2013 (5) TMI 443

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....owance of interest of Rs. 14,51,949/-, DEMAT charges Rs. 6,718/-, Membership Subscription of Rs. 11,557/- totaling to Rs. 14,70,224/- out of short term capital gain without appreciating that the assessee had borrowed funds for acquisition of shares and the burden of interest thereon and other expenses were incurred for earning short term capital gains. The appellant prays that he various expenses of Rs. 14,70,224/- be allowed while computing short term capital gains. 2. On the facts and in the circumstances of the case and in law the CIT (A) failed to appreciate that the Ld ACIT-(25)(2) did not issue any show cause notice to your appellant before disallowances of the said expenses amounting to Rs. 14,70,224/- and dismissed the appeal wit....

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....im of set off and taxed the entire capital gains of Rs. 3,72,424/-. Even during the proceedings before the CIT (A), the assessee could not improve the case by furnishing the relevant details. Ex consequenti, CIT (A) confirmed the said disallowance of expenses of Rs. 14,70,224/- and dismissed the assessee's appeal. 5. During the proceedings before us, Ld Counsel for the assessee filed a copy of the order of the Tribunal vide ITA No. 572/M/2012 (AY: 2007-2008) dated 31.1.2013 and mentioned that the said order was pronounced in the case of Dr. Arunkumar Sohanlal Gupta, who is related to the assessee. Further, Ld Counsel brought our attention to para 7 of the said Tribunal's order and mentioned that the facts of the present case are identica....

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....hereinabove and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is, therefore, partly allowed for statistical purposes." 8. From the perusal of the orders of the AO and the CIT(A) it is evident that their conclusions were derived in the context of the assessee's failure to submit the details establishing the nexus of the interest expenditure qua the capital used for purchase of the shares. Thus, it is evident that the Revenue Authorities have given their finding without going into the merit of the issue and the connection of the impugned expenditure qua the capital gains claimed by the assessee. It is, in our opinion, the disallowance so made by the AO is pre-mature....