TMI Blog2016 (2) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 against the order of CIT(A)-30, Mumbai dated 29.08.2008 23.01.2009 respectively, the grounds of appeal raised in ITA No. 6546/Mum/2010 are as under: On the basis of the facts and circumstances of the case and in law the learned CIT(Appeals) has erred in confirming that - 1. The income from short-term capital gains of ₹ 7,31,715/- is income from business. 2. In concluding that I have carried out share trading activity through PMS. 3. In holding that appreciation earned by me through the management of my portfolio by PMS operator is business income. 4. In assuming that my motive is to do trading in shares and not earn through appreciation in the value of shares in the changing share market scenario, when I hand over my funds to the Portfolio Manager. 5. In holding that taking help of expert amounts to trading in shares. 6. In disallowing the short term capital loss of ₹ 41,431/-.. u/s 94(7) of the income tax by applying dividend stripping provisions without ascertaining the motive as to tax avoidance. 7. In not allowing loss of ₹ 3489 from Mutual fund to be set off against the Income. With the permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government share and debenture and has placed fund to ASK Raymond James Securities Pvt. Ltd. and Fortis Securities Ltd. and further contended that STCG is mainly income from investment and not trading income. 6. The contention of the assessee was not accepted by the AO and the AO observed that during the period relevant to the assessment year, the assessee purchased share of ₹ 84,58,260/- and sold for ₹ 93,34,115/- to accrue STCG of ₹ 7,31,715/- and after deducting Portfolio Management Fees (PMS) the total transaction entered into for occurring STCG are 448/- out of which the period of holding into 266 instances is less than 4 month and 97 instances is within a period of 1 month in another 188 instances it is within the period of 3 months and that selling of share by assessee was to maximise profit on the amount of money kept at the disposal of institution. 7. The AO further observed that the volume and frequency of the transaction is very high as indicated by him. The AO further observed that assessee has deducted ₹ 3489/- as a loss on or redemption of unit in Frankling Tampelton and the same was not allowed to be set off against the STCG assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares are not assessable as business income. 12. Coordinate bench of ITAT Mumbai in ITA No. 5382/M/2009, titled as ITO Vs Radha Birju Patel also taken a similar view by treating the same as STGC instead if business income, hence we are also of the opinion that the finding of AO for treating the income from PMS is income from business and not STGC, are erroneous and the same is set-aside, and we direct the AO to treat the income from PMS as income on account of STGC, Thus this ground of appeal is accepted. 13. The next ground for our consideration is disallowance of STCL of ₹ 41,431/- u/s 94(7) of the Act. While dealing with this addition/disallowance, the AO observed that assessee failed to show the dividend of ₹ 3914/- received from North Canera Sarswat Bank as the same is co-operative bank and the income does not fall under the purview of section 10(33) and the same subject to tax, further, the assessee purchased a mutual fund of Birla MIP on 12.04.2004 for ₹ 5,00,000/- and sold the same on 14.12.2004 for ₹ 4,86,702/- and claimed loss of ₹ 16,298/- under the head Capital Gain . On the other hand, the assessee received a dividend of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutual fund units. Hence, the loss claimed of ₹ 16,298/- is disallowed and added back to the income of the assessee under the head 'capital gains'. ii)Assessee has purchased mutual funds of Principal Asset management Co. in 12-04-2004 for ₹ 5,00,000/- and has sold the same on 14-12-2004 for ₹ 4,85,926/- The assessee has claimed the loss of Ps. 14,074/- on sale of mutual funds under the head Capital Gains . But it is found that assessee has received dividend of ₹ 21,455/- As per provisions of section 94(7) this loss is not allowed as the dividend earned is more than the loss incurred oi l of mutual fund units. Hence the loss claimed of ₹ 14,074/- is disallowed and added back to the income of the assessee tinder the head :Capita gains . iii) Assessee has purchased mutual funds of Tata Dividend Yield Fund on 12-04- 2004 for ₹ 5,00,000/- and has sold the same on 14-12-2004 for ₹ 4,88,941/- The assessee has claimed the loss of ₹ 11,059/- on sale of mutual funds tinder the head 'Capital Gains But it is found that assessee has received dividend of ₹ 17,827/- As per provisions of section 94(7) this loss is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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