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2016 (4) TMI 739 - AT - Income TaxProfit from sale of shares - business income OR short-term capital gain - Held that:- CIT(Appeals) found merit in the contention raised on behalf of the assessee before him that the Circular No. 4 of 2007 issued by the CBDT and relied upon by the Assessing Officer actually supported the case of the assessee keeping in view that two separate portfolios for the shares purchased as investment and shares purchased as stock-in-trade were maintained by the assessee. Accordingly, the ld. CIT(Appeals) held that the profit was earned by the assessee on the shares and securities purchased and held as investment and the same, therefore, was chargeable to tax in the hands of the assessee as short-term capital gains and not business income. Disallowance under section 14A - Held that:- It is observed that Rule 8D is applicable for the year under consideration and the AO has applied the said Rule to work out the disallowance under section 14A on account of the expenses incurred in relation to the exempt income in the form of dividend and LTCG. At the time of hearing before us the ld. Counsel for the assessee did not raise any contention to dispute the applicability of Rule 8D. The limited contention raised by him is that the assessee has already having made disallowance of ₹ 34,67,355/- under section 14A of the Act as against the disallowance of ₹ 80,46,448/- worked out by the AO by applying Rule 8D, the net addition should be made to the extent of ₹ 80,46,448/- - ₹ 34,67,355/-. We find merit in the contention of the ld. Counsel for the assessee. Accordingly, we direct the AO to restrict the addition on this issue to ₹ 45,79,093/-.
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