to the file of the Assessing Officer for recomputation. For which Ld. Departmental Representative has not made any serious objection to restore this issue to the file of the Assessing Officer for considering the matter afre....