TaxTMI 
TaxTMI 
2018 (1) TMI 395
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....ustified in allowing set off of loss of Rs. 23,40,887/- from Mutual Fund transactions with the profit out of transactions in shares, securities etc., without considering the fact that the assessee has treated these under the head "Investments" and did not audit her accounts as prescribed in section 44AB of the I.T. Act, 1961 for claiming the transactions as business transactions. 2. That on the facts and circumstances of the case and on law, the Ld. CIT(A) is not justified in holding that provisions of section 94(7)/94(8) of the I.T. Act, 1961 is not applicable in this case for earning exempt income in the form of Dividend reinvestment and incurring loss out of redemption of Mutual Funds within four months of purchase." 3. The a....
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.... by the assessee as well as the material available on record, the Ld. CIT(A) decided this issue in favour of the assessee from the following reasons given in paragraph no 9.3 to 9.7 of his impugned order: "9.3. The first issue arises in this case is regarding the applicability of section 94(7) of the Income Tax Act, 1961 in respect of the loss in Mutual Funds allegedly on Dividend stripping. Before me, the appellant has submitted that the provisions of section 94(7) of the Income Tax Act, 1961 are not applicable to the case of the assessee since the Mutual Funds were of dividend reinvestment plan and therefore, the correct provisions applicable would be section 94(8) of the Income Tax Act, 1961. The appellant has submitted that the....
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....ntinuous manner with a set purpose and with the intention of earning profit and in such a scenario, the activities have to be treated as business in terms of the decision of the Hon'ble Supreme Court in the case of Karnani Properties Ltd. vs CIT, W.B. Even factually, the assessee has demonstrated that for the purpose of dealing in mutual funds, the assessee borrowed funds during the year and has incurred various administrative expenses including salary for earning such profits and therefore, it clearly fails in the definition of business income under the Act. 9.6. I have examined the above contention of the appellant together with all the submissions, assessment order and the facts of the case and I am inclined to accept the conten....
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....rpose of computing the income of the assessee since both the activities were one and the same and were carried on in an organized manner to earn profit. He accordingly directed the A.O. to treat the loss incurred by the assessee in the transactions of mutual funds as business loss and set off the same against the profits of the assessese from share trading. At the time of hearing before the Tribunal, the learned DR has not been able to raise any material contention or bring any relevant material to rebut or controvert the findings recorded by the Ld. CIT(A) while giving relief to the assessee on this issue. I, therefore, find no justifiable reason to interfere with the impugned order of the Ld. CIT(A) giving relief to the assessee on this i....
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....ised these under the head 'investments'. 4. That on the facts and circumstances of the case and on law, the Ld. CIT(A) is not justified in deleting disallowance of Rs. 29,69,773/- u/s 14A by holding that dividend was earned out of shares etc. in stock in trade, without considering several judicial pronouncements in which it has been held that disallowance u/s 14A can be made for the shares etc. categorised under the head 'stock in trade' also." 8. During the course of assessment proceedings, it was noticed by the A.O. that the assessee has made investment in shares from the funds borrowed on interest. Since the income from the said investment was exempt from tax, the A.O. was of the view that the expenses incurred by the assesse....