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2016 (7) TMI 5 - AT - Income TaxAssessability of the profit on sale and purchase of shares and securities - business income u/s capital gain - Held that:- In view of the above precedent, the stand of the lower authorities in treating the assessee as a trader in shares is unsustainable. Pertinently, in the instant assessment order, the Assessing Officer has considered the ‘assessment records for the earlier years’ as well to say that the assessee is not an investor in shares. Now, if in the earlier period, the assessee has been held by the Tribunal to be an investor in shares, consequently, in the instant year also such a finding is inevitable. The Tribunal in its order has noticed that in assessment year 2004-05 the department has itself treated the assessee as an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the case, the action of the income-tax authorities in assessing the gain on sale and purchase of shares and mutual funds as business income is untenable - Decided in favour of assessee Disallowance u/s 14A - Held that:- Quite clearly, the provisions of Rule 8D of the Rules are not applicable for the assessment year under consideration following the ratio of the judgment of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(2010 (8) TMI 77 - BOMBAY HIGH COURT ). Therefore, the disallowance of ₹ 6,24,577/- worked out by the Assessing Officer is not appropriate. So however, it also emerges from the record that apart from asserting that no amount debited to the P&L Account pertains to the exempt income, assessee has not lead any further material or evidence thereof. Be that as it may, in our view, it would be appropriate that disallowance of 5% of the exempt income i.e. 5% of ₹ 7,33,030/- be considered as a reasonable disallowance under section 14A of the Act in the present case. Therefore, we set-aside the order of the CIT(Appeals) and direct the Assessing Officer to restrict the disallowance under section 14A at 5% of the exempt income.- Decided in favour of assessee
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