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2016 (5) TMI 858 - AT - Income TaxTaxation of income from Short Term Capital Gain and Long Term Capital Gain at special tax rate u/s 111(A) & 112 - business of activities in shares and securities - Held that:- The intention of the circular is clearly to reduce the litigation and maintain consistency. The submissions of the Ld. DR that the transaction was very much voluminous and, therefore, Assessing Officer by taking into the modus operandi of the assessee treated the same as business income but the Assessing Officer has not given the day to day transaction in its entire order and that for how much period the assessee was holding the shares and selling the same is missing in the assessment order. In-fact, in earlier assessment years, the Revenue allowed the Long Term Capital Gain to the assessee and thus the same was treated as capital gain during the earlier years by taking cognizance of circular dated 4/2007 dated 15/6/2007. The assessee has also shown Short Term Capital Gain in this particular year. The case law which was cited by the Ld. DR is not applicable to the facts of the present case because in that case the shares were held for only two to three days period but the assessee’s situation in the present case is totally different. The CIT (A) has taken into cognizance of these factors and rightly treated the same as short term capital gain and in fact CIT(A) has taxed certain amount after examining all the transactions related to share trading. The assessee’s profit and loss account clearly states that the assessee was having two portfolios. Therefore, this ground of Revenue is dismissed. - Decided against revenue Disallowance u/s 14A - CIT(A) restricted the disallowance to 10% of the exempted income - Held that:- The Assessment Year involved in 2007-08 therefore Rule 8D is not applicable in this year as per the ratio laid down in the judgment of Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company (2010 (8) TMI 77 - BOMBAY HIGH COURT ). In our opinion, the CIT(A) has rightly taken into cognizance that the said judgment also held that where investment has been made and the income from the same was exempt from tax thus, the A.O is duty bound to make the disallowance u/s 14A by adopting a reasonable basis. The CIT(A) has rightly restricted the disallowance to the extent of 10% of exempted income. Thus, this ground of the Revenue is also does not survive.- Decided against revenue
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