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2018 (5) TMI 123 - AT - Income TaxReopening of assessment - loss on sale of shares and also deduction u/s.36(1)(iii) - Held that:- It is possible that with due diligence of the Assessing Officer would have ascertained this fact at the time of assessment, if any also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. The entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. The issue taken up by the AO in reopening of assessment viz. to consider loss on sale of shares and also deduction u/s.36(1)(iii) which was not at all considered in the course of original assessment, though it was completed u/s.143(3) and mere production of records by the assessee before the AO at the time of original assessment itself cannot be led to the conclusion that the AO had applied his mind wherein it requires due diligence and application of mind from the end of the AO.- Decided against assessee. Non-granting of loss on loss of shares by treating the same as capital loss - Held that:- investments in shares were not at all considered as stock in trade as the assessee was not dealing in shares. Once the shares are treated as investments, loss arising out of purchase and sale of shares is only a capital loss and it is not a business loss. In other words, assessee having carried on no business activity and treated the shares as investments from year to year, income or loss arising out of sale of such shares is to be considered as capital gain or capital loss. The share being a capital asset cannot acquire different character because of treatment accorded to it by the assessee in its return of income; contrary to the treatment given in the books of accounts. Hence, this ground of appeal of assessee stands rejected. Non-granting of deduction u/s.36(i)(viii) towards interest on deposit - Held that:- The interest income earned on deposit of surplus money would be assessable as income from other sources. If the interest income is from a fund, which has been kept as deposit from surplus capital, it would be assessable as income from other sources only. If the surplus funds are invested instead of keeping them idle, the income by way of interest should be treated as income from other sources. In the present case since there is no evidence to show that the borrowed fund was used for making fixed deposit, it is to be considered as assessee has deposited its surplus fund as fixed deposit instead of keeping them idle, the income by way of interest should be treated as income from other sources. - Decided against assessee. Disallowance u/s.14A r.w.Rule 8D - Held that:- Since the investment does not yield any exempted income, there cannot be any applicability of sec.14A r.w. Rule 8D of the Income Tax Rules, 1962. Accordingly, this ground of the assessee in this appeal is allowed.
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