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2016 (12) TMI 1002 - ITAT MUMBAIGains arising on sale of shares - business income or capital gain - Held that:- Assessee has purchased and sold higher number of shares in respect of 12 scrips only, meaning thereby, the volume cannot be taken to be high. We notice that holding period of shares for major portion of shares is reasonable. We further notice that the assessing officer has accepted the profit as Capital gains in AY 2009-10 and 2013-14 in the scrutiny assessment made u/s 143(3) of the Act. There is no reason to assess the capital gains arising on sale of shares as business income. On a cumulative consideration of various factors, we are of the view that the assessee has acted as an investor only in respect of the impugned transactions. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the gains arising on sale of shares under the head Capital gains only. Disallowance made u/s 14A - Held that:- A perusal of the statements of total income of the assessee would show that the assessee did not claim any expenditure against any income. The question of apportionment of expenses between taxable income and exempt income would arise only if any expenditure is claimed by the assessee. Hence we are unable to agree with the view taken by the Ld CIT(A) that the provisions of Rule 8D provide for “deemed disallowance”. It is well established proposition now that the assessing officer can resort to compute disallowance under Rule 8D only if he is not satisfied with the computation made by the assessee having regard to the accounts of the assessee. Since the assessee has not claimed any expenditure, in our view, there is merit in the contentions of the assessee that no disallowance u/s 14A is called for.
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