TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 479
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....the assessee has earned exempt income. 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. Revenue appeal A.Y-2010-11 1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in treating the amount of Rs. 1,08,92,468/- received by the assessee from the sale of Mutual funds units as long term capital gain as against it being taxable as business income since the assessee is engaged in the business of trading in shares? 2. The appellant prays that the order of the Ld. CIT(A) be set aside on the grounds mentioned above and that of the Assessing Officer be restored. 3. The appellant craves leave to add, amend or alter all or any of the Grounds of appeal. Assessee appeal A.Y-2009-10 1. "Business Loss" or "Short Term Capital Loss" a. The Ld. CIT(A) erred in holding that the loss of Rs. 3,15,58,406/- incurred on account of sale of shares, under the head "Business Loss" or "Short Term Capital Loss" as declared by the Appellant. b. The Ld. CIT(A) erred in holding th....
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....e Appellant craves leave to add, alter or amend the Grounds of Appeal at or before the hearing of the appeal. 3. Assessee's appeal 3.1 One common issue raised pertains to treatment of capital gain/loss as business gain/loss. Since facts are identical we are adjudicating the issue with reference to facts and figures for A.Y. 2009-10. 3.2 During the year appellant has declared short term capital' loss of Rs. 3,15,58,406/- and long term capital gain of Rs. 2,16,114/- which is claimed as exempt u/s. 10(38) of the Income Tax Act. According to the Assessing Officer appellant is indulging in transactions of shares and the frequency and volume is so high that one can easily say that appellant is in this business. Due to this fact a show-cause notices was issued to the appellant for treating capital loss as business loss. In response to the show-cause notice appellant has given reply vide letter dated 12.12.2011 which has been considered by the Assessing Officer in para 4.3 to 4.7 of the assessment order. A.O was of the opinion that as per the appellant's own admission, the company is primarily an investment company which means business of the appellant is investment, therefore, ....
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.... 2000 shares on 27.08.2008 which has been sold out on 04.09.2008. Similarly, on 10.09.2008 appellant has purchased 3000 shares thereafter various purchases are also there and after that appellant has sold out these shares on 31.10.2008, 16.01.2009, 30.03.2009. The same pattern was also noticed in AY 2008-09. Further, I find force in the argument of Ld. Assessing Officer that share transaction pattern of Kotak Mahindra Bank Ltd. shows that there was no intention of the appellant to hold these shares as an investor. The details of such pattern has been demonstrated at Page no. 6 and 7 of the assessment order which clearly reveals that appellant is cautiously involved with profit motive in such purchase and sale of shares/securities. The timings of the purchase and sales also prove that there is no investment motive but to earn profit by way of purchase and sale of shares. These specific facts, as highlighted herein above suggests that none of the case laws or ITAT decision mentioned supra, is applicable to the facts of the case. The arguments that appellant company has hired the services of the port folio manager for making investment in several shares and securities is of no avails ....
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....s cannot be treated as trading activity. For this proposition Ld. Counsel placed reliance upon Hon'ble Delhi High Court decision in ITA 485/2012 in the case of Radials International vs. ACIT vide order dated 25.04.2014. Per contra Ld. DR relied orders of the authorities below. He further submitted that it is also not clear from the order of the A.O that assessee is engaging into the investment activity through portfolio management services. 3.5 Upon careful consideration we find that this tribunal in assessee's own case has decided similar issue in earlier year as mentioned above in favour of the assessee by holding as under: "The revenue through its grounds of appeal has agitated the action of the CIT(A) in treating the profit of Rs. 49,87,5149/- earned on redemption of mutual funds as Long Term Capital Gains(LTCG) as against business income treated by the AO. The contention of the revenue is that since the assessee is primarily an investment company, so the income earned should be treated as business income. We find that this issue has been dealt by the Ld. CIT(A) in Para 4 of his order. The Ld. CIT(A) after detailed discussion of the matter has observed that the assessee compa....
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....e or capital gains Sale of shares under Portfolio Management Scheme--Assessee-firm earned gain on sale of equity shares under the Portfolio Management Schemes (PMS) and treated gains realized on sale of shares as business income. Assessee in its reply to AO stated that the shares were depicted as investments and not "stock-in-trade" in the accounts of the assessee and hence, the gains resulting from their sale were to be considered capital gains. AO noted that motive of transactions was the earning of profit and not a dividend and holding period was ranging from a few days to a few months, therefore, the gain from sale of shares was business income. CIT(A) confirmed the views of AO. Tribunal upheld the order of CIT(A) on the ground that intention of assessee was to maximize the profit at the time of deposit of amount in PMS. Assessee contended that the PMS agreement, by its terms alone or by the fact of agency being handed over to the portfolio manager, could not be the basis for inferring an intention to profit or that the transactions were in the nature of trade. Of the total of 1248 transactions that had taken place in the relevant period, revenue submitted that there were on av....
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....ainst the CIT-A orders directing to delete the disallowance of Rs. 35,00,355/- in u/s. 14A. Similar issue has been raised by the assessee in assessment year 2010-11. where it has been urged that CIT-A erred in making of adhoc disallowance u/s. 14A of Rs. 65,11,822/-. 5.1 We have heard both the counsel and perused the records. We find that similar issue was considered by this tribunal in assessee's own case for assessment year 2008-09 in ITA no. 8870 above, and the tribunal had adjudicated the issue as under: "We have considered the rival submissions of the Ld. Representatives of the parties. It may be observed that in the case of „Godrej & Boyce Manufacturing Co. Ltd.‟328 ITR 81, the Hon‟ble Bombay High Court had held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable and also not retrospective and applies from A.Y. 2008-09. It has been further held that u/s.14A of the Income Tax Act, resort can be made to Rule 8D of the Income Tax rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessin....