AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 508
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....lculated as per law. 2. The CIT(A) erred in upholding the action of the AO in treating long-term capital gains of Rs. 16,56,89,573/- as business income. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of AO in considering the capital gains arising on sale of long term capital assets as business income. The appellants further contended that the CIT(A) erred in not admitting the additional evidence and the reasons assigned by him for the same are vague and erroneous. 3. The CIT(A) erred in not adjudicating the following additional ground of appeal raised before him. "That the Ld. ITO ought to have considered the short-term capital gains claimed by the assessee. That the Ld. ITO has treated short term capital gains of Rs. 53,27,430 as a business income without giving any reason which is quite illegal, arbitrary, unwarranted, unjustified and bad in law. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought to have adjudicated the aforesaid ground of appeal. 4. The AO erred in charging interest of Rs. 1,90,21,523 and Rs. 26,903 u/s. 234B a....
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....s and Ld. CIT(A) has confirmed the action of AO. He submitted that in view of decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT 328 ITR 81; Rule 8D which has been inserted with effect from 24.3.2008 by Income tax (fifth amendment) Rules 2008 is prospective in nature and is applicable from assessment year 2008-09 and not to the assessment year under consideration. The disallowance have to be reworked by restoring the issue to AO. The Ld. Departmental Representative has not disputed above submission of Ld. AR save and except relying on the orders of authorities below. 7. We have considered submissions of Ld. Representatives of parties and orders of authorities below. We agree with Ld. AR that Rule 8D is not applicable to the assessment year under consideration as it is prospective in nature and is applicable from assessment year 2008-09 as held by Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT(supra). Hence, we set aside the orders of authorities below and restore this issue to the file of Ld. CIT(A) with a direction to decide the disallowance to be made u/s. 14A of the Act after giving due opportunity of hearing....
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....ain on sale of shares cannot be considered as Long Term Capital Gain. He has further stated that assessee is actually involved in trading of shares rather than investment, looking to the volume frequency, continuity and regularity of transaction of purchase and sales in shares. Therefore, AO stated that it could not be considered as capital gain to the assessee and charged the amount under the head business income. 10. Being aggrieved, assessee filed appeal before First Appellate Authority. 11. On behalf of assessee, it was submitted that shares of Ruchi Soya Industries Ltd. and Ruchi Infrastructure Ltd. were held since financial year 2002-03 and 2003-04 and the same were sold for Rs. 16,56,89,573/- on which Long Term Capital Gain was claimed as exempt u/s. 10(38) of the Act. It was submitted that there was no regular sale or purchase of shares of Ruchi Soya Industries Ltd. and Ruchi Infrastructure Ltd. and the investment were thus long term investments. It was stated that diminution in market value of shares was never provided in the books of account and the said shares had been shown in the balance sheet as long term and non-trade investments. It was also stated ....
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....hat in the preceding assessment years, i.e. assessment years 2003-04, 2005-06 and 2008-09, department accepted Long Term Capital Gain in respect of shares sold by assessee. He submitted that if additional documents proposed to be filed by assessee vide its letter dt. 22.5.2009 (copy placed at page 232-234) had been accepted, order of Ld. CIT(A) would have been different. Ld. AR further submitted that a part of shares which are under consideration were also sold by assessee in earlier year and department accepted the capital gain as disclosed by assessee. Ld. AR submitted that matter should be restored back to decide it afresh after considering the additional evidences, filed before Ld. CIT(A). 14. On the other hand, Ld. Departmental Representatives relied on the orders of authorities below and submitted that Ld. CIT(A) has rightly rejected additional documents proposed to be filed by assessee as assessee failed to produce said documents before AO inspite of giving adequate opportunity. 15. We have carefully considered the orders of authorities below and submissions of Ld. Representatives of parties. We observe that AO vide summons u/s. 131 of the Act dt. 12.12.2008 asked c....
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....Court has held in the case of CIT Vs Prabhu Dayal 82 ITR 804 that question as to whether receipt is a capital receipt of income, has to be judged from the facts of each case and question of law can be drawn such facts. The Hon'ble Apex Court in the case of CIT Vs. H. Holck Larsen 160 ITR 67 also held that whether transaction of sale and purchase of share is a trading transaction or in the nature of investment, is a mixed question of law and facts. Therefore to decide the question as to whether assessee has to be treated as investor in share or a trader or shares is to be considered, considering totalities of all facts. In view thereof, it is necessary that Ld. CIT(A) should have considered the evidences proposed to be filed by assessee to decide the issue fairly and judiciously. 17. In view thereof, we, in the interest of justice, set aside the order of Ld. CIT(A) and restore the issue to his file with a direction that he should decide it afresh after making proper enquiry and considering such evidences as may be filed by assessee before him. Needless to state that Ld. CIT(A) will give due opportunity of hearing to the parties in accordance with law. Hence ground No. 2 of appeal i....