TaxTMI 
TaxTMI 
2012 (6) TMI 387
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....red in not considering the decision of the ITAT in the case of M/s.Unisol Infraservices Pvt. Ltd vs. Income Tax Officer-8(3)(4) vide ITA No.2088/Mum/2008 dated 11.7.2009". 4. Assessing Officer while scrutinizing the return noticed that assessee company borrowed an amount of Rs.67,10,483/- from M/s. Amit Capital & Securities Pvt. Ltd. On noticing that the details filed on record shows that M/s Predict Investment & Financial Consultants (P) Ltd is a common share holder in both the companies and is holding 18.99% in M/s Amit Capital & Securities Pvt. Ltd., of total share holding of company and is also holding 19.72% of total share holding of assessee company. As there was surplus to the tune of Rs.89,31,955/- as reserves in the balance sheet of M/s Amit Capital & Securities Pvt. Ltd., Assessing Officer invoked provisions of section 2(22)(e) to make an addition of loan amount of Rs.67,10,483/- as deemed dividend. It was submission of assessee that moneys were advanced in the ordinary course of business and charged interest on advance and M/s Predict Investment &Fin. Con. (P) Ltd does not have any substantial interest on assessee company as per Explanation (3) to section 2(22). Neith....
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.... does not hold good. Further, it is an admitted fact that assessee is not owning any share in M/s Amit Capital & Securities (P) Ltd and as held by the Hon'ble Bombay High Court in the case of CIT vs. Universal Medicare Pvt. Ltd. (2010) 324 ITR 263 (Bom), provisions of section 2(22)(e) does not apply unless assessee is a share holder in the company. For both the reasons, we uphold order of CIT (A) and dismiss the grounds raised by Revenue. It is to be noted that the decision relied upon by Revenue in ground was not approved by Special Bench in the case of Bhaumik Colour Pvt. Ltd (Supra). Therefore, there is no need to consider and analyse the Coordinate Bench Decision stated in Ground No.2. The grounds are rejected. 7. Ground Nos. 3 to 6: Ground Nos. 3 to 6 raised by Revenue are as under: "3. On the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs.5,60,89,831/- made by the Assessing Officer by way of rejecting the books of account. 4. On the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs.5,60,89,831/- made by the Assessing Officer as the assessee has failed to r....
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....d May 31,2005 0.100% 0.075% 0.100% 0.75% 0.020% 0.015% 0.0133% 0.0100% It may be noted that the STT rate of 0.025% was not applicable during the period covered under the relevant previous year. Further in case of same day square off transaction in cash segment and transactions in derivative segments STT is charged only one side on sale. The Turnover and STT paid on the same are properly reflected and disclosed. We enclose herewith Form 10DB showing the amount of turnover and STT paid for each segments in support of our claim of rebate under section 88E of I.Tax Act. Similarly transaction charges are different for different kinds of Trades as detailed hereunder. BSE Cash charges Rate % Levied on Transaction charges 0.0035 Turn over NSE cash charges Transaction charges 0.0035 Turn over NSE Derivates Charges Transaction charges 0.0041 Turn over Transaction charges 0.0021 Turn over From the above table, it may be observed that Transaction Charges are not normally half of STT charges as stated in your letter. There are definite rates at which Transaction Charges an....
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....going Paras, the assessee's accounts does not reflect a true and fair view of the accounts of the assessee company, the books of account are accordingly rejected within the meaning of provisions of section 145(3) of the IT Act, 1961 and the assessment is accordingly finalized as per the provisions of section 144 of the Act". 9. Aggrieved, the matter was carried to CIT (A) and submitted as under: i. The books of account as prescribed under the I. Tax Act and companies Act are maintained properly and audited as per law. ii. The Tax Audit Report in Form 3CA with 3CD as prescribed u/s 44AB of the Act was obtained from the Chartered Accountant and filed with the return as its turnover of arbitrage of share business activity exceeded Rs. 40 lacs. iii. There were no discrepancies found by the Statutory Auditor and Tax Auditor and none of the reports were qualified. iv. All transactions and entries were correctly entered and entries are not complicated in books and all entries wherever asked were explained. v. The appellant has maintained all such books of account and submitted all information that would enable the Assessing Officer to compute the profits and there was no....
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....ignoring the other leg of transaction of profit in cash segment and vice versa. In respect of loss of Rs.56,03,776/- in Market to Market (M to M) margin in derivative segment, there is profit of more than this amount in cash segment. It may be noted that in case of Arbitrage activities the cash to derivative segment, the transactions are done in such way that there is exactly reverse position in another segment. For example if,'' there is buy position in cash market, there will be equal sell position/in derivative segment. In such case with the movement in price of underline scrip, there will be profit in one segment and loss in another however the profit would normally be more than loss, ultimately resulting in net profit. In view of the above facts the net loss in Market to Market cannot be segregated from the profit in cash segment and net result should be counted. iv. The figures as the Learned Income 'fax Officer has estimated is not correct since the Learned income Tax Officer has estimated the turnover on the basis of STT rate @.025 which was not applicable during the year. The rates of STT on all segments at BSE and NSE are not same as taken by the Learned Income Tax Off....
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....sions (c) & (d) of section 43(5) of I. Tax Act and the same has been substantiated by the clarificatory circular of CBDT w.e.f. 25.12006 and also supported by various judicial decisions including Mumbai tribunals in the case of DCIT v/s SSSKI Investors (P) Ltd. (113 'TTJ 511) and in the case of RKB Securities (P) Ltd v/s ITO (118 TTJ 465). In view of the same it is clear that the question of treating the loss incurred, if any, in the derivative segment even till 25.1.2006, the date from which the said circular came into effect as speculative losses u/s 43(5) of the Act does not arise and the estimated profit as above taken i.e. 1% income on turnover derived by the Learned Income Tax Officer is unjustified and uncalled for and liable to be deleted". 10. After considering the submissions, CIT (A) deleted the estimation of income resorted to by Assessing Officer stating as under: 15. I have thoroughly gone through the assessment order and the submissions made by the authorized representative of the appellant. I find that the reasons given by the Assessing Officer to substantiate her decision of rejection of books of account are very vague and she failed to understand the nature ....
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....ns on which STT is levied on sales only Anand Rathi Securities Ltd- Code No.03 84.27 Navrathna Capital and Securities (P) Ltd- Code No.3 169.51 Navrathna Capital and Securities (P) Ltd- Code No.4 0.81 Navrathna Capital and Securities (P) Ltd- Code No.05 314.09 Total 668.68 Total turn over as per method adopted by the Assessing Officer 1320.22 Turnover purchase as per the assessee's working on page Nos.6 to 9 of the paper book (after including intraday and derivative transactions) 662.18 Turnover of sale as worked out above 662.09 Total 1324.27 Difference 4.05 The above difference is due to the inherent nature of the reconciliation and also due to close out deals and auction transactions 13. It was learned Counsel's submission that referring to the order of Assessing Officer, the main focus of Assessing Officer out of 44 pages of order upto page 33 was with reference to investment in unquoted shares and how those transactions are to be treated as business income but not capital ga....
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.... Rs.31,20,337/- shown as 'other income' to tax as "Income from other sources". The CIT (A) after accepting the assessee's application did not affirm the action of the Assessing Officer by stating as under:- "I have thoroughly gone through the assessment order and the grounds of appeal submitted by the appellant. I found that the "Miscellaneous and Other Income" of Rs.21,30,337/- is nothing but the Business Income of the appellant as the assessee has earned this income by way of participating in auction market. The same cannot be treated as "Income from Other Sources" and therefore, I direct the Assessing Officer to treat the same as business income only". 17. We have perused the record and analyzed the contentions of rival parties. The details shown as "other income" are as under: "Particulars Amount in Rs IPO Referral Fee 13,02,750 Auction charges 2,69,025 Interest Received 5,58,562 There is no dispute with reference to the IPO referral fee and auction charges being part of business operations and business income. The only issue that may arise is with reference to interest received of Rs.5,58,562/-. Further details of the above amounts are as under....