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2012 (1) TMI 264 - AT - Income TaxIncome from sale of shares - Long Term Capital Gain - Held that:- In the case on hand, we find that the assessee has earned substantial income by way of dividend and also that the assessee has not borrowed any funds for making purchases in shares. The entire investment was from own funds. The transactions are delivery based transactions. Just because the assessee maintains multiple portfolios, it cannot be concluded that the assessee is a trader. The mere fact that the transactions are voluminous, does not lead to a conclusion that the assessee has traded in shares. As a prudent investor, the assessee may have sold certain shares within a short period, as in her opinion, the sale had been made at the opportune time. The assessee, in this case, has not valued her investments at cost or net realisable value whichever is less and claimed losses as in the case of stockin- trade. On this factual matrix, we uphold the findings of the first appellate authority that income from sale of shares which are held by the assessee for more than one year, is to be assessed as income earned from long term capital gain. Treating short term capital gain earned by the assessee as business income - Held that:- As the assessee is an “Investor”, we restore ground no.1, which is on the issue of treating short term capital gain earned by the assessee as business income, to the file of Assessing Officer for denovo adjudication in accordance with law. Thus, this ground is allowed for statistical purposes. Treatment of losses on derivative transactions as non-speculative loss by the first appellate authority - Held that:- We find that the issue is covered against the assessee and in favour of the Revenue by the decision of a Special Bench of the Tribunal in Shree Capital Services v/s ACIT [2009 (7) TMI 172 - ITAT CALCUTTA] wherein it is held that clause (d) of section 43(5) of the Act cannot be held to be clarificatory and it applies only to assessment year 2006-07 and onwards. The Hon'ble Jurisdictional High Court in CIT v/s Bharat R. Ruia [2011 (4) TMI 37 - BOMBAY HIGH COURT] impliedly upheld the Special Bench decision. At Para-37, the argument that amendment by way of insertion of clause (d) to the proviso to section 43(5), is clarificatory and, hence, retrospective was rejected by the Hon’ble Court. In view of the above, we allow grounds no.2 to 5 of the Revenue. Disallowance under section 14A - Held that:- disallowance in question is excessive. This issue is also restored to the file of Assessing Officer for fresh adjudication keeping in view the judgment of Hon'ble Jurisdictional High Court in Godrej and Boyce Mfg. Co. Ltd. v/s DCIT, [2010 (8) TMI 77 - BOMBAY HIGH COURT].
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