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TMI Blog2014 (9) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Charging of interest u/s 234A, 234B and 234C. 3. The facts relating to the case are discussed in brief. As per the return of income, the assessee herein is a senior citizen. The assessee declared Short Term Capital Gains (STCG) from dealing in shares and also declared exempted dividend income. During the course of assessment proceeding, the AO made disallowance u/s 14A of the Act by invoking the provisions of Rule 8D. The AO also took the view that the assessee has purchased and sold shares in the form of business activity and accordingly assessed the Short Term Capital Gains as "business income". The AO also charged interest u/s 234A, 234B and 234C of the Act. All the above said three grounds were decided against the assessee by Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall apply even if the assessee claims that she did not incur any expenditure. It is now settled proposition that the disallowance u/s 14A has to be determined by having regard to the accounts of the assessee. In the instant case, the AO did not make any reference to the accounts in order to examine the correctness of the claim made by the assessee. The dividend income earned by the assessee is also Rs. 62,134/- only. The disallowance computed by the AO show that he has proposed to disallow only general expenses only. Hence, under these circumstances, in order to put this issue at rest, we estimate the disallowance to be made u/s 14A of the Act at Rs. 1,000/- by considering the Profit and loss account placed at page 7 of the paper book. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case, but have proceeded to decide the same on the belief that the various guide lines prescribed by the CBDT in its circular are automatically applicable to the instant case. 8. We notice that the Short Term Capital Gain declared by the assessee for the year under consideration was Rs. 39,50,929/-. The details of the same are placed at page 19 of the paper book. A careful analysis of the same would show that the assessee has earned more than 90% of the above said gain in just four scrips as detailed below:- (a) Aftek 4,46,317 (b) Ahmednagar forging 3,68,368 (c) Amtek India Ltd 3,03,605 (d) Webels Engg Ltd 21,84,485 In fact, the assessee has made more than 50% of gain in just one scrip, viz., Webels Engg Ltd. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee placed at page 6 of the paper book. The assessee has borrowed funds to the tune of Rs. 40.26 lakhs. The details of the said loan would show that the assessee has taken those loans from her relatives only. The Ld A.R submitted that the said loans are interest free loans. A perusal of the Profit and Loss account and Capital account shows that the assessee did not pay interest on those loans. The Ld A.R also pointed that the assessee's own capital stand at Rs. 150.86 lakhs, where as the investment in shares stand at Rs. 142.61 lakhs and accordingly submitted that the own capital sufficiently explain the sources for making the investments. In this regard, the Ld A.R placed reliance on the decision rendered by the jurisdictional Bombay High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ld CIT(A) on this issue and direct the assessing officer to assess the impugned gain as Short term Capital gain only.
13. Next issue relates to the chargeability of interest u/s 234A, 234B and 234C of the Act. Though the charging of interest under the above sections is consequential in nature, the Ld A.R pointed out that the interest u/s 234C is chargeable on the returned income and not on assessed income. The assessing officer, while passing consequential order, is directed to compute the interest under the above said sections in accordance with the law.
14. In the result, the appeal filed by the assessee is partly allowed.
The above order was pronounced in the open court on 19th Sept, 2014. X X X X Extracts X X X X X X X X Extracts X X X X
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