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2017 (10) TMI 377

ncome Tax Proceedings. The primary conditions of claiming the expenses, in terms of Section 37, is that the expenses have been incurred wholly and exclusively for the purpose of Business or profession. Although, the assessee has placed relevant invoices and relevant ledger extracts, however, no details of any conferences / seminars are available on record. Therefore, on the basis of material available on record, the primary condition of claiming the same, in our opinion, has remained unfulfilled. As contended that the assessee could not establish / demonstrate the same for want of time. Therefore, without delving much deeper in the issue, on the facts of the case, we restore the matter back to the file of Ld. AO to re-appreciate the evidences submitted by the assessee. The assessee, in turn, is directed to substantiate his claim in this regard failing which Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. Resultantly, this ground of revenue’s appeal stands allowed for statistical purposes. - Income from sale of shares - ‘business’ or ‘capital gains’ - Held that:- Assessee is a lawyer by profession and major portion of total income .....

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assessed u/s 143(3)(ii) for impugned AY on 31/12/2010 at ₹ 5,42,91,161/- after certain additions / adjustments/ disallowances as against returned income of ₹ 4,82,20,681/- e-filed by the assessee on 30/09/2008. The two issues involved in the appeal are Foreign Travelling Expenses claimed by the assessee and secondly, the head under which Share Income earned by the assessee would be assessable. 2.2 During assessment proceedings, it was noted that the assessee claimed total expenses of ₹ 23,79,927/- towards foreign travelling expenses which comprised of travelling cost of ₹ 16,74,633/- and Hotel Expenses of ₹ 6,53,790/-. The assessee pointed that it already made suomoto disallowance aggregating to ₹ 6 Lacs which comprised of disallowance of ₹ 4 Lacs against travelling cost and ₹ 2 Lacs against hotel expenses and produced ledger copy in support of these expenses. However, Ld. AO noted that the assessee could not furnish sufficient documentary evidences against the same and also could not specify the professional purpose of the visit and therefore, made full disallowance of balance amount of ₹ 23,79,927/- as claimed by the assessee .....

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ign travelling expenses on the premises that sufficient documentary evidences could not be furnished by the assessee against the same and Ld. CIT(A), in a cryptic manner, provided relief to the assessee. Our attention was drawn to the fact that the onus of demonstrating that impugned expenses were incurred for professional purposes was on assessee, which he has failed to discharge. Regarding treatment of Share Income, reliance was placed on the finding of Ld. AO. 4. Per Contra, Ld. AR drew our attention to the fact that the assessee is lawyer by profession and required to make frequent visit to foreign countries so as to attend various seminars / conferences etc. for the purpose of enhancing / sharing professional knowledge and therefore, the impugned expenses were incurred for the professional purposes. Our attention is drawn to the fact that foreign visit was a regular feature of assessee s profession and these expenses are being incurred year on year basis by the assessee and the Assessing Officer, in several other years accepted the same barring certain adhoc disallowance against the same to factorize for the personal element. The Ld. AR also contended that very little time was .....

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im in this regard failing which Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. Resultantly, this ground of revenue s appeal stands allowed for statistical purposes. 6. Now adverting our attention to the second issue, we find that the classification of income from share trading as business or capital gains is dependent upon the facts and circumstances of a particular case and there is only a thin line separating the two view point. The CBDT has so far issued following instructions / guidelines so as to bring clarity on the issue: (i) Instruction No. 1827 dated 31/08/1989 (ii) Office Memorandum dated 13/12/2005 (iii) Circular No. 4/2007 dated 15/06/2007 (iv) Circular No. 6/2016 dated 29/02/2016 CBDT s office memorandum dated 13/12/2005 list following Circumstances to be considered by the Assessing Officers in determining whether a person is a trader or an investor in stocks:- (i) Whether the purchase and sale of securities was allied to his usual trade or business/was incidental to it or was an occasional independent activity; (ii) Whether, the purchase is made solely with the intention of resale at a profit or for longterm appreciatio .....

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ome) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. Further Apex Court in CIT v. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586 (SC) has observed that:- Whether a particular holding of shares is by way of investment or forms part of the stock-intrade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. 7. Applying the above principals upon the case in hand, we find that the assessee is a lawyer by profession and major portion of total income consist of professional income. A perusal of Balance Sheet reveals that the assessee reflects investment in securities under the head Investments and closing investment at year end is ₹ 51.61 Lacs against which the assessee s personal capital & unsecured loans stood at ₹ 21.12 crores & ₹ 31.80 Lacs. The other loans are car loans and loans against Fixed Deposits. A perusal of Share Income Chart place .....

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