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2018 (3) TMI 1409 - AT - Income TaxIncome arising from sale of securities - capital gain or busniss income - Held that:- The assessee is Non Banking Financial Company and income from capital gains where investment made in equities are sold. The assessee treated long term capital gain from sale of equities held for more than 12 months exempt u/s 10 (38) of the Act. AO treated it as business income. Now, the above issue is squarely covered in favour of the assessee by Circular No. 6 dated 29.02.2016 issued by CBDT. The above circular speaks that if shares are held for more than 12 months, if assessee shows it as LTCG, same should be accepted. We are of the opinion that when the assessee himself has treated the income arising from sale of securities held for more than 12 months as capital gains, there is no reason to dispute it by Assessing Officer. Disallowance u/s 14A - Held that:- AO has not recorded satisfaction that how the claim of the assessee is incorrect. He also did not comment upon the argument of the assessee that on the dividend received from Dabur Limited no expenditure is incurred. The provisions of section 14 A (2) mandatorily provides that AO should record satisfaction about the correctness of the claim of the assessee. There is no such satisfaction recorded by the Assessing Officer. Addition made by the Assessing Officer and confirmed by the Ld. CIT (A) cannot be sustained. Accordingly ground No.3 of the appeal of the assessee is allowed and AO is directed to delete the disallowance. Disallowance on ad-hoc basis - Held that:- Assessee has incurred ₹ 13,93,000/- under the head business promotion expenses of ₹ 16,01,689/- under travelling expenses. The assessee could not produce bills and vouchers of the above business expenses and therefore, disallowance of ₹ 15,68000/- was made u/s 37.
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