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2017 (2) TMI 905 - AT - Income TaxRevision u/s 263 - assessee made applications in his own name to different companies in IPOs - Held that:- The shares will be delivered to the demat account of the respective persons and the assessee has delivered the same to the demat accounts. In case of his HUF, the shares were delivered to HUF demat account which has been verified by the Ld. Assessing Officer from demat account statement filed and place on record. The assessee and his wife had demat account in joint names. AO has also verified the information regarding shares given to the assessee's wife and the assessee's HUF. He has also categorically asked and had seen whether these persons or recipients of shares had sold and disclosed Income in their respective returns and being satisfied, he has finalized the assessment. We are enclosing herewith a statement for your perusal which shows profit arising to these persons from the shares allotted to the assessee and transferred to them. The profit has been included in their respective income and they have paid taxes as short term capital gain in their return. This fact was verified by the Ld. Assessing Officer The rate of taxes are the same on short term capital gain and since taxes were correctly paid, there is no loss to the revenue. Under these circumstances, the assessment was correctly made after due and complete inquiry and by verifying the details and therefore, action U/s.263 of the I T Act on this account is unjustified and invalid. Nexux of interest paid against interest income - Held that:- The bank statements were placed on record, which shows the borrowings made by the assessee on overdraft account and the amounts advanced to the parties from whom interest income is received. Direct nexus of interest income to interest expenditure has been verified not only with the bank statement but also with the return of income. In the return of income, the amounts stated by you in your notice for income and claim for deduction of interest paid both have been shown under and details regarding this, has been furnished separately to the Ld. A.O. which has been verified by him. Copy of the statement is annexed herewith for your ready reference. The nexus of interest income to expenditure was also established, allowability of expenditure was also examined and after due verification of the details, the assessment was finalized. There is no reason now to question the action of the Ld. A.O. and come to a conclusion that assessment was erroneous and prejudicial to the interest of the revenue. Income Tax Consultation Fee is business expenditure and was considered as allowable from business income. This is not personal expenditure of the assessee and therefore, it cannot be said that action of the Ld. A.O. allowing this expenditure from business income was erroneous. Short term capital gain on shares - Held that:- The assessee has not carried on these transactions on regular basis but only in few cases and in some selected scripts. There is no inquiry or investigation required now to be done when the assessee had furnished all details regarding share applications, allotment of shares, sales bills and delivery of shares on sale from demat account. The transactions have been low and volume is also marginal. Therefore, once the Ld. Assessing Officer has already verified these details, his decision to tax as income from short term capital gain is just and equitable on facts. Ld. Commissioner of Income Tax’s decision to consider it as business income is erroneous and a change of opinion and such change of opinion by ld. Commissioner of Income Tax to direct the Ld. A.O. to consider it as business income is outside the purview of scope of the provisions of Section 263 of the I T Act. Thus assessment proceedings taking action U/s.263 in this case is purely an action of change of opinion - Decided in favour of assessee
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