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TMI Blog2016 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal. 1.The Ld. Commissioner of Income Tax (A) erred in confirming and treating Rs. 38, 96,224/ - -as Income from Business & profession as against short term capital gain claimed by the assessee. 2. The Ld. Commissioner of Income Tax (A) erred in confirming and treating Rs. 27,44,159/ - as Income from business & profession as against long term capital gains claimed exempt under section 10(38) of the Income Tax Act, 1961 by the assessee. 3. The Ld. Commissioner of Income Tax (A) erred in confirming the disallowance of Rs. 6,24,577/ - under Section 14A of the Income Tax Act, 1961 alleging that the said expenses debited to profit and loss account are pertaining to exempt income. 4. The Ld. Commissioner of Income Tax (A) erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On both the counts, it was a common point between the parties that similar stand of the Assessing Officer came up for consideration before the Tribunal in assessee's own case for assessment year 2005-06 and vide order in ITA NO.422/Mum/2011 Dated 12/06/2013, the stand of the assessee has been upheld. In this context, we may reproduce hereinafter the relevant portion of the order of the Tribunal dated 12/06/2013(supra), which reads as under:- " 8. We observe that the dispute is mainly in respect of taxing the short term capital gain shown by the assessee between 1.10.2004 to 31.3.2005 of Rs. 6,35,609.19 as short term capital gain prior to 1.10.2004, was assessable @ 30%, the same rate at which business income was to be assessed. On perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y borrowed funds for the purpose of purchase of shares and same is also fortified on perusal of profit and loss account, that no interest has been claimed towards expenses. The ITAT Mumbai has held in the case of Janak S Rangwala vs ACIT, 11 SOT 627 that mere volume of transaction does not mean that assessee is a trader. The intention with which purchase has been made has to be seen. It is held that if in earlier year, the department has treated the assessee as an 'investor', it cannot take a different view in subsequent year. In the case before us, it also observed that in assessment year 2004-05, assessee has shown short term capital gain as well as long term capital gain and department while making the assessment u/s.143(3) of the Act vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head 'short term capital gain' instead of 'business income'. Hence, Ground No.1 of appeal is allowed." 5. In view of the above precedent, the stand of the lower authorities in treating the assessee as a trader in shares is unsustainable. Pertinently, in the instant assessment order, the Assessing Officer has considered the 'assessment records for the earlier years' as well to say that the assessee is not an investor in shares. Now, if in the earlier period, the assessee has been held by the Tribunal to be an investor in shares, consequently, in the instant year also such a finding is inevitable. The Tribunal in its order dated 12/06/2013 (supra) has noticed that in assessment year 2004-05 the department has itself treated the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration as held by the Hon'ble Bombay High Court in the case of M/s. Godrej & Boyce Mfg. Company Ltd. Vs. DCIT,328 ITR 81(Bom). Apart therefrom, the Ld. Representative for the assessee submitted that any disallowance based on an estimate of 1 to 3% of the total income would be in order. 8. On the other hand, Ld. Departmental Representative has not controverted the applicability of the judgment of Hon'ble Bombay High Court in the case of M/s. Godrej & Boyce Mfg. Company Ltd.(supra), but contended that the disallowance under section 14A was required to be made in the absence of any suo-motu disallowance made by the assessee. 9. We have carefully considered the rival submissions. Quite clearly, the provisions of Rule 8D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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