TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 798
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....g on the period of holding. In the assessment year 2007-08, the assessee had claimed capital gains in respect of profit earned on sale of shares which was treated by the AO as business income. In an appeal filed before the Tribunal, the Tribunal vide its order dated 3-5-2013, decided the issue in favour of assessee and held that profit earned on sale of shares was liable to be taxed as capital gains. 4. Ld. AR submitted that facts and circumstances during the year under consideration are same, therefore, the capital gains offered by the assessee should be accepted as liable to capital gains tax. 5. We have considered rival contentions and found that the AO has treated capital gains as business income on the plea of frequency, regularity and volume of transaction. By the impugned order, the CIT(A) confirmed the action of the AO. From the record we found that assessee has dealt in following three types of share transaction during the year :- i) Share Trading on Future & Option basis. ii) Share Trading on Speculation business i.e. selling & buying of same script on same day. iii) Share trading on Short Term Capital Gain. The dispute in the present appeal ....
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.... shown by Ld. AR that assessee firm has charged interest of Rs. 3,10,215/- from Mr. Binal S. Koradia and Rs. 65,429/- from Mrs. Amisha Vinal Koradia At the same time interest of Rs. 2,13,318/- has been paid by assessee firm to Mr. Binal S. Koradia(HUF). Thus it is seen from the accounts of the partners that interest has been charged by the assessee where the partners were utilizing capital of the firm. Similarly interest is paid to the partner where firm has utilized capital of the partner. Thus, there is no impact on the activity of the assessee regarding sale and purchase of shares so far as it relates to amount borrowed by partners. It is also observed by the A.O that partners have borrowed huge capital but he has not brought on record any single instance to substantiate such observation. On the contrary from the accounts it is seen that the interest has been charged and paid to the partners on their capital and thus the assessee firm has not paid any interest which can be said to be incurred for the purpose of investing in the activity of sale and purchase of shares. 7.2 Moreover, as per judicial decisions a discretion has been provided to the assessee to divide its acti....
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....n.com 50; Devji Nenshi Palani, 28 taxmann.com 209; Veena Karla 37 taxmann.com 208 and Manoj Kumar Samdaria, 52 taxmann.com 247 (SC), and contended that in view of these decisions, the AO was justified in treating the gains offered on sale of shares as business income. It was argued by ld. CITDR that the dominant judicial, administrative opinion and legal position is that although there is no bar on an assessee for maintaining two portfolios, viz., an investment portfolio and a trading portfolio. However, while accounts in respect of the said activities / portfolios should not only be separately maintained, but, in addition a systematic criteria needs to be adopted and consistently applied or followed to bifurcate the various transactions into each of the portfolios, at the very beginning of entering of these transactions and not in the case of the assessee when the sales statements are received. Further, the very basis of these transaction entered for profit motive, its conduct to carry out such transactions, systematic, consistent, frequent, voluminous and repetitive nature of these transactions coupled with speculative and derivative transactions in similar shares with same broke....
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....idity of order passed by CIT(A) u/s.263. However, no finding was given relating to assessment of capital gain on sale of shares, hence, such case cannot be relied in assessee‟s case. With respect to Koradia Construction Pvt. Ltd. (supra), ld. AR submitted that this decision of Mumbai Bench supports the case of the assessee insofar as the findings given in the aforesaid case equally applicable to the assessee since the gain on sale of shares reflected as investment was held to be liable to be assessed under the head „income from capital gains‟. As per ld. AR even the Circular No.4/2007 dated 15-6-2007 also supports the case of the assessee since the assessee has offered income under the head „income from capital gains‟ on shares which are held as „investment‟. In case of Karan R Bahl (supra), ld. AR contended that no finding was given and simply the case was remitted back to the file of AO, hence, has no relevance in the present appeal. In case of Rajan R Bahl, the matter was remanded back to the file of the AO as the assessee had not filed any details, whereas in the instant case, the assessee has filed all the details, therefore, reliance ....
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....711/M/2011), the Revenue has taken following grounds :- 1.` "On the facts and in the circumstances of the case and in law, the Id. CIT(A) is erred in deleting the addition of Rs. 45,60,000/- made by the Assessing Officer on account of undisclosed sale of shares of M/s.Rajesh Exports Ltd.,. 2. "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the addition of Rs. 76,13,675/- made by the Assessing officer on account of undisclosed sale of shares of M/s. Hindustan Organics Ltd. 3. "On the facts and in the circumstances of the case and in law, the Id.CIT(A) erred in deleting the addition of Rs. 5,78,70,000/- made by the Assessing officer on account of deemed dividend u/s.2(22)(e) of the I.T.Act, 1961. 4. "On the facts and in the circumstances of the case, and in law, the Id.CIT(A) erred in deleting the addition of Rs. 13,11,123/- made by the Assessing officer u/s.14A of the I.T.Act. 1961." 5. "On the facts and in the circumstances of the case, and in law, the Id. CIT(A) erred in deleting the addition of Rs. 56,54,598/- made by the Assessing Officer as unexplained cash credit of the assessee u/s.68 of the I.....
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....issued in the name of Koradia Construction. Therefore, the same was treated as shares sold by Koradia Construction on behalf of assessee, and accordingly assessee account was credited by the Koradia Construction. Confirmation of account between Koradia Construction and assessee also reflects that the shares were sold by Koradia Construction on behalf of the assessee. Contract note of transaction enclosed in paper book reflect that the shares purchased by the assessee was sold. The CIT(A) had recorded a finding to the effect that assessee has sold 5000 shares of Rajesh Exports to M/s Koradia Construction Pvt. Ltd. and same was pointed out by the assessee in the dully filled up Annexure-A submitted along with the letter dated 20-12-2010. After recording the finding to the effect that sale proceeds of 5000 shares of M/s Rajesh Exports have been credited by the assessee in its books of accounts on 21-8-2008 i.e. before the end of the financial year, the CIT(A) held that there was no escapement of sale proceeds of 5000 shares. The finding recorded by CIT(A) has not been controverted by ld. DR. It is pertinent to mention here that no ground has been taken by the Revenue with regard to vi....
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....ctually 15,000 shares and not 2,17,761 shares. Since the addition was made by AO only on the basis of typographical mistake, which has been detected by CIT(A) and after considering the correct nos. of shares purchased on 28-2-2007, the CIT(A) recorded his finding at para 4.3 and deleted the addition, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of shares of M/s Hindustan Organics Chemicals Ltd. 15. The addition made on account of deemed dividend u/s.2(22)(e) was deleted by the CIT(A) after following the order of ITAT Special Bench in the case of Bhaumik Colour Paint Pvt. Ltd. 118 ITD 1 and jurisdictional High Court in case of Universal Medicare Pvt. Ltd. 16. We have considered rival contentions and found that addition was made by the AO in respect of loan taken by the assessee firm from M/s Koradia Construction Pvt. Ltd. The CIT(A) has deleted the addition after having the following observations :- "I have considered the submissions of the representative and the stand taken by the A.O. Admittedly, the appellant is a partnership firm which Shri Bania Koradia and Smt.Amisha Koradia were having share of profit of 20% and 40% re....
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....19. We have considered rival contentions and found that the AO has made disallowance of Rs. 13,11,123/- by observing that assessee has earned dividend income to the tune of Rs. 1,35,630/- and incurred interest expenditure of Rs. 30,44,600/- in its future and options business. The AO computed disallowance at Rs. 13,11,123/- as per rule 8D. We found that the AO has applied rule 8D which is applicable in the assessment year 2008-09 under consideration and worked out disallowance by taking into account average investments made in shares which have earned dividend. The Hon‟ble Bombay High Court in the case of Godrej Boyce, 328 ITR 81, held that Rule 8D is applicable from A.Y.2008-09. The contention of ld. AR was that assessee has offered taxable income in respect of future and options business, therefore, investment attributable to such securities are to be excluded from the investment taken by AO while computing disallowance under Rule 8D. His further contention was that as against dividend income of Rs. 1.35 lakhs, the assessee has offered taxable capital gain of more than Rs. 1 crore, therefore, suitable adjustment should be made while computing disallowance under Rule 8D. As p....