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2013 (4) TMI 664 - AT - Income TaxSale of shares - Business income v/s Long Term Capital Gain - Held that:- The valuation of the investment in shares is reflected in the balance sheet at cost and not as cost / market value whichever is lower. Furthermore, all the shares which have been sold were delivery based and the shares have been held for the period ranging between few months to more than 3 years by the assessee. Thus, the assessee has only made investment in equity shares and not in stock in trade, this is depicted and identifiable and the books of accounts in this regard. As the magnitude of the transactions in the investment account in comparison to the turnover disclosed trading account were negligible, LTCG has arisen on account of sale of 10000 shares in Ind Swift ltd. forming only 0.28% of the total holding and all these shares have been transferred only through one transaction and shares of Micro Tech. have been transferred through 3 transactions. In case of shares of paramount the shares have been sold through total 9 transactions between 3.4.06 to 28.4.06. Thus CIT(A) has rightly concluded that number of transactions are not large enough and neither they are frequent to hold that there has been any intention on part of the of the assessee to indulge into business of trading in shares & has earned substantial dividend income of Rs. 20,14,851/- during the year which is indication of the assessee's intention of investment in shares for earning dividend income. See C.I.T. vs. Rohit Anand (2010 (8) TMI 232 - Delhi High Court) wherein said that it is relevant to see the intention of the assessee at the time of making of investment so as to determine whether the transactions was for dealing in shares or making investment for earning dividend - No infirmity in the conclusion that profit arisen on sale of shares held as investment by the assessee deserves to be assessed as short term capital gain and long term capital gain as disclosed by the assessee. Against revenue. Addition u/s.14A by applying Rule 8D - CIT(A) deleted the addition - Held that:- Addition made by the AO is not sustainable as Rule 8D is not applicable for asstt. year 2007-08. The interest related to loan of Rs. 2.5 crore taken by the assessee from M/s Cholamandalam Investment during the previous financial year 2005-06. The CIT(A) gave a finding that this has been used for the purpose of business and not for making any investment in shares. This was substantiated by the assessee through various details & opined that assessee had sufficient source of its own through which investment in shares have been made and these sources are interest free funds - No infirmity in the order of the CIT(A) - Against revenue.
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