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TMI Blog2015 (10) TMI 2800X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rs. 4,74,810/- under the head 'Income from Business or Profession' instead of Loss from Short Term Capital Gains' disclosed by the appellant and while doing so he amongst others failed to appreciate that: (a) The Loss arising on transfer of the capital assets held by the appellant by way of shares was on account of the investments held by the appellant; (b) The Loss disclosed by the appellant under the head 'Short Term Capital Gains/Loss' was on account of the shares purchased with making an investment; (c) The appellant had maintained separate books for the investments made and the business activities carried on of trading in shares. (d) As in the earlier years, the appellant continued to be an investor in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y entering into the share transactions and that the frequency of the transactions was very high. He therefore held that the activity of the assessee was not of an investor but of a trader. He, accordingly, treated the loss on share transactions as business loss of the assessee. Being aggrieved, the assessee preferred appeal before the Ld. CIT(A). 4. The Ld. CIT(A) also noted that the assessee was indulged in purchase and sale of shares on large scale. He further noted that in the identical facts and circumstances for the earlier assessment year i.e. A.Y. 2006-07, it was held that the assessee indulged in the share transactions on a regular basis and on a substantially high scale. He further observed that for the year under consideration, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year, hence, applying the same ratio and for the sake of principle of consistency, we hold that the short term capital loss returned by the assessee has to be treated as such and not as business income of the assessee. This issue is accordingly decided in favour of the assessee. 6. Vide Ground No.2, the assessee has agitated the disallowance of Rs. 24,92,047/- under section 14A of the Act in relation to the expenditure incurred for earning of exempt income. The AO found that the assessee had earned exempt dividend income. The assessee had incurred interest and other expenses for earning of such dividend income. He, therefore, computed the disallowance under section 14A read with rule 8D at Rs. 24,92,047/- and added back the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the rules straightaway without considering whether the claim made by the assessee in respect such expenditure is correct. The satisfaction of the Assessing Officer must be arrived at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and recording of reasons by the Assessing Officer in the event that he comes to the conclusion that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the file of the AO to decide this issue afresh in accordance with law. 10. The assessee, vide ground No.3, has contested the disallowance of interest expenditure of Rs. 11,89,256/- on interest free loan given. The Ld. A.R. of the assessee submitted before the lower authorities that the interest free loan was advanced out of own funds of the assessee, hence, the interest disallowance was not attracted. Reliance was placed in this respect in the case of "CIT vs. Reliance Utilities and Power Ltd." (2009) 313 ITR 340 (Bom). It has also been stated by the ld. AR that the AO, while computing the interest disallowance, has made double disallowance as that the same amount has been considered twice for interest disallowance. 11. We have consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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