TMI Blog2016 (8) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case. As regards administrative expenditure, the disallowance for the same has been restricted to the ratio (0.5% of the investment) in terms of rule 8D(2)(iii) of the Rules. We find the same as reasonable and, accordingly, confirm the same. Activity of purchase and sale of scrips - in the nature of trade or business transaction, or in the nature of an investment - Held that:- The activity, which in the instant case is systemic and regular, is a manifestation of this intent and, thus, relevant, clearly reflecting a trading activity, i.e., a regular activity of trade. This finding of fact by the Assessing Officer, has not been, as afore-stated, disputed or controverted in any manner. We, accordingly, are in no manner of any doubt that the assessee’s activity of purchase and sale of scrips is, as in the case of speculation business, which is admitted to be business activity (resulting though at a loss of ₹ 42.68 lakhs for the current year) as well as the trading in derivatives, only a business activity. Rather, the said activities, which are allied and pari materia, being in the same market and in the same scrips, reinforce and endorse the Revenue’s stand of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Per Sanjay Arora, A. M.: These are cross appeals, i.e. by the Assessee and the Revenue, arising out of the order by the Commissioner of Income Tax(Appeals)-VI, Mumbai ( CIT(A) for short) dated 20.5.2009, partly allowing the assessee s appeal contesting its assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) dated 31.12.2007 for the assessment year (A.Y.) 2005-06. Assessee s Appeal 2. Vide its Ground 1, the assessee agitates the disallowance u/s. 14A of the Act, since restricted to ₹ 13,11,549/-, i.e., as against at ₹ 22,21,205/- by the Assessing Officer (AO), comprising disallowance qua interest and the other administrative expenses at ₹ 5,01,596/- and ₹ 17,19,609/- respectively. The part relief by the ld.CIT(A) has been on account of his direction to the AO for applying Rule 8D; the AO having applied proportionate formula for allocating both, the interest as well as indirect administrative expenditure, for the purpose of disallowance u/s. 14A. 3. We have heard the parties, and perused the material on record. Before us, the assessee was able to exhibit on the basis of its balance-sheet as at the year- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mr. Anil Aggarwal, Director and Principal Officer of the assessee-company. The two brothers, as it appears, share an estranged relationship. Mr. Sunil Aggarwal resigned as a director of the assessee-company on 14.1.2000. However, he continues to operate as an Incharge of the Bhillai/Tedessara Unit as per the interim order of the Company Law Board (CLB) dated 30.7.2002 (copy on record). Vide the said order the CLB restrained the company (Head Office) not to interfere with the functioning of the said Unit. No accounts of the said unit were received, so that the assessee s final accounts (balance-sheet, including profit and loss account) for the relevant year were prepared in the absence of the said information, i.e., without incorporating the same. That is, except for ₹ 81,05,139/- claimed by way of depreciation on the fixed assets of the said Unit on the ground that the same forms part of the assessee s block of assets. Shri Sunil Aggarwal, being the person managing the said unit was summoned by the Assessing Officer u/s. 131 of the Act, who attended in response thereto (on 19.10.2007), submitting tax audit report u/s. 44AB of the Act ( qua the accounts of the said Unit), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned person/s who may be liable therefor. Rather, it appears strange that an interim order should be allowed to continue for long, so the petition of Sh. Sunil Aggarwal, who is no longer a director, and may also be having either nil or nominal shareholding, continues to remain undisposed even after over a decade and half, an early disposal of which would be in the interest of the company as well as both the parties. Even if the petitioner (Sh. Sunil Aggarwal) had for some reason/s not pursued the matter, so has not the assesseecompany. It has failed to invoke CLB in the matter, seeking its indulgence to define the rights in-as-much as it is the company which is statutorily obliged for various compliances as well as in the functioning of its Unit. A dispute for or within the Management, cannot, in any case, over-ride the provisions of law, much less the statutory compliances or obligations. In fact, as we observe, the assets of the company s Bhillai unit are being systematically sold. Operating and running a unit is vastly different from its liquidation, decision in respect of which vests, again, only with the Board of Directors of the company. Are there any Board resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him in detail and with reference to its different parameters, and considered in light of certain case laws in the matter, viz.: i. Raja Bahadur Visheshwar Singh vs. CIT [1961] 41 ITR 685 (SC); ii. XYZ/ABC Equity Fund, In re [2001] 250 ITR 194; iii. A. V. Thomas and Co. Ltd. vs. CIT [1963] 48 ITR (SC) 67; iv. CIT vs. P. K. N. Co. Ltd. [1966] 60 ITR 65 (SC); v. CIT vs. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586 (SC); vi. G. Venkataswami Naidu Co. vs. CIT (35 ITR 194); vii. CIT vs. Sutlej Cotton Mills Supply Agency Limited (100 ITR 706); and viii. CIT vs. H. Hoick Larsen [1986] 160 ITR 67 (SC). However, for the sake of completeness of our order, we may analyse his findings and which remains undisputed or uncontroverted even before us: (a) Firstly, in terms of Accounting Standard-17 (AS-17), requiring it to report on its different business segments, clearly states to be dealing in buying/selling of shares and securities and trading in derivatives, as amongst one of its business, viz. soya crushing, oil refining, etc. (b) The company has during the year made more than 180 transactions of purchases, while the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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