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2013 (11) TMI 977 - AT - Income TaxBad debts or business loss Held that:- The assessee miserably failed to prove that the present transaction was in the nature of a `business transaction' - The amount given as advance was never given with the intention of doing any business in "real estate". The assessee never intended to carry on such business of real estate - This solitary transaction of paying Rs.37.50 lakh to M/s.ZEPL was with the object or making an "Investment" and the non-receipt of refund of Rs.15 lakh out of such transaction cannot be characterized as anything but a loss of capital nature Following Bengal & Assam Investors Ltd. VS. CIT [1965 (11) TMI 31 - SUPREME Court] - The object clause in M/A is not decisive because question is not what business company professes to carry on but what business it actually carries on Decided against assessee. Sale of shares Business income or capital gain - Held that:- The assessee valued such shares at cost price in the respective balance-sheets from the date of purchase - If these shares had been treated as "stock-in-trade", then these would have been valued at `Cost or market price, whichever is less' - The fact that the mistake in disclosing these shares as "Stock-in-trade" was rectified by way of the Board's resolution also substantiates the claim that these shares were in fact held as "Investment" - Nomenclature of a transaction is not relevant. It is the real character of the transaction which is looked into - The facts and circumstances of the case should be considered - The period of holding of more than two years and the valuation of such shares at cost price in the earlier balance-sheet shows that the shares were in fact held as "Investment". Once the shares are held as `Investment, any profit or loss from their transfer has to be considered under the head `Capital gains' and not as `Business income' Decided against Revenue. Disallowance u/s 14A Held that:- Following Dhanuka & Sons VS. CIT [2011 (4) TMI 861 - CALCUTTA HIGH COURT] - Disallowance u/s 14A is attracted even when the securities fetching exempt income are held as stock in trade. Following Godrej & Boyce Mfg. Co. Ltd. VS. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D of the IT Rule, 1962 is applicable from AY 2008-09 - The disallowance u/s. 14A of the Act can be made on "reasonable basis" in the years anterior to AY 2008-09 For the AY 2006-07 the disallowance is required to be made u/s. 14A of the Act on some reasonable basis - The Kolkata Bench of the Tribunal has sustained addition in several cases u/s. 14A at the rate of 1% of the exempt income in the years prior to the A.Y. 2008-09 Partly allowed in favour of assessee.
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