TMI Blog2016 (7) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation on car as not used for business purposes as assessee had not substantiated the usage of the same for the purpose of business. These facts go to prove beyond doubt that the ld AO had duly applied his mind on the aspect as to whether the assessee had indeed carried on any business during the year or not. It is not in dispute that the ld AO had allowed the claim of other administrative expenses as allowable business expenditure. Hence it could be safely concluded that the ld AO had indeed made requisite enquiry in the given set of facts and circumstances of the case and had taken a judicious view on the entire issue. Hence his order cannot be termed as erroneous within the meaning of section 263 of the Act. We find that even the ld CIT had not disturbed the claim of administrative expenses to be allowed under the head ‘income from business’. Hence either way, no prejudice is caused to the interest of the revenue by the order of the ld AO. Hence the twin conditions required for section 263 of the Act are not satisfied. - Decided in favour of assessee. - I.T.A No. 1713/Kol/2013 - - - Dated:- 15-7-2016 - Shri M. Balaganesh, AM And Shri S. S. Viswanethra Ravi, JM For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO observed that keyman insurance premium is eligible for deduction as per CBDT Circular No. 762 dated 18.2.1998. However, in respect of depreciation, he observed that the same was claimed on assets such as air-conditioner, furniture, electrical fitting etc along with a car. The assessee claimed to have used the car for business purpose as well as in connection with new business venture. However, the ld AO observed that the claim is not fully substantiated that the car was entirely used for business and accordingly made proportionate disallowance of depreciation of ₹ 80,192/- and completed the reassessment u/s 147 / 143(3) of the Act on 30.11.2011. 4. The ld CIT issued show cause notice dated 22.3.2013 seeking to revise the assessment framed u/s 147/143(3) of the Act in as much as the ld AO had granted deduction towards keyman insurance of ₹ 2,28,780/- and allowed depreciation on assets as used for business purposes in the sum of ₹ 59,228/- instead of disallowing the same, which in the opinion of the ld CIT are not allowable for want of business being carried on by the assessee during the year under appeal. The assessee replied before the ld CIT that it is pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of administrative expenses as detailed supra other than keyman insurance premium and depreciation on assets. We find that the ld CIT himself had partially allowed certain administrative expenses detailed supra to be business expenditure and having done so, it would be improper on his part to treat keyman insurance premium and depreciation alone as not meant for business purposes. We also find from the body of the assessment order that the ld AO had mentioned the nature of business of the assessee to be Trading in Shares / Units Loan Advancing . Under these circumstances, we find it would be improper on the part of the ld CIT to hold the order passed by the ld AO to be erroneous warranting revisionary jurisdiction u/s 263 of the Act. It is not the case of the revenue that the profit on sale of mutual funds should not be treated as business income during the year under appeal. Similarly it is not the case of the revenue to treat the profit on sale of derivatives should not be treated as business income during the year under appeal. It is already well settled that transactions in derivatives would always be construed only as business transactions as the same activities are carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned or loss incurred on such transactions be treated as capital gain or loss. The answer is no. Therefore, in our considered opinion, the profits arising on purchase and sale of shares are in the nature of business and not as investment. Merely because the purchase and sale of shares had occurred through DEMAT account on delivery based; it would not change the nature of the transaction. Since the portfolio manager in the capacity of an agent has traded in shares on behalf of the assessee, the profits arising therefrom will be in the nature of business profits. Further simply because the assessee has treated the deposits made under PMS as investments and balance shares lying in DEMAT account as on the last day of the accounting year under the head 'investment' would not change the character of trading done by the portfolio manager on behalf of the assessee. The shares purchased and sold during the year have not been recorded in the books of accounts as investment nor it is feasible to record as the details were not available with the assessee and the assessee has no control or say as to when and the type of shares or the period of holding of the shares. Therefore, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even the ld CIT had not disturbed the claim of administrative expenses to be allowed under the head income from business . Hence either way, no prejudice is caused to the interest of the revenue by the order of the ld AO. Hence the twin conditions required for section 263 of the Act are not satisfied. In this regard, we place reliance on the following decisions :- Malabar Industries Co Ltd vs CIT reported in 243 ITR 83 (SC) The phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the A.O. Every loss of revenue as a consequence of an order of A.O. cannot be treated as prejudicial to the interest of the revenue. It was further held that if the A.O. has adopted one of the courses permissible in law or where two views are possible and the A.O. has taken one view with which CIT does not agree, the order cannot be treated as erroneous and prejudicial to the interest of the revenue unless the view taken by the A.O. is unsustainable in law. Bongaigaon Refinery and Petrochemicals Ltd vs Union of India reported in 287 ITR 120 (Gau) Entertainment of a view different from the one adopted by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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