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TMI Blog2013 (6) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... perused. Facts in brief are that the assessee company is one of the holding companies of M/s Birla Group holding investment in various Birla Group companies. During the year under consideration, the assessee has sold sum of the shares on which gains/loss have been offered under the head 'capital gain' but the same was taxed by the Assessing Officer as 'business income'. These gains pertain to shares of Eastern Spinning Mills & Industries Ltd. and Grasim Industries Ltd. In addition to the capital gain, the assessee has also incurred capital loss on the redemption of unit of Mutual Fund. However, the Assessing Officer taxed the same under the head 'business income' and treated such loss as 'business loss' in place of 'capital loss'. Total Short Term Capital Gain offered during the year amounts to ₹ 4,93,18,051/- whereas Short Term Capital Loss was ₹ 46,08,555/-. 3. In the impugned order the CIT(A) directed the Assessing Officer to compute the capital gain/loss as offered by the assessee. Precise observation of CIT(A) was as under :- "9.2 I have carefully considered the submissions of the AR. The issue has already been decided in Appeal No. 378/06-07 dated 16.01.07, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended to the computation of total income and the details of computation of total income filed by the appellant shows that the appellant itself disclosed dividend income under the heading "income from other sources". The appellant separately disclosed income under the head "business income". Thus, once the appellant held these shares as investment and disclosed the dividend income therefrom under the head "income from other sources" and not as business income, it cannot revert back and claim the benefits of set off of business loss against other income. The appellant on one side wants to declare these shares held as investments and not as stock-in-trade, but on the other side wants to claim as if it is a stock-intrade. There is clearly a contradiction in the stand of the appellant. The balance sheet as on 31/03/2003 showing these assets as investment is enclosed herewith as Annexure-A forming part of appellate order. 4.4 Another plea taken by the appellant is that they are recognized as an NBFC by the RBI and hence the investments made by them should be considered as stock in trade. I have considered this plea and I am to hold that this is not tenable. Any financial institution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fund itself at the prevailing NAV. Similarly, in case of growth scheme, the investor gets the return on its redemption. In the instant case, the assessee has invested in Debts Scheme and not in Equity Schemes. Even from the record also, we found that even in the past years the profit/loss on investments have been assessed by department as capital gain. We find that assessment in assessment year 1997- 98, 2001-02, 2003-04 and 2004-05 were framed u/s 143(3) of the Act wherein capital gains offered by the assessee on similar transactions were accepted. Even I.T.A.T. in assessee's own case in assessment year 1999-2000 has upheld the profit to be assessed under the head 'capital gains' and not under the head 'business income'. 6. In view of the above discussion, we do not find any infirmity in the order of CIT(A) for directing the Assessing Officer to treat profit/loss on sale of shares as capital gains/capital loss instead of business income/loss. 7. During the course of assessment, the Assessing Officer has disallowed ₹ 12,55,377/- on account of custodial charges by invoking provisions of section 14A. The contention of Assessing Officer was that custodian charges have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has disallowed entire operating and other expenses of ₹ 8,87,242/- on the plea that expenditure were incurred for earning exempt income. By the impugned order, the Learned CIT(A) restricted the disallowance to the extent of 10% of the expenditure which works out to be ₹ 83,840/-, after having the following observations :- "3. The second point raised by the appellant is that the disallowance of operating and other expenses for sum of ₹ 8,87,242/- is incorrect. According to the appellant these expenditures are on account of salary and other allowances, rent, bank interest, auditor's remuneration, audit fee, out of pocket expenses, travelling charges. Misc. charges, etc. which amounted to ₹ 8,38,397/-. The appellant is in receipt of interest income of ₹ 2.87 crores on Inter Corporate Deposits. These operating expenditure have no direct connection with earning of dividend income. This is for the routine maintenance of office and also for earning other income i.e., interest income, misc. income, etc. Dividend income flows automatically once money is invested in shares. Thus appellant pleaded that out of ₹ 8.38 lacs disallowance of ₹ 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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