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2017 (2) TMI 593 - AT - Income TaxDisallowance under section 14A - disallowance has been worked out with reference to Rule 8D(2)(iii) being administrative and general expenses estimated at 0.5% of the average value of investment - Held that:- As per financial data before us, the substantive part of expenditure incurred obviously has proximate connection with the earning of dividend income. The expenditure incurred is towards all business activities including investment activities and remains undivisible. Hence, we are unable to guage the rationale for not applying Rule 8D for apportionment of expenditure in relation to dividend income. The proposition towards reasonable estimated expenditure with reference to dividend income as propounded on behalf of assessee cannot be ordinarily accepted in derogation of the statutory frame work provided by the statue. No tangible cause has been shown by the assessee for doing so. Thus, in the given set of facts, in our considered opinion, the formula provided under Rule 8D would come into play. Indication of prima facie presence of satisfaction can be deemed to be substantial compliance of the provisions without there being any explicit assertion about the same. As noted, the affirmative steps by way of SCN on the issue in the first instance tantamount to subsistence of ‘satisfaction’ in the instant case. Hence, in our view, S. 14A as presently codified does not provide impetus on explicit recording of satisfaction per se. The requirement of section would stand addressed when the satisfaction is otherwise discernible in the action of the AO. Applying the aforesaid view in the context, we are of the opinion that requisite satisfaction was subsisting for invoking section 14A and Rule 8D. Consequently, we hold that the objection of the assessee on this score is not sound. - Decided against assessee. Sale of shares and securities which are held for less than 30 days - Short Term Capital Gain(STCGs) OR business income - Held that:- The issue is thus required to be decided as per the facts and the circumstances of the individual case and not having regard to the smaller period of holding alone. As pointed out by the assessee before the CIT(A), the assessee has sold the shares held for less than thirty days in only six instances which in our view does not give any indication of systematic and organized business activity. The loss declared on similar transactions as capital loss which is detrimental to assessee was duly accepted by the revenue in the past. No aspersions have cast on LTCG either. Therefore, in the totality of the facts, it is difficult to agree with the view rendered by the CIT(A). While one set of transaction have been treated as capital assets, there is no reason to treat other set of transactions similar nature as trading assets merely owing to lesser period of holding. In the circumstances, the plea of the assessee deserves acceptance. The action of revenue is accordingly liable to be struck down.
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