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2017 (2) TMI 589 - AT - Income TaxTreatment of quantum capital loss as speculation loss in terms of provision of Explanation to Section 73 - Held that:- After considering the volume, frequency and quantum of transactions, Authorities Below presumed that assessee was carrying out the activity of business. Therefore the profit and loss on such transactions should be treated as under the head “business”. Admittedly, we find that that there is no dispute with regard to treatment of the aforesaid transactions in the books of account of assessee and aforesaid transactions were classified by assessee under the head “investment” and such practice was also followed by assessee in the earlier year also. The activities through Portfolio Management Scheme (PMS) cannot be regarded as business activities on standalone basis. There are other factors which need to be considered. In the instant case the Revenue has been harping to treat the share transaction activity as business activity as the assessee has availed the services of PMS to maximize the profit. At the end we conclude that the assessee has been showing income under the head “capital gains” from the sale-purchase of securities which is held for a period more than 12 months consistently then the same has to be treated as income under the head “capital gains” only. Similarly, the transactions for the sale-purchase shares carried out through PMS cannot be regarded as business transactions for the reasons discussed above. Therefore, we are inclined to reverse the order of Authorities Below - Decided n favour of assessee Disallowance u/s 14A r.w.s. 8D - Held that:- The assessee has claimed total expenditure of ₹ 4,14,08,065/-. Out of the same a sum of ₹ 2 crores was donated to charitable trust which in our considered view has no nexus with the dividend income. However the balance expenses of ₹ 2,14,08,065/- has been incurred and claimed by the assessee under the head administrative and other expenses. In the instant case the disallowance has been worked out to ₹ 60,53,495/- out of total administrative expenses of ₹ 2,14,08,065/-. Hence, the disallowance is not exceeding the total administrative expenses incurred by the assessee. Therefore the recent Notification issued by the CBDT No. SO 1949(E) dated 2.6.2016 and relied by the assessee where the disallowance was limited to the extent of total expenses will not be of any help.- Decided against assessee
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