TMI Blog2019 (6) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... Gains only. Moreover, latest CBDT Circular No.6/2016, which is clarificatory in nature, applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently. Hence, we find that there could not be any straight jacket formula to distinguish the same and further there cannot be any single decisive factor to determine the same but an overall view has to be taken keeping in mind peculiar facts and circumstances of the case. Accordingly, after weighing all the factors as cited above, we find ourselves in agreement with the submissions of Ld. AR and therefore, inclined to hold that the impugned gains were rightly offered as Capital Gains. By reversing the stand of lower authorities, we allow this ground of appeal. See GOPAL PUROHIT [ 2010 (1) TMI 7 - BOMBAY HIGH COURT] Disallowance u/s 14A - HELD THAT:- AR has submitted that in terms of decision of Delhi Tribunal (Special Bench) in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] only exempt income yielding investments were to be considered to arrive at the said disallowance. Concurring with the same, Ld. AO is directed to compute the disallowance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACT R.W. RULE 8D OF THE INCOME-TAX RULES, 1962 ( THE RULES ) AMOUNTING TO RS. 5,42,245: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the actions of the Ld. AO in disallowing interest expense amounting to ₹ 5,42,245 on the alleged ground that the Appellant has not proved the nexus of funds utilised for making investments. 2. He failed to appreciate and ought to have held that: i. For computing the disallowance u/s 14A of the Act, only expenditure 'in relation to' earning dividend income is to be considered; ii. Rule 8D of the Rules cannot be automatically applied without considering the facts of the Appellant and without recording his dissatisfaction with respect to the Appellant's claim. 3. The Appellant prays that the aforesaid disallowance of ₹ 5,42,245 be deleted or be appropriately reduced. 4. Without prejudice to the above, the Appellant prays that the shares treated by the Ld.AO as held as stock-in-trade be excluded while computing the disallowance. 3.1 Facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncements and CBDT circulars issued on the subject from time to time to support the submissions. However, the same could not convince first appellate authority who observed that the assessee was involved in the activity of investments finance as a business in his proprietary concern namely M/s Rupam Investment Finance and the share transactions were allied to the activity of finance and investment. Further, the number of transactions was high, there was repetition of transactions and frequency of trading was also high. It was also held that the motive of investment was not to earn dividends but to earn the profit. In the aforesaid background, the ground was dismissed. Similarly, the disallowance u/s 14A as made by Ld. AO was confirmed. Aggrieved, the assessee is in further appeal before us. 5. The Ld. Authorized Representative for Assessee [AR], Shri Ronak Doshi, on the strength of documents placed in the paper-book, agitated both the additions. The Ld. DR, on the other hand, submitted that there was no infirmity in the impugned order. Reliance has been placed on following j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in another proprietorship concern during impugned AY. 6.3 It has been submitted by Ld. AR that the assessee is a conventional investor in shares securities and the gains / loss on shares was always offered under the head Capital Gains only and the same has always been accepted by the revenue in all the earlier years. In particular, similar treatment given by the assessee to such income in AYs 2007-08, 2008-09, 2009-10 was accepted by the revenue in assessments framed u/s 143(3) and the gains / losses were assessed under the head Capital Gains only. Similar claim has been accepted for AY 2010-11 u/s 143(1). Even in subsequent AYs 2013-14 to 2016-17, the assessment was framed u/s 143(3) wherein similar gains / losses were accepted under the head Capital Gains Only. The assessee s claim has been disturbed only for impugned AY as well as in AY 2012-13. The aforesaid facts remain uncontroverted before us. 6.4 Although we are conscious of the fact that principle of res-judicata do not apply to Income Tax proceedings, however, facts and circumstances being the same, the revenue is debarred from changing its stand and taking co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision of where the earlier decision is per incuriam. However, these are fetters only on a coordinate Bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction. (emphasis supplied) 9. The principle accepted by the Revenue for 10 earlier years and 4 subsequent years to the Assessment Years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistently applied and followed, the Revenue was bound by it. Unless of course it wanted to cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowings; (vi) The stated objects in the Memorandum and Articles of Association in the case of corporate assessee; (vii) Typical holding period for securities bought and sold; (viii) Ratio of sales to purchase and holding. (ix) The time devoted to the activity and the extent to which it is the means of livelihood. (x) The characterization of securities in the books of account and balance sheet as stock-intrade or investment. (xi) Whether the securities purchased or sold are listed or unlisted. (xii) Whether investment is in sister/related concerns or independent companies. (xiii) Whether transaction is by promoters of the company. (xiv) Total number of stock dealt in (xv) Whether money has been paid or received or whether these are only book entries . As per Circular No. 4/2007 it is possible for a taxpayer to have two portfolios, i.e., an investment portfolio comprising of securities which are to be treated a capital asset and a trading portfolio comprising of stock-in-trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No.6/2016, which is clarificatory in nature, applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently. Hence, we find that there could not be any straight jacket formula to distinguish the same and further there cannot be any single decisive factor to determine the same but an overall view has to be taken keeping in mind peculiar facts and circumstances of the case. Accordingly, after weighing all the factors as cited above, we find ourselves in agreement with the submissions of Ld. AR and therefore, inclined to hold that the impugned gains were rightly offered as Capital Gains. By reversing the stand of lower authorities, we allow this ground of appeal. Our view is fortified by the cited decision of Hon ble Bombay High Court rendered in CIT V/s Gopal Purohit which has subsequently been followed in recent decision titled as Pr.CIT V/s Vikshit Engineering Ltd. [100 Taxmann.com 436 26/11/2018]. 6.6 The Ld. DR has placed reliance on the decision of Hon ble Bombay High Court rendered in Ramilaben D. Jain V/s ACIT [supra]. We find the same to be distinguishable on facts since in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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