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2010 (11) TMI 441 - AT - Income TaxSale of shares - short term capital gains or business income - As per the view of ancillary object clause 3, assessee could make the investment in shares only in those companies which had their objects together or in part similar to those of assessee - company or carried on any business capable of being conducted so as directly or indirectly benefit the assessee - company - The assessee's alleged plea of investment does not meet this criteria - Frequency of transactions clearly demonstrates its intention to trade in shares and mutual funds and not to keep them as part of its investment portfolio - There was no intention to earn dividend because the shares were liquidated within three months - Therefore we can treat taht the sale of share is a business incime - Decided against of assessee. Apportionment of interest expenditure - Rule 8D(i)- find that the Hon'ble Bombay High Court in Godrej Boyce Limited vs ACIT, vide judgment dated 12th August 2010, wherein, it has been held that applicability of Rule 8D is only prospective in operation, therefore, for assessment year 2005-06, it was not applicable - Again, the company is enjoying a short term loan of Rs. 95,000,000 borrowed at Indore Branch against the pledge of agricultural produce/commodities stored in approved warehouses as per sanction letter from the HDFC Bank dated 28th July 2004 - This short term loan can't be used for any other purpose. Hence, this loan is not utilised for investment in shares and mutual funds - Thus it can be seen that only company's funds are used for the purpose of investment" - In case assessee had utilised its own funds, no disallowance was called for - Therefore, restore this issue to the file of Assessing Officer for examining this aspect afresh - Thus, appeal by the assessee is allowed for statistical purposes.
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