TMI Blog2012 (5) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of remit to the tribunal to examine the issue holistically keeping in mind the parameters/tests - in favour of the Revenue. Deleting disallowance made by the AO under Section 14A – Held that:- An order of remit passed as Rule 8D of the Income Tax Rules, 1962 is not retrospective, but both the direct and indirect expenses in relation to exempt income have to be disallowed under Section 14A - it has been held that no direct or indirect expenditure whatsoever were incurred in relation to tax free income, but there is no finding to the said effect - merely, because the AO was wrong in making disallowance on ad hoc basis, cannot be a ground to hold that no amount whatsoever was relatable directly or indirectly to the earning of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of this Court in ITA 687/2009,Maxxopp Investments Ltd. Vs. CIT dated 18th November, 2011. In the said decision, it has been held that Rule 8D of the Income Tax Rules, 1962 is not retrospective, but both the direct and indirect expenses in relation to exempt income have to be disallowed under Section 14A of the Act. In the present case, we have noticed that the respondent-assessee is a company and the entire disallowance of Rs.1,19,385/- was deleted by the first appellate authority and the said order is affirmed by the tribunal. In other words, it has been held that no direct or indirect expenditure whatsoever were incurred in relation to tax free income, but there is no finding to the said effect. Merely, because the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown the securities under the head investment in the balance sheet for many years. He has referred to the notes to accounts to the said balance sheets.The CIT(A) for the Assessment Year 2000-01, followed the same reasoning and reversed the addition made by the Assessing officer. For the Assessment Year 2001-02, CIT (A) relied upon the decision of the tribunal for the Assessment Year 1999-00 and 2000-01, wherein the same was directed to be taxable under the head capital gain . 7. The tribunal by the impugned order dated 4th April, 2008 for the assessment years 1999-2000 and 2000-01 dismissed the appeals filed by the Revenue, inter alia, recording as under:- 15. We have carefully considered the rival submissions in the light of mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) had given a contradictory finding with regard to the treatment of the transactions relating to securities in the books of accounts. The tribunal in its order has not given any finding either in favour or against the respondent-assessee but referred to the balance sheets where the securities were shown under the head investment". It has recorded and accepted that in some years (or as argued before us by the assessee in the return filed for the assessment year 1998-99) the gains were shown as income from business and not as short term capital gains . Tribunal has held that the earlier treatment given by the assessee cannot be determinative; and the explanation of the assesee that there was no difference in tax rate has been accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od and cogent evidence to judge the nature of the transaction and would be a relevant circumstance to be considered in the absence of any satisfactory explanation. (e) The fifth test, normally applied in cases of partnership firms and companies, is whether the deed of partnership or the memorandum of association, as the case may be, authorises such an activity. (f) The last but not the least, rather the most important test, is as to the volume, frequency, continuity and regularity of transactions of purchase and sale of the goods concerned. In a case where there is repetition and continuity, coupled with the magnitude of the transaction, bearing reasonable proportion to the strength of holding, then an inference can readily be drawn tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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