TMI Blog2013 (8) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... net interest earned by her - Rule 8D is toward estimating the expenditure that can be attributed to the tax exempt income and, thus, could not, in any case, exceed the actual expenditure incurred and claimed by the assessee - Decided in favour of assessee. - I.T.A. No.301/Mum/2012 - - - Dated:- 24-7-2013 - Shri I. P. Bansal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Shri Pramod Kumar Parida Shri Sanjukta Chowdhury For the Respondent : Shri Manoj Kumar ORDER Per Sanjay Arora, A. M. This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-8, Mumbai ('CIT(A)' for short) dated 27.12.2011, partly allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2008-09 vide order dated 27.12.2010. 2. The appeal raises three issues, per its first three grounds; grounds nos. 4 5 being general in nature, warranting no adjudication, and which were even otherwise not pressed by the ld. AR, the assessee's counsel, during the course of the hearing. 3.1 The first ground is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m that adopted by him for a preceding year. The decision by the hon'ble jurisdictional high court in the case of CIT vs. Gopal Purohit [2011] 336 ITR 287 (Bom) has also been taken into consideration by the tribunal in that case, stating that the matter being purely factual, it has to be decided on the facts obtaining for the relevant year. On that basis, it was claimed by him that the matter could not be treated as covered by the order by the tribunal in the assessee's case for the preceding years, which had in fact only set aside the assessment for adjudication afresh. On merits, he would draw our attention to the details of the share transactions in respect of shares held for less than one year, claimed as STCG, which appears at pgs.46- 64, and the details of the entire share transactions, including the period of holding, transaction-wise, whether short term or long term (PB pgs.65-72). As apparent, the transactions, though not numbered, are voluminous and the holding period very low in many cases. As such, the same clearly shows the assessee being engaged in the activity of purchase and sale of the shares on a regular basis. 4. We have heard the parties, and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o whether he maintained any distinction between shares which were hold by him as investments and those hold as stock in trade. ( CIT v/s Associated Industrial Development Co. Ltd., 82 ITR 586 (SC). (c) Treatment in the books by an assessee will not be conclusive. If the volume, frequency and dt. 15.6.2007 ularity with which transactions are carried out indicate systematic and organized activity with profit motive, then it would be a case of business profits and not capital gain. CIT v/s Motilal Hirabai Spg. And Wvg. Co. Ltd. 113 ITR 173 (Guj.); Raja Bahadur Viswshwara Singh v/s CIT, 41 ITR 685 (SC). (d) Purchase without an intention to resell where they are sold under changed circumstances would be capital gains. CIT v/s PKN, 60 ITR 65 (SC). Purchase with an intention to resell would render the gain profit on sale business profit depending on the circumstance of the case like nature and quantity of article purchased, nature of the operation involved. Saroj Kumar Mazumdar v/s CIT, 37 ITR 242 (SC). (e) No single fact has any decisive significance and the question must depend upon the collective effect of all the relevant materials brought on record. Janki R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side this issue to the file of the A.O. for a de novo adjudication, deciding the same on merits in accordance with law, by issuing definite findings of fact, and after affording a reasonable opportunity of hearing to the assessee. We decide accordingly. 5. The second ground of the assessee's appeal is in relation to a disallowance in the sum of ₹ 6,52,086/- u/s.14A of the Act by the A.O. following Rule 8D, being mandatory for the current year; the assessee having earned dividend at ₹ 21.51 lacs for the year. The same stood confirmed in appeal by the ld. CIT(A), who found that the failure of the assessee to produce any cash flow statement or any other material to establish the facts, her claim of having not utilized the borrowed funds for investing in shares and, thus, of having not incurred any interest expenditure toward earning dividend income, could not be accepted. There is also no question of the assessee having not incurred any administrative expenses in maintaining its shares yielding tax exempt income, so that the assessee's claim of having not incurred any such expenditure in its respect also could not be accepted, so that he found no infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the said income cannot be accepted. As apparent, there is expenditure on office and maintenance expenditure, including on repairs, telephone, general expenses, electricity expenses, etc., as well as on employment of staff, and which would only be in support of her activities. A volume of the transactions has been undertaken by the assessee during the year, yielding income, including dividend, which stands credited to the profit and loss account. Under these circumstances, therefore, we only consider it fit and proper that the matter is restored back to the file of the A.O. for consideration afresh of the matter. This would also be in agreement with the tribunal having restored the issue qua the income on the sale of the shares as being either LTCG or STCG, as the case may be, or business income, back to the file of the A.O. for a de novo adjudication. We decide accordingly. Reference in this regard may be made to the decision by the hon'ble jurisdictional high court in the case of Godrej and Boyce Manufacturing Co. Ltd. vs. Dy. CIT [2010] 328 ITR 81 (Bom) , which deals with all aspects of the matter in considerable detail. 7. The third and the final ground of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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