2018 (5) TMI 956

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... 2. The only issue raised in various grounds of appeal of the Revenue is against the direction of Ld. CIT(A) to AO to treat the long term as well as short term capital gain amounting to Rs. 18,95,000/- as such and not as business income. 3. The facts in brief are that during the year the assessee has earned long term capital gain of Rs. 89,95,728/- comprising Rs. 41,23,584/- as short term capital gain and Rs. 48,72,144/- on account of long term capital gain on the sale and purchase of shares undertaken as an investor and not as a trader whereas as per the AO, looking to the frequency of transactions, period of holding and other facts and circumstances, the assessee was doing the business and accordingly the AO treated the said amount....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the Bench was drawn to para 3(b) wherein the CBDT issued a circular to AO to treat the income from transfer of shares held for more than 12 months as long term capital gain if the assessee chooses so. The Ld. A.R. referred to another circular No.4/2007 dated 15.06.2007 filed at page 130 of the paper book to emphasize the point that assessee can be a trader as well as an investor simultaneously and may have two portfolios in which the assessee can hold the shares, securities as capital assets as well as stock in trade in the trading segment. The Ld. A.R. submitted that assessee has maintained two portfolios and reported the income under both the heads of income i.e. income from business and profession and income under the head capital gain b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....661/M/2015 for A.Y. 2010-11 and others. The relevant paras of the said order are reproduced as under: "18. To sum up, we find the view of the AO in treating the LTCG and STCG as business income of the assessee, is not proper. Considering statutory provisions regarding the def inition of LTCG, we are convinced that the views of CIT (A) are sus tainable. Simi lar ly, regarding the claim of STCG al so, we f ind that ( i ) the consistency pr inciples; (i i) use of own funds of Rs. 54 Crs; ( ii i) earning of gross dividend income of Rs. 1.20 Crs or Rs. 30 Iakhs on account of short term capital assets; iv) details given in the contract notes regarding intention of certain shares in physical form etc. , sugges t that the STCG in question ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....i) of the Rules, if any, should be restricted to 0.5% of average value of investments, by only considering those investments from which dividend is received during the year; 5. Without prejudice to the above, erred in not excluding the short term investments, gains from which are taxable; while computing disallowance under section 14A r.w.r 8D; 6. erred in upholding interest under section 234C of the Act amounting to Rs. 10,113 treating it as consequential in nature; 7. In addition to above, the AO erred in not accepting the CIT(A)'s order and has filed an appeal before Income Tax Appellate Tribunal; 11. The issue raised in cross objection No.1 is against the addition of Rs. 6,29,793/- under section 14A rea....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lowance but nothing of the sort was done by the AO before invoking the provisions of section 14A r.w.r. 8D. Therefore, the disallowance should be deleted. Without prejudice, the Ld. A.R. alternatively submitted that in the case of assessee's husband in ITA No.3661/M/2015 for A.Y. 2010- 11 (supra) the co-ordinate bench of the Tribunal has made the disallowance at the rate of 2% and the same should be applied in the present case as well. 13. The Ld. D.R., on the other hand, objected to the arguments of the Ld. A.R. and relied heavily on the order of authorities below on this issue. 14. We have heard the rival submissions of both the parties and perused the material on record. We find that in this case a disallowance of Rs. 6,29,793/- wa....