TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 365
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....Gain as business income. The Learned CIT(A) erred in facts and circumstances of the case and in law in confirming addition that the AO had made by treating the Short Term Capital Gain as business income. II. Inappropriateness of granting only Part relief of addition that the AO made u/s 14A applying Rule 8D. The Learned CIT(A) erred in facts and circumstances of the case and in law in granting only part relief of additions that the AO made u/s 14A applying Rule 8D. Reasons given by CIT(A) in confirming additions that the AO made by treating SHORT TERM CAPITAL GAIN as BUISNESS INCOME and not granting full relief on additions that the AO made u/s 14A are wrong, insufficient and contrary to facts and evidence on record and in law." G....
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.... carried out by the assessee were to the tune of more than Rs. 4 crores, whereas the dividend income earned was only Rs. 46,218/-; That the assessee had carried numerous share transactions and that the holding period of the investments was not substantial. He, therefore, held that the motive of the assessee for purchase of shares was not investment but trading in shares. He accordingly treated the income earned by the assessee from share transactions as 'business income' of the assessee. 5. Being aggrieved by the above action of the AO, the assessee filed appeal before the Ld. CIT(A). In appeal, the ld. CIT(A), vide impugned order, observed that the assessee during the year had done only activities of share transactions and hence share tra....
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....sessee again has been treated as investor. He, therefore, has stated that the department has changed its stand during the year under consideration. So far as the use of borrowed funds was concerned, the ld. AR has stated that the assessee is in the business activity of lending and borrowing and surplus borrowed funds were invested in share transaction. That the assessee, otherwise, has its own sufficient capital that the investment was not only made in shares but also in mutual funds and in fixed assets such as landed property where the notice of which earning of profits was not involved but the activities of the assessee suggest that he was an investor. Ld. DR on the other hand has strongly relied upon the findings of the lower authorities....
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....ed for investments, we find that lending and borrowing being business of assessee and the assessee having surplus borrowed funds having invested in the share transaction would not change the status of the assessee from an investor to a trader in relation to share transactions carried out by it. The Hon'ble Karnataka High Court in the case of CIT vs. Kanpur Investments Private Limited [2015] 61 taxmann.com 91 (Karnataka) held that the Income Tax Act does not prohibit the assessee from making investments in capital assets after using borrowed funds and that even if the assessee has invested the borrowed funds in share transaction that would not mean that the same would become business activity of the assessee. There is another peculiar fact o....
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....perty of Rs. 5,47,21,652/- for computation of disallowance under Rule 8D. However, the ld. CIT(A) has wrongly confirmed the remaining disallowance made by the AO. The ld. AR of the assessee has relied upon the decision of the Hon'ble Delhi High Court in the case of Joint investments Private Ltd. vs. CIT ITA No. 117/2015 decided on 25.02.2015 and further in the case of ACB India Limited vs. ACIT ITA No.615/Mum/2014 decided on 24.03.2015 to contend that the disallowance under Rule 8D(2)(iii) cannot be made on the basis of entire investments but should be worked out by taking only those investments which yielded dividend during the year. He has further relied in this respect on the decision of the co-ordinate bench of the tribunal in the case ....