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2019 (2) TMI 616 - ITAT MUMBAIGain earned as acquired from IPO (Public issue) - Gains to be assessed as Capital Gains or as a Business Income - Held that:- The perusal of holding period chart extracted by Ld. AO clearly reveal that the assessee has dealt in 11 scrips / transactions during the year out of which the holding period of 10 scrips / transactions is five or less than five days which indicate that the investments were made by the assessee as a trader only and not as an investor and the primary objective of the investments was to earn the gains in a business-like manner rather than to earn accretion to the same by way of dividend. The intention of the assessee gets manifested from the fact that the scrips have been sold within a very short span of time so as to reap the benefits of listing gains only. This is further fortified by the fact that the assessee was engaged as share broker and as evident from memorandum of association as placed on record, dealing in shares was one of the main objectives of the assessee company. Hence, after due consideration, we find ourselves in agreement with the view taken by first appellate authority and we see no reason to interfere with the same. All the grounds as well as the appeal stand dismissed. Addition u/s 14A r.w.r 8D - Held that:- It is undisputed position that the Tribunal in assessee’s own case for AY 2009-10 as well as first appellate authority in AY 2011-12 has restricted the same to 5% of exempt income, which has been accepted by the assessee. Relying upon the same, first appellate authority has restricted the expense disallowance to 5% of exempt income, which is fair under the circumstances and no further relief could be granted to the assessee on this account. The same is in line with estimation made in earlier years and therefore, the grounds of appeal, to that extent, stands dismissed. So far as interest disallowance u/r 8D(2)(ii) is concerned, we find that the assessee has not offered any disallowance against the same and therefore, to contend that the Ld. AO failed to reject the workings made by assessee and record a proper satisfaction in that respect could not help the assessee in any manner. The same is devoid of any merits. We find substantial force in the argument of AR that the assessee had sufficient interest free funds in the shape of Share Capital & Free Reserves to make new investments including stock in trade. The perusal of financial statements as placed on record reveals that there is no change in non-current investments made by the assessee during impugned AY whereas current investments and inventories have been funded by way of reduction in overall current assets. Therefore, a presumption was to be drawn in assessee’s favor that own funds were used to make the investments. Therefore, upon due consideration, we are inclined to delete the impugned interest disallowance u/r 8D(2)(ii). - Decided in favour of assessee.
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