TMI Blog2013 (8) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143(3) the Department has accepted the profit under the head capital gain. Thus following rule of consistency no reason to take a different view as from the past assessment of the assessee. Against revenue. Disallowance u/s 14A - CIT(A) restricted the disallowance u/s 14A to Rs. 18,65,942/- whereas the disallowance as per Rule 8D worked out to Rs. 2,96,23,551/- - Held that:- As it is settled that Rule 8D is prospective as held in Godrej and Boyce Mfg. Co. Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT), . However , at the same time a reasonable disallowance accepted to be made so far as earning of exempt income is concerned CIT(A) has restricted the disallowance to the extent of expenditure claimed. Thus no reason to interfere wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward to the subsequent assessment year. The A.O. sought explanation from the assessee as to why LTCG of Rs. 13,52,70,833/- should not be taxed as business income. The assessee filed a detailed reply vide letter dtd. 30-7-2009. The assessee explained that out of total 68 transactions of capital gains, 40 transactions constituted LTCG. Only 18 transactions constituted short term capital gains (STCG). The assessee further explained that after holding investment for more than three months, these constituted nearly 70% of total transactions. The assessee explained that it is only an investor and not trader. The A.O. was not convinced with the submission made by the assessee and further asked to the assessee as to why LTCG declared should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as 40 months. Further, after analyzing the holding period, the ld. CIT(A) was of the belief that approximately 83% of the quoted securities were held for more than one year, 57% for more than two years and 33% for more than three years and only balance investments were the investments made during the financial year. The ld. CIT(A) was also convinced that the A.O. has wrongly considered "purchase to sales ratio" instead of "sales to purchase and holding ratio". Referring to the Circular of CBDT No. 4/2007 dtd. 15-6-2007, the ld. CIT(A) observed that even in the Circular "sales to purchase and holding ratio" has been considered as one of the parameters and applying the "sales to purchase and holding ratio", the ratio worked out at 0.17. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is immaterial while deciding the issue in the instant assessment and finally concluded that the finding of the A.O. should be accepted on the facts of the case. 5. Per contra, the ld. counsel for the assessee reinterred what has been submitted before the ld. CIT(A) and prayed that the finding of the ld. CIT(A) deserves to be confirmed. 6. We have considered the rival submissions and perused the orders of authorities below. The dispute is regarding the nature of income from sale and purchase of shares by the assessee. The issue whether the income from sale and purchase in a particular case should be treated as capital gain or as business income is a debatable issue and there are conflicting decisions of the Tribunal on this issue. Each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,96,23,551/-. 8. It is seen from the assessment order that the A.O. has made disallowance by invoking the provisions of section 14A r.w.r. 8D based on the decision of the Tribunal in the case of Special bench of ITAT in the case of Daga Capital Management Pvt. Ltd. (ITA No. 8057/Mum/2003). Before the ld. CIT(A) it was contended that Rule 8D cannot be applied for the year under consideration. It was further explained that no interest bearing funds was used in investment in shares. After considering the facts of the case and in the light of the provisions of section 14A of the Act, the ld. CIT(A) was convinced that disallowance u/s 14A cannot be more than the expenses debited to the P L account. The ld. CIT(A) observed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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