TaxTMI 
TaxTMI 
2012 (5) TMI 335
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....nue is against the order of CIT(A) in holding that business income assessed by AO is to be assessed as capital gains without any evidence that Business of assessee was capital in nature. For this, revenue has raised the following ground No.1: "1.That, on the facts and circumstances of the case, Ld. CIT(A) erred in treating the business income of Rs.1,37,33,138/- as capital gain without showing any proof that the Business was capital in nature." 3. We have heard rival submissions and gone through facts and circumstances of the cases. The brief facts leading to the above issue are that assessee is engaged in the business of loans and finance, filed its return of income showing total income of Rs.31,36,825/- on 29.10.2007. Apar....
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....n that the original intention of the appellant was to treat shares as investment and not stock in trade as evident from the entries made in the books of account and balance sheet. The volume of transactions, frequency of transactions, period of holding etc. would not alter the nature of transaction from investment to trading when the initial intention of the appellant was to hold the shares under investment and accordingly recorded in the books. As such the assets (shares) categorized under the head 'investment' are to be treated as capital assets and the profit on sale of such assets are taxable under the head 'capital gains'. As observed by the Hon'ble ITAT, Kolkata Bench in the case of Reliance Trading Enterprises Ltd. (Supra) the shares....
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....ale/redemption of shares/units as income under the head 'capital gains'. Therefore, we agree with the ld. CIT(A) that the volume of transaction, frequency of transaction, period of holding, etc. would not alter the nature of transaction from investment to trading, when the initial intention of the assessee was to hold the shares under the head 'investment' and accordingly shown in the books. Therefore, we uphold the order of the ld. CIT(A) that the net surplus shown by the assessee is the capital gain on account of the sale/redemption of the assessee's investment and the same is taxable under the head 'capital gains' and not as business income. Hence, we confirm the order of the ld. CIT(A) by rejecting the grounds of appeal taken by the Dep....
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....le 8D." Assessee's grounds of Cross Objection: 1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the adoption of Rule 8D of the Income Tax Rules, 1962 by Ld. Assessing Officer for making disallowance u/s. 14A of the Income tax Act, 1961. Alternatively and without prejudice to ground no.1: Alt. 1. For that on the facts and in the circumstances of the case, the Ld. CIT9A) erred in upholding the application of Rule 8D(2)(ii) by the Ld. A/O to interest paid amounting to Rs.3,15,000/-. Alt. 2. For that on the facts and in the circumstances of the case, the Ld. CiT(A) erred in upholding the action of Ld. Assessing Officer in including the average value of even ....
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....d with section 14A of the Act in respect of all pending proceedings as on 24.03.2008, including appeals. The Hon'ble TAT, Kolkata bench following the aforesaid special Bench decision upheld the method prescribed under Rule 8D in the case of ACIT V. Shree Capital Services Ltd. (ITA No. 1596/Kol/2008 dt. 9.1.09). In view of this, the adoption of Rule 8D by the Assessing Officer is correct. So far as A.R's contention about calculation of average total assets for Rule 8D2(ii) is concerned, I hold that the opening and closing value of total assets be calculated without reduction of any current liabilities and provisions therefrom. The word in Rule 8D(2)(ii) against denominator "c" is the "average of total assets' as appearing in the balance shee....
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....r must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record; (vii) The proceedings for the assessment year 2002-03 shall stand remanded back to the Assessing Officer. The Assessing Officer shall determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income/income from mutual funds which does not form part of the total income as contemplated under Section 14A. The Assessing Officer can adopt reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer shall provide a reasonable opportunity to the ....