TMI Blog2016 (5) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... se in that case the shares were held for only two to three days period but the assessee’s situation in the present case is totally different. The CIT (A) has taken into cognizance of these factors and rightly treated the same as short term capital gain and in fact CIT(A) has taxed certain amount after examining all the transactions related to share trading. The assessee’s profit and loss account clearly states that the assessee was having two portfolios. Therefore, this ground of Revenue is dismissed. - Decided against revenue Disallowance u/s 14A - CIT(A) restricted the disallowance to 10% of the exempted income - Held that:- The Assessment Year involved in 2007-08 therefore Rule 8D is not applicable in this year as per the ratio laid down in the judgment of Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company (2010 (8) TMI 77 - BOMBAY HIGH COURT ). In our opinion, the CIT(A) has rightly taken into cognizance that the said judgment also held that where investment has been made and the income from the same was exempt from tax thus, the A.O is duty bound to make the disallowance u/s 14A by adopting a reasonable basis. The CIT(A) has rightly restricted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as options or privileges granted to the assessee by the legislature. Where transactions have suffered STT, the treatment given by the assessee to transactions as share trading activity or investment activity should be considered as final. 4. The Assessing Officer after taking into account the submissions of the assessee observed that although the assessee has mentioned purchase of shares as investments in its books of accounts but looking to the nature of transactions of shares, it was found that the assessee was doing frequent transactions for sale and purchase of shares which was evident from the inventory of opening stock/closing stocks. The Assessing Officer has also taken into cognizance of Circular No. 4/2007 dated 15/06/2007 issued by CBDT and held that the assessee has declared Short Term Capital Gain on certain sale of shares even though its main business is trading of shares. The Assessing Officer also considered the instructions dated 31st August, 1989 issued by CBDT and held that though the portfolio manager is an agent of the investor and though he may carry on certain transactions in his own name such transactions are in his capacity as an agent of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much high and is rightly treated as business by the Assessing Officer. It was further submitted that no separate account was maintained by the assessee and the intention of the assessee was clearly for the trading activity and that there was no share purchased for Long Term Capital Gain or to earn dividend. The Ld. DR pointed out that from the Assessing Officer s order it was clear from the assessee s opening stock and closing stock was evident to show that the total number of shares purchased during the year was 514.44 lakh having total value of ₹ 2513.54 lakhs and number of shares sold during the year was 488.46 lakhs of ₹ 21,185.99 lakhs. The used volume itself indicated that the assessee was doing business activity and wrongly treated it as investments and had shown capital gain. The Ld. DR while supporting the order of Assessing Officer stated that Rule 8D is Procedural Rule and, therefore, will have retrospective operation. In so far as, all pending proceedings as on date of notification are concerned, the Ld. DR relied upon the case of CIT Vs. M/s DM Components Ltd. passed by Hon ble Delhi High Court wherein the assessee has claimed the amounts were not business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issues by the CBDT. The assessee also relied upon the case of CIT Vs. Gopal Purohit (2011) 336 ITR 287 (Bombay) which was confirmed by the Hon'ble Supreme Court. In respect of Ground No. 2, the Ld. AR submitted that Rule 8D will not be applicable for the present Assessment Year 2007-08 as held in Jurisdictional High Court in the case of Maxopp Investment Ltd. vs. CIT reported at 347 ITR 272. 8. We have perused all the records and heard both the parties. The Ld. DR s contention that the circular dated February 2016 is not retrospective has to be looked into from the angle of the earlier circulars and the intention of that circular issued by the CBDT. The intention of the circular is clearly to reduce the litigation and maintain consistency. The submissions of the Ld. DR that the transaction was very much voluminous and, therefore, Assessing Officer by taking into the modus operandi of the assessee treated the same as business income but the Assessing Officer has not given the day to day transaction in its entire order and that for how much period the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
