TMI Blog2014 (9) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s 14A at ₹ 1,000/-. Assessment of Short Term Capital Gains as business income of the assessee - Held that:- There is no reason to suspect the nature of activity carried on by the assessee during the year under consideration. Accordingly, we are unable to agree with the view taken by the tax authorities. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to assess the impugned gain as Short term Capital gain only. - I .T.A. No.2133/Mum/2010 - - - Dated:- 19-9-2014 - S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) For the Appellant : Shri Nilkhant Khandelwal For the Respondent: Shri Sambit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge value of investments, but restricted the same equal to the amount of dividend income referred above. The Ld CIT(A) also confirmed the same by following the special bench decision rendered in the case of Daga Capital Management (117 ITD 169). 5. We have heard the rival contentions on this issue. The present assessment year being AY 2006-07, the provisions of Rule 8D are not applicable as per the decision of Hon ble jurisdictional High Court rendered in the case of Godrej Boyce Mfg. Co. Ltd (328 ITR 81). According to the said decision the provisions of Rule 8D shall have prospective effect only. However, it has been held that the AO has to compute the disallowance on a reasonable basis. In the instant case, the claim of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions. The tax authorities have also placed reliance on the Circular No.4 of 2007 dated 15.6.2007, wherein certain guiding factors that are needed to be considered to decide about the nature of transactions has been stated. All the case laws reveal only one point that there is no straight jacket formula to decide about the nature of share transactions viz., whether it was carried as business activity or investment activity. The facts prevailing in each case has to be judged independently in order to resolve the said question. 7. A perusal of the assessment order shows that the AO has held that the assessee has carried on share transactions on day to day basis and it has been carried in a very well planned, systematic and organized ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gains in four scrips only. In the case of Webels Engg Ltd, the assessee had purchased 14,399 shares in July 2005 and 601 shares on August 10, 2005 and off loaded them in installments during the last week of August, 2005 and made a profit of ₹ 21.84 lakhs. It is a well settled proposition that the intention of the investor at the time of purchase is more relevant to determine the character of the asset. In the above said case, the assessee has purchased the shares of Webels Engg Ltd at an average rate of ₹ 150/- per share. But the price of the above said company has appreciated fast and it has almost doubled by the end of August, 2005. In a volatile share market, an investor also sometimes sell the shares if abnormal gain is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld A.R also submitted that the assessment of the assessee relating to the assessment years 2003-04 and 2004-05 were completed u/s 143(3) of the Act. The relevant assessment orders are placed at pages 38 to 42 of the paper book. A perusal of the same would show that the assessee incurred Short term Capital loss of ₹ 9,37,931/- in AY 2003-04 and earned Short term Capital gain of ₹ 6,17,892/- in AY 2004-05. In both the assessments, the assessing officer has accepted the short term capital loss/gains declared by the assessee. According to the assessee, there is no change in the facts relating to her share transactions. In AY 2005-06, the return filed by the assessee was accepted u/s 143(1) of the Act. 11. The Ld D.R, during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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