TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 38
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.... matter before CIT (A). CIT (A) vide order dated 5-5- 2009 dismissed the appeal of assessee. Against the aforesaid order of CIT (A), assessee has filed the present appeal (ITA No.2240/Ahd/2009). The grounds raised by the assessee reads as under:- "1. The order passed by the Ld. CIT (A) is bad in law and is required to be quashed. 2 (i) The Ld. CIT (A) erred in law as well as on facts in confirming the A.O's action of treating the Short Term Capital Gains of Rs.6,89,223/- as Business Income. It is submitted that it be so held now. 2(ii) Without prejudice to above, the Ld. CIT (A) erred in law as well as on facts in not treating the surplus of Rs.5,86,847/- from IPO Investment and secondary market investment as Short Term capital gain. It is submitted that it be so held now. 3(i) The Ld. CIT (A) erred in law as well as on facts in confirming disallowance of Rs.1,17,285/- out of total claim of depreciation. It is submitted that it be so held now. 3(ii) Without prejudice to above, the Ld. CIT (A) erred in law as well as on facts in confirming disallowance of depreciation of Rs.72,032/- on assets other than plant and machinery which are also used for one of the lines of the busines....
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....r:- "3.3. I have carefully considered the contentions of the Ld. Counsel for the appellant with judicial pronouncements relied upon by him and have also carefully gone through the assessment order. It is seen that on one hand, the appellant submits that he was not having much exposure about share market still all of a sudden; he started and invested in shares in large magnitude which clearly reveals his intention towards trading in shares. From the details of purchase and sale of shares, it is very clear that there are number of intra-day transactions of purchase and sale. In the assessment order, the A.O. has already mentioned that the appellant has dealt with more than 120 scrips through different three brokers. It clarifies the intention of the appellant that sudden purchase of shares in the months of March, 2005 in large magnitude and number was with his firm intention and motive to trade in shares. In the given set of facts in the case of the appellant, the judicial pronouncements being distinguished are not helpful to the appellant. Under these facts and circumstances of the case, the action of the A.O. in treating the amount of Rs.6,89,223/- as short term capital gain is he....
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....n record. Considering the totality of the aforesaid facts the systematic activity of purchase and sale of shares, making application in IPOs directly as well as through relatives and on allotment selling them, the volume and frequency of transaction do not appear to be an investment activity but on the contrary appears to be business activity. We are therefore of the view that the action of A.O. in treating the activity of purchase and sale of shares as business activity cannot be faulted and therefore the profit and sale of shares were rightly treated by him as business income. Thus this ground of the assessee is dismissed. Third ground is with respect to depreciation. 10. A.O. observed that assessee has claimed depreciation of Rs.1,46,864/- on assets of "Prelude Engineering". He further observed that during the year assessee has not carried out any business activity in oxygen manufacturing plant and the 250KVA HT connection for running oxygen plant was disconnected and deposit taken back. Assessee submitted that it was manufacturing oxygen since A.Y. 2000-01 and in the current year though there was no production of oxygen but still the machineries were kept ready for production....
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....The Ld. D.R. on the other hand relied on the order of A.O. and CIT (A). 13. We have heard the rival submissions and perused the material on record. The undisputed fact is that the assessee is in the business of oxygen gas since A.Y. 2000-01, there was no business activity of oxygen gas during the year in appeal. The submission of the assessee that the electricity connection was surrendered in January,2006 and till Dec.,2005 the assessee was having electricity connection and no business activity during the year was on account of business conditions has not been controverted by Revenue by bringing any contrary material on record. It is also not in dispute that in earlier year the assessee has been allowed depreciation and during the year under appeal the machinery was kept ready to use. 14. In the case of CIT vs. Oswal Agro Mills Ltd. (supra) the Hon'ble Delhi High Court has held as under:- "Head Note: " After the amendment of section 32 of the Income tax Act,1961, by the Taxation Laws (Amendment & Miscellaneous Provisions) Act,1986, section 32(1) of the Act allows depreciation on the written down value of a block of assets. Section 2(11) of the Act defines the term "block of ass....
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....ital (ITA No.8057/Mum/03). Aggrieved by the order of A.O., assessee carried the matter before CIT (A). CIT (A) dismissed the ground of assessee by holding as under:- "7.3. I have carefully gone through the findings of the A.O. in the assessment order and have also carefully gone through the contention put forth by the Ld. Counsel for the appellant. Having verified the facts of the case and the amended rule 8D, it is seen that the A.O. has rightly made the addition of Rs.1,47,509/- u/s. 14A by relying on the latest decision of the Special Bench of Mumbai ITAT cited supra in which it is held that section 14A has an overriding effect and can be applied even if the deductions are allowable under other provisions of section 36(1)(iii) and that sub-section (2) & (3) of section 14A, though inserted by the Finance Act, 2006 with effect from 1-4- 2007 read with Rule 8D are procedural and clarificatory in nature and apply to pending matters also. The words, "in relation to" in Section 14A encompass not only the direct expenses but also the indirect expenses which has any relation to the exempt income. Thus, it is clear that the amended rule 8Dis having retrospective effect and the A.O. was ....
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....ane material having a bearing on the facts and circumstances of the case." 21. Following the ratio laid down in the aforesaid decision in the case of Godrej & Boyce Mfg. Co. Ltd. (supra) wherein interalia it has been held that in the years when provision of Rule 8D were not applicable the A.O. should make reasonable disallowance, we are of the view that the matter be remitted to the file of A.O. to work out a reasonable disallowance in light of the decision of Hon'ble High Court in the case of Godrej & Boyce (supra) and after giving an opportunity of hearing to assessee. Thus this ground of assessee is allowed for statistical purpose. 22. In the result, appeal of the assessee is partly allowed. 23. During the course of assessment proceedings A.O. noticed that assessee had shown receipt of unsecured loan of Rs.1,61,70,000/- from Wirana Private Ltd. which was adjusted against the sale of shares of R.L. Kalathiya Ship Breaking Private Ltd., A.O. was of the view that the repayment of loan was otherwise than by an account payee cheque or account payee bank draft as it was by way of journal entry and therefore was in violation of provisions of Sec. 269T of the I.T. Act. Assessee submi....
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....se of M/s. Shelter Inn Hotel Pvt. Ltd. relied upon by the Ld. Counsel. In this case, the Ld. ITAT has upheld the order of CIT(A) and cancelled the penalty levied by the Assessing Officer. Further, the Assessing Officer had also not doubted the genuineness of the transactions, which have been fully accepted in the assessment made for the year under consideration. As already stated hereinabove, the Assessing Officer has held the transaction as genuine and has further taxed the same as an income by way of gains accordingly. Therefore, following the judicial pronouncements of the various courts and tribunals, I hold that the provisions of section 269T of the Act are not applicable to the facts of the present case. In view of the above, the penalty levied under section 271E of the Act is directed to be cancelled." 24. Aggrieved by the order of CIT (A), the Revenue is now in appeal before us. 25. Before us, the Ld. D.R. submitted that explanation of the assessee that the amount was an advance and not loan was not acceptable in view of the fact that the assessee in its books of accounts has classified the amount as loan. Further in the audited balance sheet as on 31-3-2005, the amount o....