TMI Blog2018 (5) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) has not given any finding as to whether the transaction in the present case are delivery based on not. Furthermore the observation of the AO that assessee has obtained huge amount of loan to make these investments has also not been considered by the learned CIT(A). CIT(A)is directed to consider the issue afresh and give proper finding as to whether the issue can be said to be decided in favour of the assessee on the basis of the ratio emanating from the Hon’ble Bombay High Court decision in the case of Gopal Purohit (2009 (2) TMI 233 - ITAT BOMBAY-G) - Decided in favour of revenue for statistical purposes. - ITA No. 3053/Mum/2016 - - - Dated:- 2-5-2018 - Shri Shamim Yahya, Accountant Member and Shri Amarjit Singh, Judicial Member For The Appellant : Shri Rajat Mittal For The Respondent : Ms. Krupa Gandhi ORDER Per Shamim Yahya, AM This appeal has been filed by the Revenue against the order of the CIT(A)-8, Mumbai dated 21. 01. 2016 and pertains to A. Y. 2010-11. 2. Revenue has raised the following grounds of appeal: - 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,477 4. Opening Total Assets as on March 31 , 2009 17,020,048 5. Closing Total Assets as on March 31, 2010 74,111,802 6. Average Total Assets 45,565,925 7. Interest Paid 3,539,716 (i) Actual expenditure incurred - (ii) Interest Paid * Average Investment Average Total Assets 3,093,390 (iii) One-half percentage of Average Investment 199,102 TOTAL DISALLOWANCE (i)+(ii)+(iii) 3,292,492 TOTAL DIVIDEND INCOME 469,605 AMOUNT OF DISALLOWANCE UNDER SECTION 14A RESTRICTED TO ₹ 4,69,605/- The AO in his assessment order disallowed amounting to Rs. 33, 49, 507/- under section 14A of the Act read with rule 8D of the Income-tax Rules, 1962 by disallowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88/- was treated as business income of the assessee and computation with special rate was disallowed by the Assessing Officer. 8. The AO has inter alia observed as follows in para 6. 12 of his order: - 6. 13 Huge borrowed funds have been used for the trading in shares shown as investment in shares. The shares categorized as investment have been purchased in the current year both in huge volume with huge amount of money. Further the use of borrowed funds of ₹ 9. 12 crores from Chhatisgadh Investment Ltd. , ₹ 2. 04 crores obtained from Sarda Energy Minerals Ltd. and ₹ 39, 79 crores obtained from M/s. J. M. Financial Services shows that the assessee is doing business of share holding. The AO has further noted that except giving captions to the investment portfolios the assessee has not given any cogent proof in support. 9. Upon assessee s appeal the learned CIT(A) deleted the addition by holding as under: - 5.2.3 In the instant case, I find that the appellant has submitted explanation before the AO through various letter, particularly in its letter dt. 26. 02. 2013 wherein it was informed that shares and securities under the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any explanation or evidence or components of audited accounts. His only reasons appear to be the volume and frequency of transactions in the investment portfolio and the lack of proof of intention that the impugned shares and securities were part of investment. In terms of a company, decisions/resolutions of the board of directors are reflections of intentions or views of the company. The AO has not shown why the above mentioned board resolution do not satisfy his need for seeing an evidence of the intention for investment. 5.2.8 In view of the above, the AO is directed to treat impugned amount of ₹ 1, 70, 31, 749/- as income from short term capital gain instead of business income. This ground of appeal is allowed. Against the above order the Revenue is in appeal before us. 10. We have heard both the counsels and perused the record. We find that on this issue there is a decision of the Hon'ble Bombay High Court in the case of Gopal Purohit 188 Taxman 140 which the learned CIT(A) has purportedly applied and found that the said decision is applicable on the facts of the case. In this regard we may gainfully refer to the very first paragraph of the said or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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