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2014 (9) TMI 519 - AT - Income TaxNon-speaking order by CIT(A) - Transactions through PMS – STCG treated as business income – Held that:- The AO and revenue’s contentions regarding the frequency of intermixing and interlacing of funds have not been objectively answered by the CIT(A) besides the crucial fact whether there was intra-account transfer from business stock to investment stock of shares or vice versa has not been spelt out - It is acceptable that the assessee can maintain business & investment portfolio separately which an ideal situation should be taxed under the head business income and capital gains respectively - But this presupposes the neat and clean state of affairs in which there is neither intermixing nor interlacing of funds and there are no internal / journal transfer from one account to other to keep the check in clandestine method. LTCG on sale of shares – Claim of exemption u/s 10(38) – Held that:- In respect of shares of M/s. Share Street (P) Ltd., there is a huge gap between the valuation of private company’s equity shares arrived at by the AO and claimed by the assessee as facts emerges that the assessee has claimed these shares in investment account and they are available at reduced rate of taxation - assessee did not spell out any market credentials of the shares of M/s. Share Street (P) Ltd. nor the product range or worth of the company - there is no factual elucidation about the turnover and assets of this company so as to work out the valuation of unquoted equity shares at ₹ 65/- per share - CIT(A) without adverting to any factual observations has allowed the relief by summary observation which cannot be upheld. Disallowance u/s 14A r.w. Rule 8D – Held that:- The amount has been disallowed against the interest paid on loans by applying the provision of Rule 8D which on the face of its seems to be excessive - CIT(A) instead of giving any factual projection by summary observation has deleted the entire addition – Thus, the issue should be restored back to the file of the CIT(A) to pass a speaking order on the facts and circumstances of the case duly considering the factual issues raised by the AO in his order about the intermixing and interlacing of the funds and possibility of internal transaction from business account to investment account portfolios – also , the shares of M/s. Share Street (P) Ltd. needs to be correctly worked out and also the disallowance u/s 14A should be considered – thus, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of revenue.
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