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2016 (11) TMI 657 - AT - Income TaxIncome from share transaction - short term capital gain or business income - Held that:- From the facts discussed in the assessment order, it is found that out of total 41 transactions in shares, 39 shares were held for less than a month. Further, it has been found by the Assessing Officer that in 22 scrips, the assessee had made repeated entry and exit which indicate the intention of the assessee to trade in shares rather than holding it as investment. The Assessing Officer has also observed that the assessee had used borrowed funds for investing in shares. The learned Commissioner (Appeals) has also approved the aforesaid finding of the Assessing Officer. No material has been brought by the assessee before us to controvert the aforesaid factual findings of the Departmental Authorities. In the aforesaid view of the matter, we do not find any reason to interfere with the order of the learned Commissioner (Appeals). Disallowance of interest - Held that:- Assessing Officer while treating the income derived from share transaction as business income has actually allowed the interest expenditure of ₹ 7,24,408 and assessed the net business income of ₹ 23,12,136. Therefore, the ground raised by the assessee before the learned Commissioner (Appeals) challenging the disallowance of interest expenditure by the Assessing Officer was misconceived. Similarly, the observations of the learned Commissioner (Appeals) upholding the disallowance of interest expenditure by the Assessing Officer is unnecessary and unwarranted. Before us also, the assessee has raised this ground challenging disallowance of expenditure from short term capital gain. Alternatively, assessee has claimed that even if the income from share transaction is assessed under the head “Business” the interest expenditure is allowable under section 37(1). As we have already noted, the Assessing Officer while computing income from share transaction under the head business income has allowed the interest expenditure to ₹ 7,24,408. That being the case, there is no question of disallowance of interest expenditure, therefore, the ground raised by the assessee being infructuous is not required to be adjudicated upon, hence, dismissed. Addition under section 14A r/w rule 8D - Held that:- While computing the income from share transaction under the head Business, the Assessing Officer has allowed the entire interest of ₹ 7,24,408. This action of the Assessing Officer demonstrates that the interest expenditure is related entirely to earning of taxable income from share transaction, hence, no part of it can be apportioned towards the exempt income earned by the assessee. Therefore, in our considered opinion, no disallowance out of interest expenditure can be made in terms of rule 8D(2)(ii). However, as far as disallowance of 0.5% of the average value of investment in terms of rule 8D(2)(iii) is concerned, we agree with the view of the Departmental Authorities
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