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2012 (5) TMI 335 - AT - Income TaxBusiness income vs. capital gain - sale and purchase of shares - Held that: - net surplus shown by the assessee is the capital gain on account of the sale/redemption of the assessee's investment and the same is taxable under the head 'capital gains' and not as business income. Regarding disallowance u/s. 14A - Rule 8D of the Income Tax Rules, 1962 - Hon'ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) has already held that applicability of Rule 8D of the Rules as prospective and not retrospective w.e.f. assessment year 2007-08, wherein Hon'ble High Court has also directed to recompute disallowance in case there is a nexus for expenses with exempt income by laying down the principle - Appeal is allowed by way of direction to AO to restrict the disallowance at 1% of exempted income as expenses related to this income
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