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TMI Blog2013 (8) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. represented on behalf of the Revenue. 3. In ITA No. 1140/Kol/2009 (assessee's appeal), the assessee has raised the following grounds : - (1) For that the CIT(Appeals) erred in holding that Rule 8D of the Income Tax Rules, 1962 which was introduced in the statute only on24th March 2008 was applicable in respect of assessment year 2006-07. The CIT(Appeals) failed to appreciate the fact that even sub-section (2) of section 14A of the Act in which the said rule was inserted was introduced in the statute book with effect from 1st April , 2007 and was admittedly applicable only from assessment year 2007-08 as stated in the memo explaining the Finance Bill, 2006. (2) For that no expenses were incurred by the appellant for earning dividend income. Further and in any event the Assessing Officer as well as the CIT(Appeals) could not point out any expenditure which was directly relatable to exempt income and as such disallowance of Rs.54,523/ - on proportionate basis even under Rule 8D of the Rules was erroneous. (3) For that further and in any event and without prejudice to ground no. 3 interest on PPF should not have been included for computation as the said subscription was made ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss income. It was the submission that the assessee had disclosed the profit from the said transact ions of the purchase and sale of shares as short - term capital gains. I t was the submission that ld. CIT(Appeals) had upheld the view of the assessee and had held that the profit from the purchase and sale of shares was assessable as short -term capital gains and not profit and gains of business. I t was the submission that for this purpose, ld. CIT(Appeals) had relied upon various decisions of the coordinate Benches of this Tribunal as also the decision of the Hon'ble Madras High Court in the case of Rama Mitram reported in 217 CTR 206. I t was the submission that in view of the Circular of the CBDT referred to supra as the transactions of the assessee fell within the criteria as prescribed in the said Circular, the same was liable to be treated as income from business and not short-term capital gains. I t was the submission that the order of ld. CIT(Appeals) was liable to be reversed. 5. In reply, ld. A.R. submit ted that no borrowed funds were utilized for the purchase and sale of shares as done by the assessee. I t was the further submission that substantial portion of the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head "short -term capital gains". He placed reliance on the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang [193 ITR 321 (SC) ]. It was the submission that the order of ld. CIT(Appeals) was l iable to be upheld. 6. We have considered the rival submissions. At the outset , a perusal of the facts of the present case clearly shows that no borrowed funds had been used by the assessee for the purchase and sale of shares. Further, a perusal of the list of shares as also the details of the short -term capital gains clearly shows that the assessee is not regularly purchasing and selling shares in a systematic manner to be termed as 'business'. Substantial portion of the gains as disclosed by the assessee is admittedly from the sale of shares, which have been purchased from IPOs and public offers. I t cannot be said that the assessee is regularly and systematically doing any business of purchase and sale of shares. Further, the fact that for the earlier and subsequent years, the Revenue has accepted the similar transact ions in the hands of the assessee being taxed as short -term capital gains also goes in favour of the assessee especially in view of the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sect ion 14A of the Act. 12. At the time of hearing, it was fairly agreed by both the sides that the issue is now covered by the decision of the Hon'ble Calcutta High Court in the case of R.R. Sen & Brothers (Pvt. ) Ltd. in G.A. No. 3019 of 2012 dated 4t h January, 2013, wherein expenditure at 1 percentage of the dividend income is a thumb rule applied consistent ly as the expenditure relatable for earning of the exempt income. This view also finds support from the decision of the Hon'ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. -vs. - DCIT & Another reported in [2010] 328 ITR 81. In this view of the matter and respect fully following the decision of the Hon'ble jurisdictional High Court in the case of R.R. Sen & Brothers (Pvt. ) Ltd. referred to supra as also the decision of the Hon'ble Bombay High Court referred to supra, the Assessing Officer is directed to restrict the disallowance under section 14A to 1 percentage of the exempt income. 13. In ITA No.1247/Kol. /2010 (assessee's appeal ), the assessee has raised the following ground, which is against the action of ld. CIT(Appeals) in confirming the disallowance made under section 14A : - "For that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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