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Shah Investor’s Home Ltd. Versus The Joint Commissioner of Income Tax Range-3 and ACIT Ahmedabad Versus Shah Investors Home Ltd. (Vice-Versa)

2016 (10) TMI 344 - ITAT AHMEDABAD

Addition of undisclosed interest income - mismatch between the interest shown in the TDS Certificates with the interest income shown in the books of accounts - Held that:- We find that the assessee has shown interest income from Canara Bank at ₹ 70,14,087/- and interest from HFC Bank at ₹ 42,05,468/-, whereas in the TDS Certificates issued by both these Banks, the interest paid/credited in the account of the assessee was shown at ₹ 74,82,545/- and at ₹ 43,15,909/- respect .....

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mparing TDS Certificates. However, it seems that there was no occasion for the assessee to produce necessary ledger account for AY 2005-06 in which the impugned interest amount of ₹ 5,78,899/- has been disclosed and offered to tax. Under these circumstances, it would be justified if this issue is remitted back to the file of ld.AO. There is no objection on the part of the Revenue in this regard. Accordingly, we remit this issue to the file of AO who will provide reasonable opportunity of b .....

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a business developer appointed by the assessee and as per the agreement ACBPL is providing multiple services relating to stock market and working on behalf of the assessee and more so, most of the expense incurred on the office premises of ACBPL are reimbursed by the assessee. Certainly, such kind of arrangement does not fall within the ambit of rent expenses and, therefore, assessee has rightly deducted TDS by bifurcating the payments made to ACBPL under the head brokerage, fees for providing t .....

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that the assessee has not deducted TDS u/s.194-I of the Act on the payments as the assessee has deducted and deposited TDS under the correct provisions of the Act, i.e. u/s.194-J & 194-C respectively and, therefore, no disallowance is called u/s.40(a)(ia) of the Act. - Addition u/s 14A - Held that:- We observe that the assessee possessed interest-free funds as on 31/03/2007 of ₹ 21.55crores and investments as on 31/3/2007 stood at ₹ 2.47crores which shows that assessee had suffi .....

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er, we also observe that Rule-8 r.w.s. section 14A of the Act came into existence from 01/04/2008 and certainly it was not applicable to the assessee for AY 2007-08 and also no satisfaction has been made by the ld.AO by extracting necessary details from the books of account of assessee to prove that any specific expenditure has been incurred for earning dividend income. However, looking to the totality of the fact of the present case, wherein the assessee has earned dividend income of ₹ 14 .....

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refore, of the view that out of the disallowance confirmed by the ld.CIT(A) of ₹ 1,69,229/-, we hereby delete the proportionate disallowance of interest at ₹ 23,929/- and confirm ₹ 1,45,300/- as disallowance u/s.4A of the Act. Accordingly, ground of assessee’s and Revenue’s appeal are partly allowed. - Transaction of shares - STCG v/s business income -.AO for treating the STCG as business income meaning thereby not allowing the benefit of exemption of tax on LTCG and benefi .....

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LTCG capital gain as business income - Addition on account of claim of bad debts - Held that:- Respectfully following the judgement of the Hon’ble High Court of Mumbai in the case of CIT vs. Shreyas S. Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT ], we upheld the decision of the ld.CIT(A) and applying the facts of the case, we find that inc the case of assessee who is a share-broker was providing services to NIFCL upto FY 2000-01 and was regularly earning income from brokerage which is ve .....

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ference is called for with the order of the ld.CIT(A) - TDS u/s 194J - rent expenditure - V-set charges to NSE/BSE for connectivity and internet expenses - Held that:- Payment made to M/s.Ashwin Chinubhai Broking Pvt.Ltd. on account of office management and maintenance expenses do not fall under the head of rent expenditure and the assessee has rightly deducted TDS u/s.194-J of the Act and, similarly, payment paid towards V-set charges to NSE/BSE for connectivity and internet expenses are su .....

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ee CIT vs. Gujarat Narmada Valley Fertilizers Co.Ltd [2014 (4) TMI 235 - GUJARAT HIGH COURT] - Disallowance of bad debts - Held that:- An amount of ₹ 64,000/- has been paid to Aneel Bhargavbhai Lalcha on 24/08/2007, eventhough an outstanding amount of ₹ 1,04,210/- was due to be received on 01/04/2007. This facts shows that there was no dealing of assessee with this impugned parties for purchase of sale and shares in order to earn brokerage income, rather assessee himself has adva .....

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ed in ACIT Ahmedabad vs. Amrapali Capital & Financial Services Ltd [2015 (6) TMI 713 - ITAT AHMEDABAD] the CIT(A) has accepted the assessee's revised computation as per section 55(2)(ab) of the Act. The Assessing Officer had refused the very relief by quoting the case law of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court ) and also the fact that the time limit for filing revised return had already elapsed. This is not the Revenue's case that the assessee is not otherwise entitled for the r .....

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/Ahd/2011, 534/Ahd/2011, 3134/Ahd/2011, 3032/Ahd/2011 - Dated:- 3-5-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI MANISH BORAD, ACCOUNTANT MEMBER Assessee by : Shri S.N.Soparkar & Shri Parin Shah, ARs Revenue by : Shri Narendra Singh, Sr.DR ORDER PER SHRI MANISH BORAD, ACCOUNTANT MEMBER These four cross-appeals for Asst. Years 2007-08 and 2008-09 are directed against separate orders of the Commissioner of Income Tax(Appeals)-XIV/6 dated 29/12/2010 and dated 05/10/2011 respectively. Sinc .....

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engaged in the business of Share and stock broker and depository participant. Its return of income has been filed for AY 2007-08 on 25/10/2007 disclosing total income of ₹ 6,50,28,099/-. The case was selected for scrutiny assessment and notice u/s.143(2) of the Act dated 23/07/2008 was issued and duly served upon the assessee. The case was discussed and necessary details were filed and the assessment was completed by assessing an income at ₹ 7,82,42,838/-, after making addition of & .....

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Ld.CIT(A) has erred in law and on facts in confirming addition of ₹ 5,78,899/- on the basis of TDS certificates, without appreciating the fact that the interest is already offered in the year 2005-06 as Accrued interest as per mercantile system of accounting. It is therefore prayed that the additions so made may kindly be deleted. 4. During the course of assessment proceedings, the ld.AO observed that the assessee has shown interest income from Canara Bank at 70,14,087/- and from HDFC Ban .....

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ed by the assessee that the reason for difference of income shown in the books of accounts and income shown to be received as per TDS certificate has arisen, because the differential amount of interest had already been offered for tax during AY 2006-07 and also filed reconciliation submission separately for Canara Bank and HDFC Bank demonstrating that interest of ₹ 5,78,899/- has been offered to tax during the AY 2006-07 in the regular books of accounts. However, the ld.AO was not convince .....

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ing that the impugned interest income of ₹ 5,78,899/- which was shown as income from interest during AY 2006-07 and the same happened due to variation of interest accrued and interest received between the assessee and the respective Banks. Ld.AR further requested that if they are given an opportunity, then they will furnish necessary evidences and documents pertaining to F.Y. 2005-06, i.e. AY 2006-07 before the AO, so as to satisfy him that the impugned interest of ₹ 5,78,899/-has al .....

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he assessee has shown interest income from Canara Bank at ₹ 70,14,087/- and interest from HFC Bank at ₹ 42,05,468/-, whereas in the TDS Certificates issued by both these Banks, the interest paid/credited in the account of the assessee was shown at ₹ 74,82,545/- and at ₹ 43,15,909/- respectively from Canara Bank and HDFC Bank. On account of this variation, the difference figure of ₹ 5,78,899/- originated which the ld.AO has added to the income of the assessee. We fur .....

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; 5,78,899/- has been disclosed and offered to tax. Under these circumstances, it would be justified if this issue is remitted back to the file of ld.AO. There is no objection on the part of the Revenue in this regard. Accordingly, we remit this issue to the file of AO who will provide reasonable opportunity of being heard to the assessee. Needless to say that the assessee will furnish complete details and evidence, if any for FAY 2005-06, i.e. for AY 2006-07 to establish that the income of S .....

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ing Pvt. Ltd, as office management and maintenance expense on which TDS was made u/s 194J of the Act, alleging the same to be rent income and tax was required to be deducted u/s 194-1 of the Act, as tax is deducted under other section, the disallowance is made u/s. 40(a)(ia) of the Act. It is therefore prayed that the additions so made may kindly be deleted. 3. The Ld. CIT(A) has erred in law and on facts in confirming disallowance of payment of ₹ 1,40,037/- given to Tulip IT Services Ltd. .....

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de may kindly be deleted. [B] Ground Nos.1 & 2 of Revenue s appeal - AY 2007-08 1. The L d CIT(A) erred in law and on facts in directing the AO to give credit for TDS deducted u/s.194J instead of section 194I accordingly recalculate the disallowance on the proportionate basis out of addition of ₹ 68,32,451/- on account of disallowance of office management expenses made u/s.40(a)(ia) of he IT Act. 2. The L d CIT(A) erred in law and on facts in directing the AO to give credit for TDS ded .....

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rds fees for professional charges and reimbursement of expenses on which TDS u/s.194-J of the Act and 194-C of the Act has been deducted respectively. However, on examination of the agreement between the assessee and ACBPL, the ld.AO was of the view that the payment of ₹ 68,32,451/- has been paid towards rent expenses because in the agreement it was mentioned that the premises of ACBPL will be solely used in carrying on the business activity of assessee and, accordingly, TDS was required t .....

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of the Act and the assessee has wrongly deducted TDS u/s.194-J and 194-C respectively, the ld.AO made disallowance u/s.40(a)(ia) of the I.T.Act, 1961 for not correctly deducting the TDS under the provisions of Income Tax Act. 6.2. Aggrieved assessee, went in appeal before ld.CIT(A), who has given partial relief to the assessee, by observing as under:- 3.3.5 The AO stated that from the above it can be seen that clause (k) of deed dated 1.4.2005 clearly provides that the premises of M/s. Ash win .....

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mbai and Ahmedabad along with infrastructure of net work, trained and skilled staff as referred therein. Hence, the said agreement was in effect an agreement for utilization of the premises and infrastructure belonging to M/s. Ashwin Chinubhai Broking Pvt. Ltd. The said fact was again reconfirmed vide above referred deed of Addenda dated 01.12.2006 wherein it has been reconfirmed that the assessee will be paying adhoc amount of ₹ 3,25,000/- per month for usage of the said infrastructure of .....

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DS should have been deducted under section 1941. In view of this reason, the action of the AO in applying the provisions of section 1941 is confirmed but the disallowance is reduced in view of the fact that some TDS has been deducted and paid in time. The AO will recalculate the disallowance on proportionate basis. This ground of appeal is therefore partly allowed. ..... ………. 4.3 I have considered the submission made by the appellant and observation of the AO. In addition to .....

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th taken by the appellant and not on the transactions made by the appellant for the purchase and sale of shares. Over and above these quarterly/annual payments the appellant is making payment for each and every transaction of share purchase and also of share sale. These are transaction charges. Therefore, the VSAT charges and lease line charges are definitely nothing but rent for the various equipment, which does not belong to the assessee but belongs to either the stock exchange or the service .....

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e TDS already deducted and paid in time and disallow the balance amount. 6.3. However, the ld.CIT(A), directed the ld.AO to give proportionate benefit of the TDS already deducted and paid in time. Now, the Assessee and Revenue both are in appeal before the Tribunal. In relation to disallowance u/s.40(a)(ia) of the Act, towards payment to ACBPL of ₹ 68,32,451/-, ld.AR submitted that the nature of the payment made to the said party is not of rent, but of office management and maintenance exp .....

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t such business developer has fully developed infrastructure and of network along with good office location, furniture with trained and skilled staff and also financial soundness is an indispensable requirement. The ld.AR further submitted that three types of payments has been passed on to ACBPL under the expenses head, namely, brokerage, fees for payment of technical services, reimbursement of expenses and tax has already been deducted at source @ 5% on the brokerage as well as professional and .....

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owance u/s.40(a)(ia) of the Act for not deducting TDS under correct head for payment towards lease lying expenses and V-Set charges, ld.AR submitted that lease lying expenses were paid towards connectivity charges for internet services, i.e. telephone and intra-services and payment has been made to ICEW-NET, BSNL, U-Telecom, etc. During the year under appeal, total lease line expenses were incurred at ₹ 4,49,275/- out of which amount of ₹ 1,40,036/- paid to Tulip IT Services Ltd. was .....

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on the ground that TDS has been deducted under a wrong head. In support of this contention, ld.AR relied the decision of the Coordinate Bench (ITAT D Bench Ahmedabad) in ITA No.2825/Ahd/2010 for AY 2007-08, dated 9/04/2014, decided in favour of assessee and which has been upheld by the Hon ble Jurisdictional High Court. He also relied on judgement of Hon ble High Court of Calcutta in the case of CIT vs. S.K. Tekriwal reported at (2014) 361 ITR 432 (Cal.) 6.5. On the other hand, ld.Sr.DR supporte .....

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u/s.40(a)(ia) of the Act on account of deduction of tax at source under wrong provisions of the Act on office expenses at ₹ 68,32,451/- paid to ACBPL and disallowance of ₹ 7,76,690/- incurred on lease line expenses and V-set charges, whereas Revenue is aggrieved by the order of ld.CIT(A) for allowing the proportionate benefit of the TDS already deducted and paid. 7.1. From going through the grounds of appeal of assessee and the Revenue, we find that the expenditure which has been di .....

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h relates to deduction of TDS on payment by way of rent. We further observe that the Hon ble Jurisdictional High Court confirming the order of Coordinate Bench Ahmedabad in the case of Prayas Engineering Ltd. vs. Addl.CIT(supra) dealt with similar issue and observed as under:- 3. Heard the learned advocate appearing for the appellant-Revenue and considered the submissions. Learned advocate appearing for the appellant has contended that the circular issued by CBDT is very clear and the issue is g .....

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ia) Ltd is directly applicable to the facts of this case. In the case of UE Trade Corporation v. DCIT, the Hon'ble Tribunal in similar facts has held as under: 6. We have heard both the parties and gone through the material available on record. We have also gone through the Tax Audit Report in Form No. 3CD placed at pages 20 to 49 of the Paper Book. Annexure-XIV of the Tax Audit report gives the details of tax deductible under various sections of the Act. Page 1 of Annexure-XIV gives the det .....

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Government, the assessee has added back the expenditure on which tax was deductible but no tax was deducted at all and also where tax was deducted at source but not paid to the credit of Central Government amounting to ₹ 20,16,778/-. Details of such expenditure is given at page 1 and page 3 of the Annexure-XIV to the Tax Audit Report. The learned AR of the assessee has claimed the benefit of two decisions, one by the Kolkata Bench and other by the Mumbai Bench of ITAT. In the case of DCIT .....

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ase of DCIT vs. S.K. Tekriwal (supra). In this case also the difference in shortfall was due to the applicability of provisions. The assessee has deducted tax at source u/s. 194C whereas according to the Assessing Officer provisions of section 1941 are applicable. Thus the assessee's case is covered by the decisions of the Tribunal referred to about. No doubt assessee is in default as per provisions of sec. 201 but disallowance of the expenditure is not permissible u/s. 40(a)(ia), respectful .....

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er passed by the Tribunal. No substantial question of law is made out and the appeal is devoid of any merits and deserves to be dismissed. Hence, this appeal is dismissed. 7.2. We further observe that the basic reason for disallowance made by ld.AO rested upon his observation that the assessee has not deducted TDS under the correct provisions of the Act. However, in our view, payment of ₹ 68,32,4521/- to ACBPL does not fall under the Rent expenses because ACBPL is a business developer appo .....

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mbursement of expense and has duly deducted TDS on all these payments under the correct provisions of Income Tax Act. Similarly, payment of ₹ 7,76,690/- incurred on lease line expenses and V-Set charges also do not fall under the category of rent expenses because the machineries and equipments used for providing these services are shared by many stock-brokers and, therefore, the assessee has rightly deducted TDS u/s.194-C. We are, therefore, of the view that the ld.AO erred in observing th .....

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deposited under the correct provisions of the Income Tax Act and, therefore, no disallowance u/s.40(a)(ia) is called for. 9. Now, we take up grounds No.4 of Revenue s appeal and assessee s appeal, which reads as under:- [A] Revenue s appeal 4. The L d CIT(A) erred in law and on facts in deleting the addition of ₹ 2,10,788/- on account of disallowance u/s.14A of the IT Act. [B] Assessee s appeal 4. The Ld. CIT(A) has erred in law and on facts in confirming disallowance on proportionate basi .....

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t was disallowed by assessee u/s.14A of the Act towards expenses related to such exempt income/investment. In reply to, the question raised by the ld.AO, appellant submitted that no such expenditure was incurred for earning exempt income and more so assessee-company possessed interest-free funds at approximate ₹ 21.55crores as against investments of ₹ 2.47crores and, therefore, no inference should be drawn that interest-bearing funds have been utilized for making investments and furt .....

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observing as under:- 7.3. I have considered the submission made by the appellant and observation of the AO. The provisions of section 14A and the Rule 8D has been upheld by the Hon. Mumbai High Court recently in the case of Godrej & Boyce Mfg Co Ltd, the Hon. Mumbai High Court has stated that for assessment year prior to A.Y. 2008-09 Rule 8D is not applicable but the AO can make reasonable disallowance. As per the provisions of section 14A as well as the recent rulings it is clear that if th .....

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e reasonable. Hence the disallowance is restricted to ₹ 1,69,229/- is quite reasonable. The grounds of appeal are therefore, partly allowed. 9.3. Aggrieved assessee and Revenue both are in appeal(s) before the Tribunal. Ld.DR supported the order of the AO and ld.AR submitted that no specific expenditure was incurred for earning dividend income and also assessee possessed sufficient interest-free funds for making investments and more so Rule 8-D of the IT Rules r.w.s.14A of the Act came int .....

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below as well as the judgement relied upon by the ld.AR. The only issue in the appeals relate to disallowance u/s.14A of ₹ 2,10,788/- made by the AO and restricted by the ld.CIT(A) at ₹ 1,69,229/-. From going through the records, we observe that the assessee possessed interest-free funds as on 31/03/2007 of ₹ 21.55crores and investments as on 31/3/2007 stood at ₹ 2.47crores which shows that assessee had sufficient interest-free funds for application in the investments an .....

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and certainly it was not applicable to the assessee for AY 2007-08 and also no satisfaction has been made by the ld.AO by extracting necessary details from the books of account of assessee to prove that any specific expenditure has been incurred for earning dividend income. However, looking to the totality of the fact of the present case, wherein the assessee has earned dividend income of ₹ 14,53,085/- and also observing that in various judgements it has been held that disallowance u/s.14 .....

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, we hereby delete the proportionate disallowance of interest at ₹ 23,929/- and confirm ₹ 1,45,300/- as disallowance u/s.4A of the Act. Accordingly, ground of assessee s and Revenue s appeal are partly allowed. 11. Now, we take up the last ground No.5 of assessee s appeal, which reads as under:- 5. The Ld. CIT(A) has erred in law and on facts in confirming the long-term Capital gain of ₹ 18,43,793/- as business income, without appreciating the facts of the case, submission of t .....

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overruling the specific provisions of S. 111 A, which, is brought in the statute w.e.f. A.Y. 2005-2006, where on STCG on shares there is concessional rate of tax, It is therefore prayed that the A.O. may be directed to treat the gain as short-term capital gain and to tax at the rate prescribed u/s. 111A of the Act. 11.1. From going through the financial statement of computation of income, the ld.AO observed that the assessee has claimed Short Term Capital Gain (STCG) at ₹ 96,31,238/- and .....

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siness income and assessed income by treating ₹ 1,14,75,031/- (STCG of ₹ 96,31,239 + LTCG ₹ 18,43,793/-) as business income. 11.2. Aggrieved assessee, went in appeal before the ld.CIT(A) who dismissed the ground of the assessee by observing as under:- 9.3.1 I have considered the submission made by the appellant and observation of the AO. The arguments of the appellant are not acceptable in view of the large volume of transactions. From the details of sale and purchase of shares .....

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ale and purchase of scripts on periodical or regular basis in F.Y. 2006-07. Hence, from the same it can be seen that the assessee has utilized substantial fund in sale and purchase of shares/securities. From the explanation given by the assessee it can be seen that the assessee itself has agreed that the investment in mutual funds has been done in order to maximize the return i.e. for profit motive and not for investment purpose. Such periodical activity of sale and purchase of mutual funds defi .....

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and regularly during the year. (iv) Whether the object of trading in share is mentioned in Memorandum and Article of Association of the company. (v) Holding period of the securities brought or sold. 9.3.2 In the case of the assessee company the assessee! Is regularly engaged in trading of the shares or mutual funds. The assessee is holding majority of investments for a period off: less than a year. The scale of the activity is also substantial. The main business activity of the assessee is shar .....

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case where the purchase has been made solely and exclusively with the intention of resale at a profit and the purchaser has no intention " holding the property for himself or otherwise enjoying it or using it the presence of such intention is a relevant factor and unless it is off set by the presence of other factors, it would raise a strong presumption that a transactions is an adventure in the nature of trade". * In the case of H. Mohammad & Co. vs. CIT 107 ITR 637, the Hon'b .....

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ock-in-trade and investment is that of selling outright in the course of the business activity and deriving income from exportation of one's own asset. * In the case of Sardar Indra Singh & Sons Ltd. vs. CIT 24 ITR 415, the Supreme Court was dealing with the case of a company which was incorporated with the object, inter alia of carrying the business of bankers, financiers, managing agents and secretaries and was also empowered to invest and deal with the monies of the company not immedi .....

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ciple applicable in an such cases was well settled and the question always w whether the sales which produced the surplus were so connected with the carrying on of the assessee's business that it could fairly be said that the surplus was the profit and! gains of such business. On the facts of this case it was held that the surplus resulting of sale of shares and securities constituted business income. * In the case of Karam Chand Thapar and Brothers P Ltd. vs. CIT reported in 83 ITR 899 it w .....

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a business activity and income earned from such activity of purchase and sale of shares and securities is business income. In view of the above facts and the legal principle it is held that the assessee is engaged itself in business of sale and purchase of mutual funds and hence the income arising there from at ₹ 96,31,238/- shown as short term capital gains by the assessee and ₹ 18,43,793/- shown as Long Term Capital Gains by the assessee totaling to Rs.1,14,75,031/- has been rightl .....

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Sr.DR supported the order of the authorities below. 12. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue raised by the assessee is against action of the ld.CIT(A) confirming the order of ld.AO for treating the STCG of ₹ 18,43,793/- ad STCG of ₹ 96,31,238/- as business income; meaning thereby not allowing the benefit of exemption of tax on LTCG and benefit of special rate of tax with STCG. Fro .....

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the year and nor any closing stock/inventory of equity shares is held as on the year end. We further observe that the assessee has disclosed investments in government security and equity shares under the head Investments and scrip-wise details of investment in equity shares is forming part of balance-sheet as on 3132007 & 31/03/2008. 12.1. We further observe that the Hon ble Apex Court in the case of CIT vs. Associated Industrial Development Co.(P) Ltd. reported at (1971) 82 ITR 556, wherei .....

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6/2016 dated 29/02/2017 adding further to previous Circular No.4 of 2007 dated 15/06/2007 and Instruction No.1/08/2007 dated 31/08/1989, has mentioned that in respect of such listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer if the assessee treating the income arising from the transfer thereof as capital gain, the same was not to be put to dispute by the AO. 12.3. We further find that similar issue in assessee s own case for AY 2 .....

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.27 lacs as against the gains of ₹ 1.81 crore earned on the trading of shares. He further submitted that the principal of res judicata is not applicable to Income Tax matter and each assessment year has to be considered independently. He thus supported the order of A.O. Ld. A.R. on the other hand reiterated the submissions made before A.O and Ld. CIT(A) and further submitted that in earlier years also in the scrutiny assessments the profits on sale of shares were held to be short term capi .....

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ed to the summary of period of holding of the shares which have been reproduced by the ld. CIT(A) at page 13 of the order and from it he submitted that the short term capital gains earned on sale of shares sold within 30 days was only ₹ 7,15,737/- and the balance capital gains was earned where the holding period was more than 30 days. He therefore submitted that the decision of ld. CIT(A) calls for no interference and thus supported the order of ld. CIT(A). 7. We have heard the rival submi .....

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ry based. He has further given a finding that it is not a case where the Assessee has done the transactions of sale and purchase on every day basis. He has further noted that the shares were considered by the Assessee as investment in its books of accounts, had not borrowed any finance to acquire the shares and out of the total gains earned by the Assessee, around 2/3 of the profits were earned from shares which were held for over 60 days. He thereafter relying on the ratio of the decision rende .....

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hort terms capital gains and the same was also accepted by the Revenue. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. 12.4. Respectfully following the aforesaid decision of the Coordinate Bench together with CBDT Circulars(supra), we are of the view that the appellant has separately maintained the details of investments and equity shares and has been able to show the transactions of capital gain and invest .....

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d No.3 of Revenue s appeal for AY 200708 and the ground reads as under:- 3. The Ld.CIT(A) erred in law and on facts in deleting the addition of ₹ 12 lakhs on account of claim of bad debts. 14.1. During the course of assessment proceedings, the AO observed that the assessee has claimed bad debt of ₹ 12 lacs u/s. 36(2) of the Act for non-realization of debt from M/s.Nishad Inv. & Finance Co.Ltd. (hereinafter referred to as NIFCL). In reply to the question raised by the ld.AO, as to .....

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CIT vs. Ahmedabad Electricity Co.Ltd. reported at (2013) 262 ITR 97 (Guj.) was of the view that before claiming any amount as bad debt certain steps needs to be taken by assessee which includes the issuing of reminders, restructuring of debt, rescheduling of debt statement, negotiation or arbitration of a disputed debt, and legal action, whereas in the instant case, the assessee has failed to prove that they have complied to any specific criteria stipulated by the Hon ble Jurisdictional High Cou .....

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ral provisions of the Act and it is well settled law in India, and, therefore, as the bad debts is specifically covered under the separate section, then, there remains no reason to allow such type of expenses under other heads of Income Tax Act. 14.2. Aggrieved assessee, went in appeal before ld.CIT(A), who has allowed the ground and addition of ₹ 12 lacs was deleted. Aggrieved Revenue, now is in appeal before us. 14.3. Aggrieved assessee, is now in appeal before the Tribunal. Ld.AR submit .....

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se at a point in time anterior to the liability to pay the value of the shares transacted makes no material difference to the position. As the brokerage from the transaction of the purchase of shares had been taxed in the hands of the assessee as business income, the debt or part thereof has been taken into account in computing the income of the assessee and the requirements of section 36(l)(vii) r.w.s. 36(2) were satisfied. 14.4. The ld.Sr.DR supported the order of the AO, whereas ld.AR support .....

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012) 342 ITR 285 (Mum.), wherein Special Bench decision of the ITAT Mumbai Bench has been confirmed. 15. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below and the judgement/decision relied upon by the ld.counsel for the assessee. The Revenue has raised ground against the action of the ld.CIT(A) in deleting the addition of ₹ 12 lacs on account of bad debts claimed by the assessee. From going through the records .....

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y the assessee at their behalf which had become irrecoverable. The Hon ble High Court of Mumbai upheld the decision of the Special Bench of Tribunal and dismissed the appeal of the Revenue by observing as under:- 14. The value of the shares transacted by the assessee as a stock broker on behalf of its client is as much a part of the debt as is the brokerage which is charged by the assessee on the transaction. The brokerage having been credited to the profit and loss account of the assessee, it i .....

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t of the debt, the requirements of section 36(2)(i) are fulfilled where a part thereof is taken into account in computing the income of the assessee. Before concluding, we again take note of the fact that in paragraph 31 of its impugned decision the Tribunal has left the issue as regards the value of the shares which remain in the hands of the assessee which has to be adjusted against the amount receivable from the client to be determined before the regular Bench of the Tribunal following the vi .....

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at inc the case of assessee who is a share-broker was providing services to NIFCL upto FY 2000-01 and was regularly earning income from brokerage which is verifiable from the ledger account of NIFCL appearing at page Nos.181 to 191 of the paper-book of the assessee and out of this outstanding balance, after a lapse of eight years, the assessee has transferred ₹ 12 lacs to the bad debts account and these facts has not been controverted by the Revenue by placing any contrary material. Theref .....

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lowance of payment on proportionate basis of payment made to M/s.Ashwin Chubhai Broking Pvt.Ltd. as office management and maintenance expense of ₹ 63,00,000/- on which TDS was made u/s.194J of the Act, alleging the same to be rent income and tax was required to be deducted u/s.194-I of the Act, as tax is deducted under other section, the disallowance is made u/s.40(a)(ia) of the Act. It is therefore prayed that the additions so made by may kindly be deleted. 2. The Ld. CIT(A) has erred in .....

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herever required and /or no TDS is required to be deducted on such disallowances It is therefore prayed that the additions so made may kindly be deleted. 17. From going through both these grounds, we observe that we have adjudicated similarl grounds while disposing of ground Nos.2 & 3 in assessee s own case in ITA No. 633/Ahd/2011 for AY 2007-08, wherein we have held that the assessee has deducted TDS under the correct head of provisions of Income Tax Act and no disallowance u/s.40(a)(ia) wa .....

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of the Act and assessee has rightly deducted TDS u/s.194-C and, therefore, ld.AO was not correct in observing of the payment of Rs.,6,40,762/- and Rs.4,85,638/- as rent expenditure (subject to TDS u/s.194-I of the Act). We therefore allow ground Nos.1 & 2 raised by the assessee for AY 2008-09. 18. Lastly, we take up the Revenue s appeal, i.e. ITA No.3032/Ahd/2011. Revenue s ground No.1 reads as under:- 1. The Id. CIT(A) has erred in law and on facts in deleting the disallowance u/s. 40(a)(ia .....

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Revenue is dismissed for this Asst.Year 2008-09. 19. Revenue s ground No.2 reads as under:- 2. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 37,43,705 u/s. 40(a)(ia). Considering that it is a reimbursement of expenses. The Id. CIT(A) has disregarded the fact that the payments was made with one composite agreement and payments on monthly basis or lumpsum payment have been made. 19.1. During the course of assessment proceedings, the ld.AO observed that a tota .....

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₹ 1,00,43,705/- as rent expenditure subject to TDS u/s.194-I of the Act and made disallowance of ₹ 1,00,43,705/- u/s.40(a)(ia) of the Act for non-deduction of TDS. We further observe that while dealing with ground No.1 of assessee s appeal for AY 2008-09 in ITA No.3134/2011, we allowed the ground of the assessee by deciding that ₹ 63 lacs was not rent expenditure but falls under the categories of fees for providing professional and technical services and assessee had rightly de .....

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holding that no disallowance is called for u/s.40(a)(ia) of the Act on reimbursement of expenses as the obligation to deduct the TDS on payment of the expenditure are to be complied with the agent to admit payment on its behalf. Respectfully following the decision of the Hon ble Jurisdictional High Court, we are of the view that no disallowance is called for u/s.40(a)(ia) of the Act on reimbursement of expenses of ₹ 37,43,705/- and liability, if any, was as the shoulders of ACBPL and not t .....

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95,556/- from transactions of purchase and sale of shares but while framing the assessment, on the basis of his view that assessee is dealer in share the amount of ₹ 70,09,807/- (Rs.68,14,251 + 1,95,556) as business income. 20.2. On appeal before the ld.CIT(A), assessee got relief nd now Revenue is in appeal before the Tribunal. 20.3. We have heard the rival submissions and perused the material available on record. We find that we have dealt with similar issue while adjudicating ground No. .....

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/- and ₹ 1,95,556/- respectively and, therefore should not be treated as business income. Thus, Revenue s ground is dismissed. 21. Revenue s ground No.4 reads under:- 4. The Id. CIT(A) has erred in law and on facts in deleting the addition made on account of disallowance of bad debts of ₹ 2,89,121/-. 21.1. During the course of hearing the ld.AO observed that bad debts of ₹ 2,89,121/-has been claimed in the P&L Account, but during the course of assessment proceedings the ass .....

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wever, in the year under appeal, we find that the facts are not same. In Asst.Year 2007-08, the amount of ₹ 12 lacs was outstanding to be received since AY 200102 and finally, in AY 2007-08 it was claimed as bad debts which proved that a sufficient time was taken by the assessee for making efforts in recovering the said outstanding debts. However, in the year under appeal, on the basis of observing the ledger account at page No.211 & 212 of the paper-book which shows the ledger account .....

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rage income, rather assessee himself has advanced money to this party. We are, therefore, of the view that the facts of the case in the year under appeal, are not the same to the facts dealt by us while adjudicating the appeal for AY 2007-08 and we are of the view that the ld.AR has rightly disallowed the claim of bad debts of ₹ 2,89,121/- and, accordingly, we allow the ground of the Revenue. Thus. Ground No.4 of Revenue s appeal is allowed. 22. Revenue s ground No.5 reads as under:- 5. Th .....

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ld.AO observed that the assessee filed revised computation for calculation of LTCG on by back of ₹ 5,475/- shares of BSE Ltd., thereby showing capital gain less by ₹ 8,43,750/- as was shown in the revised return of income. Ld.AO did not accept the revised calculation of LTCG of BSE shares on the basis of his view that such type of mistake could have been rectified by the assessee only by way of filing revised return of income and the statutory time limit for filing the return of inc .....

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ad vs. Amrapali Capital & Financial Services Ltd. for AY 2008-09, decision dated 09/06/2015. 22.3. The ld.Sr.DR did not controvert the submissions made by the ld.AR. 23. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgement relied upon by the ld.AR. In this ground, the question is whether the revised computation income can be accepted by the AO during the course of assessment proceedings or .....

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