TMI Blog2010 (4) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) of the Act. Since both the appeals are by the same assessee for the same assessment year and are also interconnected, they were heard together and are disposed of by a single order. ITA No.18/Mum/2004:- 2. The assessee is an individual engaged in the business of share trading and also deriving income from other sources. There are only two grounds of appeal. The first is against the disallowance of the legal expenses of ₹ 12,79,871/- and the other is against the assessment of ₹ 6,12,711/- as business income of the assessee as against the assessee s claim that it should be assessed as short term capital gains. 3. As regards the legal expenses, brief facts are that from the details filed by the assessee, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness in shares but in connection with the dispute with M/s. J.B. Holdings Ltd. and it can be said that the expenses were incurred in connection with the transfer of shares. He therefore held that the expenses have to be capitalized and whenever the sale transaction ultimately takes place with regard to the balance of the shares, the legal expenses may be considered as part of the cost of the shares. He accordingly disallowed the claim of the legal expenses. The disallowance having been upheld by the CIT(A), the assessee is in further appeal before us. One point which has to be noted now is that before the CIT(A), the assessee claimed that if the legal expenses were not allowable as business expenditure, they should be allowed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fresh consideration in the hands of the Assessing Officer. Under section 57(iii) any expenditure incurred for the purpose of making or earning the income assessed under the head income from other sources is allowable as a deduction. It is a factual question to be examined and established as to whether the legal charges have any nexus with the earning of the income. We therefore restore this issue to the file of the Assessing Officer who will examine the assessee s claim for deduction of the legal expenses under section 57(iii) against the interest income and take a fresh decision in accordance with law after affording due opportunity to the assessee. 6. The second ground is whether the amount of ₹ 6,12,711/- being surplus on sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was also vehemently contended that there is no basis for the statement of the CIT(A) that there was no delivery of the shares in question. On the other hand, the learned D.R. strongly supported the orders of the departmental authorities. Having given the matter serious consideration, we are of the view that this issue also has to be restored to the Assessing Officer for the purpose of finding out whether the shares which gave rise to the surplus were actually delivered when they were sold. This point appears to have been taken for the first time by the CIT(A) and it seems to us that the CIT(A) has recorded a finding without giving any opportunity to the assessee. Further it is also necessary to examine the assessee s claim regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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