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2014 (6) TMI 329 - ITAT MUMBAISale of investment in shares – Business income OR STCG – Assessee being as trader or investor - Held that:- The assessee is a partner in M/s. Kamdar & Co., M/s. Mahek Investments, K. Amishkumar & Co., and M/s. Hamsa Trading Co., from where he is deriving share of profit and interest on capital – Relying upon P.M. Mohammed Meerakhan (P.M.) v/s CIT [1969 (2) TMI 4 - SUPREME Court] - it was not possible to evolve any single test or formula which could be applied in determining the transaction as adventure in nature of trade or not - The distinction between the two types of transaction is not always easy to make - Whether the transaction is of one kind or the other depends on the question whether the excess is an enhancement of the value by realizing the security or a gain in an operation of profit making. The assessee might have invested capital in shares with an intention to resale these if in future their sale brings in a higher price - Such an investment though motivated by a possibility of enhancement value, did not necessarily render the investment a transaction in the nature of trade – there was no reason as to why the profit should not be taxed under the head Short term capital gain as returned by the assessee – thus, the order of the CIT(A) is set aside and the AO is directed to tax the profit arising from the sale of shares under the head ‘Short term capital gain’ as shown by the assessee – Decided in favour of Assessee. Disallowance u/s 14A r.w. Rule 8D of the Act – Held that:- The assessee has own capital of Rs. 6.31 crores - Computation of income of the assessee show that the assessee has earned interest at Rs. 44.20 lakhs out of which interest paid claimed as deduction at Rs. 21.36 lakhs - Dividend income received by the assessee is Rs. 7.19 lakhs - Long Term Capital gain is at Rs. 9.19 lakhs and share of profit from firms is at Rs. 36.85 lakhs - These incomes have been claimed to be exempt from tax - Rule 8D is applicable from A.Y. 2008-09 as it has already been decided in Godrej & Boycee Manufacturing Co. Ltd. Vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] – thus, the AO is directed to disallowance of 5% of the exempt income – Decided partly in favour of Assessee.
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