TaxTMI 
TaxTMI 
2016 (4) TMI 32
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....red in not appreciating that most of the transactions effected were of short term nature, clearly indicative of the motive of the assessee to earn profits by resorting to frequent trading rather than to earn dividend by holding shares for long durations. 4. The Learned Commissioner of Income-tax (Appeals) erred in not appreciating that the assessee had carried out transactions in high volume and in an organized manner which constitute the activity as business and not investment as claimed by the assessee and as such the profits derived from such transactions was taxable under the head 'Income from business & profession." 3. Facts of the case, in brief, are that the assessee is an individual and has returned income of Rs. 26,19,900/- which also comprised of income earned on sale of shares and the same had been shown as capital gains/loss in the return of income filed. During the year, the assessee had entered into Portfolio Management Services (PMS in short) agreement with HDFCPMS, DSPMerrilLynchPMS and EnamPMS to whom the assessee had entrusted certain funds. As per the PMS agreement, the funds of the assessee were invested in stock market by the above party and the....
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....hors the specific provisions of section 14A(3) of the Act?" 8. Facts of the case, in brief, are that the assessee while disclosing the income under capital gains in the return of income filed has not claimed any such expenses which were incurred by him and which were arising out of PMS activity. The AO held the capital gain as business income and thereafter disallowed the total expenses on account of PMS and other charges at Rs. 13,16,563/- under Rule 8D of the I.T. Rules. 9. In appeal the Ld.CIT(A) following the decision of the Tribunal in assessee's own case for A.Y.2008-09 deleted the disallowance by observing as under : "4.2 The A.O. has applied the Rule 8D to arrive at the disallowance of Rs. 10,48,138/-. However, disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has incurred or claimed, disallowance u/s.14A cannot stand. The expenditure on PMS has not been claimed by the assessee and, therefore, there does not remain any other expenditure other than this expenditure which is otherwise liable to be disallowed under Rule 8D of the I.T. Rules. 4.3 This has also been elab....
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....IT(A) the revenue is in appeal before us. 10. After hearing both the sides, we find no infirmity in the order of the CIT(A). The learned CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. Under these circumstances, we hold that the learned CIT(A) was justified in deleting the disallowance made by the AO. Grounds raised by the revenue are accordingly dismissed." 12. Since the Ld.CIT(A) while deciding the issue has followed the decision of the Tribunal in assessee's own case which has been followed by the Tribunal in A.Y. 2009-10 in the case of other related parties, i.e. Smt. Sadhana Ashokkumar Patni and other connected appeals vide ITA No.1835/PN/2013 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A) allowing the claim of the assessee and deleting the disallowa....
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....f discontinuation of business vide letter dated 07-04-2006 submitted with the Assessing Officer on 12-04-2006, i.e. within the prescribed period of time as mentioned in section 176(3) of the I.T. Act, 1961. Considering the facts and circumstances of the case and the legal position enunciated by the above referred to decision of the Mumbai Tribunal the appellant's claim is held to be tenable in law. Accordingly, ground No.4(a) & (b) are held to be allowed. Since ground No.4(a) & (b) are allowed, there is no need to adjudicate on ground No.4(c) which is on a without prejudice basis." 5.2 In view of the above, as the facts and the legal position has not undergone any change in the year under consideration, the ground being the same as in A.Yrs. 2007-08 and 2008-09, following the decision taken by my predecessor which was also followed by me while adjudicating the matter in appellant's case for A.Y. 2008-09, the ground of appeal No.3(a to c) raised for the year under consideration is allowed." 16. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 17. After hearing both the sides, we find identical issue had come up before the Tribunal in the cas....