TaxTMI 
TaxTMI 
2015 (10) TMI 392
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....and surmises, and the same may be ordered to be deleted. In any case and without prejudice the said disallowance is far too excessive. 4) The learned Commissioner of Income Tax has further erred in upholding the disallowance of 20% of the fuel and car maintenance expenses amounting to Rs. 25,610/-. The same are based on conjectures and surmises, and the same may be ordered to be deleted. In any case and without prejudice the said disallowance is far too excessive. 5) The learned Commissioner of Income Tax (Appeals) has erred in upholding disallowance of 20% of the depreciation particularly in view of the facts and circumstances, that the same is claimed on the asset that forms part of the block of assets and he same is therefore not called for. 6) Your Appellants crave leave to add, alter or amend or withdraw the above ground of appeal and to submit such statements, documents and papers as may be considered necessary either at or before hearing of the Appeal." 2. Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in the business of export and import of marbles, granite etc. The assessee was also investing in shares and was consi....
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....ssee has been permitted to hold two portfolios. Reliance was placed by ld. AR on the following judicial pronouncements :- i) In the case of Bharat Kuverji Kenia Vs. Add.CIT, 130 TTJ 86 (Mum), the Mumbai Bench of the Tribunal observed that, "There is no justification for treating the activity of purchase and sale of shares as 'business' merely on the reason of the' volume of transactions. As per well settled principles of law, the frequency of transactions cannot be per se decisive." ii) In the case of Mr. Nehal V. Shah vs, ACIT (ITA. No.2733/Mum/2009), the Mumbai Bench of the Tribunal held "that a single transaction would be split by the computers trading of the stock exchanges into many smaller transactions, but, that does not mean that assessee has carried so many transactions". In the case of Hitesh Satishchandra Doshi vs. JCIT (ITA No. 6497/Mum/2009), the Tribunal held that the frequency of purchase and sale of shares, transactions through the electronic system of Stock Exchange split a single order into numerous transactions. This gives an unrealistic figure of the number of transactions." iii) In case of DCIT vs. SMK Shares & Stock Broking (ITA No. 799/Mum/2....
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....rt of marble and granite. The audited balance and profit and loss account placed on record clearly indicate the main business of the assessee. The assessee was also investing in shares and has always offered gain from investment under the head capital gain and the same have also been accepted by the department in all the years in past under the scrutiny assessment framed u/s.143(3) of the Act. We had verified the details of income under the head capital gain arising out of share transaction from assessment year 2003-04 to 2008-09 as placed on record. Perusal of assessment framed for assessment year 2003-04 & 2004-05 clearly indicate that the AO has accepted assessee as investor, thereby capital gain offered was accepted as long term or short term depending on period of holding. During the year under consideration, the long term capital gain offered by the assessee and claimed as exempt was accepted by the AO, however, he did not accept assessee's claim of short term capital gain and treated the same as business income. Thus, only in this isolate year, the AO has changed the treatment of income which is contrary to the accepted legal position by the jurisdictional High Court in ....
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....2 months, the AO has accepted the profit arising therefrom as long term capital gains. Thus, only during this year under consideration that the assessee has been treated as a trader because of certain tax benefits granted to an investor in securities by way of amendment in the relevant provisions of the Income Tax Act brought by Finance Act, 2004. By insertion of provisions of section 111A and section 10(38), the levy of tax has been reduced to 10% on short term capital gains and long term capital gains have been made exempt. Under the old provisions of the Act, profits or gains arising to an investor from the transfer of securities were charged depending on the period of holding of the said securities. Short term capital gains were taxed at applicable rates (normal rates) and long term capital gains were taxed at the rate of 20% after adjusting for inflation by indexing the cost of acquisition. For listed securities, the tax payer had an option to pay tax on long term capital gains at the rate of 10% but without indexation. In case of trader in securities, however, the capital gains were taxed as any other normal business income. Thus, tax liability on the income for sale and purc....
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.... placed in this respect on the authorities of the Hon'ble Bombay High Court in 'CIT vs. Darius Pandole' [(2011 330 ITR 485 (Bom.)] and in 'CIT vs. Gopal Purohit [(2011) 336 ITR 287 (Bom.). 10. The frequency and repetition of the purchase and sale transactions play important role, but the same is not conclusive and other factors like main business/profession of assessee, intention while purchasing shares, holding the same as investment, earning of dividend income thereon etc. are required to be seen for reaching to the conclusion regarding assessee being investor or trader in shares. 11. From the record we found that assessee has disclosed shares as investment in the balance sheet, there is no claim of any expenses while computing capital gains which demonstrates the intention of the assessee to treat the shares and securities as investment and not as stock-in-trade. No borrowed interest bearing funds was invested in shares except for making investment in one security on long term basis. The said fact was also explained to the AO and the AO has not disputed the same while accepting assessee's claim of long term capital gains. CBDT in its Instruction No 1827 dat....