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2013 (8) TMI 412 - ITAT DELHIIntention of the assessee, whether an assessee has made investment in shares or it was an adventure in the nature of trade - To discern the intention of the assessee, whether it has made investment or just on account of change of law, it is trying to convert its stock-in-trade as investment – Held that:- In the light of tests laid down in the case of Sarnath Infra- structure Pvt. Ltd. vs. ACIT reported in [2007 (12) TMI 261 - ITAT LUCKNOW-B], facts of the present case was examined and it was revealed that assessee has not converted its stock-in-trade into investment, just after the announcement of change in the tax rate on short term capital gain. It has been independently making purchases, which are shown as investment in the investment registered. It has took the delivery of shares, this aspect was specifically pleaded before the CIT (A) and it has been accepted. It has not used borrowed funds for making investment. The AO has not pointed out this aspect in the assessment order also. The shares have been valued at cost at the end of the year, while closing the accounts. The Board had passed the resolution for investment in the month of January, some of the shares were old shares on which short term capital gain has been declared, they were appearing in the opening stock as investment. Thus cumulative setting of all these factors suggest that assessee had made investment in the shares – Decided in against the Revenue. Allowance of security transaction tax – Held that:- Deduction of security transaction tax is not admissible to the assessee, once its claim of short term capital gain is accepted – Decided against the Revenue. Disallowability of deduction under section 14A of the Income Tax Act – Held that:- If it is not possible for the AO to pin point any specific expenditure from the accounts relatable to earning of exempt income then he would look into surrounding circumstances – AO is directed to re-adjudicate this issue, keeping in view the judgment of Hon'ble Delhi High court in the case of Maxopp Investment Ltd. Vs. CIT [347 ITR page 272].
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