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2017 (1) TMI 1339 - ITAT MUMBAIGain arising on sale of shares - ‘business income’ OR ‘capital gains’ - Held that:- In view of judgments of Hon’ble Supreme Court in the case of Radha Swami Sat Sang, vs. CIT (1991 (11) TMI 2 - SUPREME Court) and CIT v. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT ), upholding principal of consistency and in view of the circular of the CBDT and in view of facts of this case as discussed above, claim of the assessee deserves to be upheld. Therefore, after taking into all the facts and circumstances of the case and in view of the detailed discussion made by us in earlier part of our order, we find that the detailed findings recorded by Ld. CIT(A) for upholding the claim of the assessee by treating the income arising from purchase and sale of shares as assessable under the head of ‘capital gains’ are well reasoned and do not require any interference from our side Disallowance made by the AO u/s 14A read with Rule 8D - Held that:- The assessee has maintained separate accounts with regard to its business income and expenses incurred in earning the business income. It is further brought to our notice that the expenses incurred with regard to the activity of making investment in shares have been debited to the capital account and have not been debited to P & L account. The P & L A/c prepared by the assessee is exclusively for the purpose of reflecting its transactions arising out of business activities i.e. comprising of business income and business expenses. Under these circumstances, there was heavy onus upon the shoulders of the AO to establish if any of the expenses debited in the P& L account did not pertain to its business activity but with any other activity say for earning income from capital gains. Unfortunately, no such exercise has been done by the AO before invoking the provisions of section 14A. It was all the more necessary in the light of the fact that expenses incurred on PMS brokerage fee and other incidental expenses for making investment into shares have not been debited in the P & L account by the assessee. These facts have also not been disputed by the Ld. DR before us. Thus the reasoning given by the Ld. CIT(A) for deleting the disallowance made by the AO is in accordance with law and facts of this case. - Decided in favour of assessee
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