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2015 (8) TMI 1202 - ITAT MUMBAI

2015 (8) TMI 1202 - ITAT MUMBAI - [2015] 43 ITR (Trib) 15 (ITAT [Mum]) - Sale of shares - assessment as Capital Gains or Business income - AY 2007-08 - Held that:- The gains arising on its sale should be assessed as Short term capital gains only. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to assess the gains arising on sale of shares of M/s Adani Enterprises Limited under the head “Income from Capital gains”.- Decided in favour of assessee. < .....

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authorities are not right in law in holding that the travelling expenses are capital/pre-operative in nature. Accordingly we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the deduction towards foreign travel expenses.- Decided in favour of assessee.

Assessment of Short term capital gain arising on sale of shares as business income - AY 2008-09 - Held that:- The assessee has accumulated the shares initially in instalments and later sold them in instalments. .....

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of M/s Balaji Telefilm Ltd as business income, that too, without bringing any other material on record. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to assess the same under the head “Short term Capital Gain”.- Decided in favour of assessee.

Disallowance made u/s 14A - Held that:- The provisions of Rule 8D should not applied in the instant case, since the disallowance computed under Rule 8D works out to disproportionately higher figure of ₹ 13 .....

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N, JJ. For The Appellant : Shri Vijay Mehta For The Respondent : Shri Asgar Zain V P ORDER PER B. R. BASKARAN (AM) Both the appeals filed by the assessee are directed against the two separate orders dated 15.9.2010 and 5.9.2011 passed by Ld CIT(A)-19, Mumbai and they relate to the assessment years 2007-08 and 2008-09 respectively. Both the appeals were heard together and hence they are being disposed of by this common order, for the sake of convenience. 2. In the assessment year 2007-08, the fol .....

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e field of private placement of shares to foreign institutional investors, financial institutions. It is also engaged in the business of arranging finance and advising on insurance business. During the two years under consideration, the assessee also dealt in purchase and sale of shares. It declared a portion of profits arising on sale of shares as Short term Capital Gain (STCG) and the remaining portion was offered as its business income, i. E. the assessee has maintained separate portfolios fo .....

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hat it is in the nature of capital expenditure or pre-operative expenses. Though the assessee explained that it has incurred foreign travelling expenses for expansion of its business in foreign countries, the AO took the view that the assessee did not specify the purpose of expenditure. In view of the above, he disallowed the claim of foreign travel expenses. 5. In the assessment year 2008-09, the assessee had declared the dividend income of ₹ 42.05 lakhs. The assessee has disallowed ͅ .....

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it is capital in nature. With regard to the disallowance made under section 14A of the Act in assessment year 2008-09, the ld. CIT(A) restored the matter to the file of the AO with a direction to re-work the disallowance in the light of discussion made by him. Aggrieved by the order of the ld. CIT(A), the assessee has filed these appeals before us. 7. We heard the parties and perused the record. The first issue relates to the assessment of Capital Gains as Business income. In the year relevant .....

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hat the assessee has held the shares of M/s Adani Enterprises Limited for an average period of 60 days. The assessee has purchased shares initially in several instalments and sold them subsequently in instalments, meaning thereby there are no successive repetition of purchase and sale of shares. There is an exception only to the extent of ₹ 1.13 lakhs against the total purchases of ₹ 588.01 lakhs. A perusal of Balance Sheet placed at page 5 of the paper book also shows that the asses .....

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n shares held as trading stock as its business income. The assessee has claimed the gains arising on sale of Adani Enterprises Limited only as Short term Capital gain with the claim that it has held the same as its investment. It is now well settled proposition that a person is entitled to maintain two separate portfolios, one for its investment and another one for its trading assets. For this proposition, one may gainfully refer to the Circular No.4/2007 dated 15-06-2007 issued by the CBDT and .....

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the facts prevailing in the instant case. In our view, the discussions made by us in the preceding paragraphs clearly show that the intention of the assessee at the time of purchase of shares of M/s Adani Enterprises Limited was to hold it as its investments. We notice that the assessing officer has not brought any material on record to show the contrary, which means that the AO has arrived at the adverse conclusion only on surmises. Accordingly, we are of the view that the gains arising on its .....

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xploring new business opportunities and hence it is capital in nature and/or in the nature of pre-operative expenses. There is no dispute with regard to the fact that the assessee is engaged in the business of providing consultancy services in private placement of shares with Foreign Institutional Investors, financial institutes and is also providing advice on strategic investments and insurance sector. Besides the above, it also helps in arranging finance. Now the submission of the assessee is .....

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ling expenses have been incurred to increase the customer base in different countries and also to identify new avenues in the existing business of providing financial consultancy services. It is a settled proposition that the expenditure incurred for expansion of the existing business activities is revenue in nature. It is also well settled that the expenditure need not produce revenue immediately, since it is usual that these expenditure may bear fruits in future. The assessee has also submitte .....

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penses. 10. Now, we shall take up the appeal filed for AY 2008-09. The first issue relates to the assessment of Short term capital gain arising on sale of shares as business income. As in last year, the assessee has maintained two separate portfolios, viz., one for share investment activity and another one for share trading activity. In the investment category, the assessee has dealt with only one share viz., M/s Balaji Telefilms Ltd. The various criteria discussed in the immediately preceding y .....

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The assessee has declared the gains under the head business in respect of shares held as trading asset. All these factors support the contention of the assessee that the shares of M/s Balaji Telefilm Ltd were held as investment. Accordingly, we hold that the tax authorities are not justified in assessing the profit generated on sale of shares of M/s Balaji Telefilm Ltd as business income, that too, without bringing any other material on record. Accordingly, we set aside the order of Ld CIT(A) on .....

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9,11,754/-, out of which it has suo-motu disallowed a sum of ₹ 8,20,901/-, meaning thereby the assessee has claimed about ₹ 11.00 lakhs only as administrative expenses. It was further contended that the above said amount of ₹ 11.00 lakhs was also incurred in connection with the regular business activities. In view of the above said submissions, the Ld CIT(A) set aside the matter of computation of disallowance to the file of the AO. The assessee is contesting the said decision b .....

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