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2016 (6) TMI 1270 - AT - Income TaxSale of shares and redemption of units of Mutual Fund - capital gains (long term and short term) or business income - Held that:- As noticed from assessee’s investment chart regarding long and short term capital gains that most of the investments have seen holding period for quite a longer duration. There is a very miniscule percentage of share investments being made and sold in a very short span of time less than a week. The assessee’s long term capital gains arise from investment held for much longer duration of more than a year. It has come on record that his balance sheet shows two different patterns of trading and investment portfolio. We come to his City Bank borrowings of ₹ 20 crores. It emanates that the assessee had indeed availed this loan. But the same was for a period of less than one month whereas his investments are seen to have carried forward since long. The Revenue fails to rebut all these crucial findings recorded by the lower authorities. We adopt judicial consistency in these facts and circumstances to hold that the CIT(A) has rightly treated assessee’s profits/losses arising from shares investments as in the nature of capital gains than business income. Section 14A disallowance relating to exempt income from dividends - Held that:- A perusal of section 14A(2) reveals that the Assessing Officer has to record a non satisfaction having regard to an assessee’s account that the same are not correct in respect to expenditure in relation to exempt income not forming part of the total income under the act. There is no dispute that Rule 8D is applicable w.e.f. assessment year. 2008-09. However, we notice from the assessment order that there is no such satisfaction or non satisfaction being recorded before invoking Rule 8D resulting in the impugned disallowance. The Revenue further fails to rebut the lower appellate finding that the assessee has not incurred any expenditure as held in Commissioner of Income Tax-II Versus M/s Hero Cycles Ltd. (2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ). Its arguments seeking to revive the impugned disallowance accordingly fail.
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