TaxTMI 
TaxTMI 
2016 (5) TMI 858
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,42,972/- from shares to be taxed at special tax rate u/s 111(A) & 112 of the IT Act, 1961 and not to be considered as business income as assessed by the A.O. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erroneously restricted the disallowance to 10% of the exempted income as against the disallowance of Rs. 68,78,340/- made by the A.O. 3. The assessee company is engaged in the business of activities in shares and securities during the year under consideration, as well as also earned dividend from these shares and securities. Out of total income of Rs. 224.55 lakhs earned by the assessee, the income from Short Term Capital Gains was at Rs. 21,14,240/- and from Long Term Capital Gain at Rs. 50,42,972/-. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tock/closing stocks. The Assessing Officer has also taken into cognizance of Circular No. 4/2007 dated 15/06/2007 issued by CBDT and held that the assessee has declared Short Term Capital Gain on certain sale of shares even though its main business is trading of shares. The Assessing Officer also considered the instructions dated 31st August, 1989 issued by CBDT and held that though the portfolio manager is an agent of the investor and though he may carry on certain transactions in his own name such transactions are in his capacity as an agent of investor. Therefore, under general principals such transactions are the transactions of the investor carried out through an agent, the income from such transactions is liable to tax as the income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e was claiming the same as long term capital gain consistently, since many years which was allowed by the Assessing Officer in previous years and thus, partly allowed the said ground. As regards to Ground No. 2 related to dividend income the CIT(A) relied on the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company Limited 234 CTR 1 and held that it was the duty of the A.O to make the disallowance u/s 14A by adopting reasonable basis and thus restricted the disallowance to 10% of exempted income. Now the Assessee is in appeal. 6. The Ld. DR submitted that the transactions on its volume and on the basis of the trading in a single day were very much high and is rightly treated as business by the Assessing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l submissions, the Ld. AR submitted that the assessee is having two portfolios and it's not a requirement under the law to have two separate bank accounts for conducting a business and making investments. The Assessing Officer admittedly stated that the Profit and Loss Account clearly shows that the assessee was having Short Term Capital Gain as well as business income so there was clear bifurcation of both the incomes. In-fact, for Short Term Capital Gain the assessee has not utilized any borrowed fund. The Ld. AR submitted that the judgment which was relied by the Ld. DR was in respect of transactions dealing with shares held only for three to four days. Thus, the applicability of the said judgment will not sustain in assessee's case beca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bay) which was confirmed by the Hon'ble Supreme Court. In respect of Ground No. 2, the Ld. AR submitted that Rule 8D will not be applicable for the present Assessment Year 2007-08 as held in Jurisdictional High Court in the case of Maxopp Investment Ltd. vs. CIT reported at 347 ITR 272. 8. We have perused all the records and heard both the parties. The Ld. DR's contention that the circular dated February 2016 is not retrospective has to be looked into from the angle of the earlier circulars and the intention of that circular issued by the CBDT. The intention of the circular is clearly to reduce the litigation and maintain consistency. The submissions of the Ld. DR that the transaction was very much voluminous and, therefore, Assessing ....