TMI Blog2016 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... has noticed that in assessment year 2004-05 the department has itself treated the assessee as an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the case, the action of the income-tax authorities in assessing the gain on sale and purchase of shares and mutual funds as business income is untenable - Decided in favour of assessee Disallowance u/s 14A - Held that:- Quite clearly, the provisions of Rule 8D of the Rules are not applicable for the assessment year under consideration following the ratio of the judgment of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(2010 (8) TMI 77 - BOMBAY HIGH COURT ). Therefore, the disallowance of ₹ 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the assessee. 2. The Ld. Commissioner of Income Tax (A) erred in confirming and treating ₹ 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 ₹ 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 in confirming the charging interest under section 234B 234C of Income Tax Act, 1961. 5. The Ld. Commissioner of Income Tax (A) erred in invoking the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 perusal of balance sheet at page 4 of PB as well as profit and loss account placed at page 5 of PB, we observe that assessee has specifically st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 vide order dated 11.8.2006, copy placed on record, accepted the capital gain shown by the assessee. In the case of Gopal Purohit vs JCIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rules are not applicable for the assessment year under consideration following the ratio of the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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