AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1200
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....der learned CIT(A) directed the deletion of the addition of Rs. 68,49,607/- made by the Assessing Officer under the head "Profit and Gains from Business or Profession" but sustained the addition of Rs. 7,82,753/- u/s 14A of the Income-tax Act, 1961 ('the Act') read with Rule 8D(2)(iii) of the Income-tax Rules, 1961 ("the Rules"). 2. Brief facts of the case are that the assessee is an individual deriving income from the business or profession, capital gains and other sources. During the financial year 2012-13, the assessee filed her return of income on 19.09.2013 declaring the income as nil with the following particulars: (i) Profit/loss on sale/purchase of equity/funds Rs.23,23,079/- (ii) Short term capital gain Rs. 7,0....
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....tal gains' and the activity of the assessee proves that she is engaged in the business of purchase and sale of securities in an organized and regular manner and showing the income under different heads is just a strategy to avoid tax. 4. In support of his observation, ld. AO derived strength from the profit and loss account of the assessee for the concerned year. Ld. AO referred to the CBDT circulars on the question of nature of transaction of purchase and sale of shares where investment or trading and looking at the volume of transaction and quantum of investment, reached a conclusion that the income earned by the assessee on purchase and sale of securities was not the income from investment but it had to be considered as from the busin....
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....e AY 2012-13 directed that the amount assessed by the learned AO as income from business be assessed under the head 'income from short term capital gains and long term capital gains' as declared by the assessee. At the same time, learned CIT(A) upheld the findings of the learned AO in respect of addition u/s 14A read with Rule 8D and confirmed such an addition. Assessee, therefore challenged the addition u/s 14A read with Rule 8D whereas the Revenue challenged the deletion of Rs. 68,49,607/-. ITA No.5626/Del/2016 7. In so far as the addition u/s 14A is concerned, the main plank of argument advanced on behalf of the assessee is that the assessee herself disallowed a sum of Rs. 3795/- and without recording any reasons by the learned ....
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....ions of the learned AO on this aspect read as follows: "The assessee in her computation of income has disallowed Rs. 3795/- as disallowance u/s 14A of the Income-tax Act, 1961. It is thus admitted that provisions of Section 14A of the Income-tax Act, 1961 are applicable in the case of the assessee. The case of the assessee is thus squarely covered u/s 14A of the Income-tax Act, 1961. The only dispute can be with the working given by assessee and amount of disallowance to be worked out in accordance with the provisions of Rule 8D(2) of the Income-tax Rules, 1962." 10. It, therefore, goes without saying that before jumping to the conclusion that the disallowance has to be worked out in accordance with the provisions of Rule 8D(2) ....
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.... is to be made on application of the formula prescribed under rule 8D or to the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction of the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of section 14A(2) and (3) read with rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable". 11. When we apply the provisions of Section 14A read with Rule 8D(1)(a) in the light of the observations of the Hon'ble Supreme Court in the case of Godrej & Boyce Ma....
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....11-12, as could be seen from the assessment orders vide page Nos. 54 to 59 and 153-158 of the paper book, learned AO accepting the same as short term gain and long term capital gain, as the case may be, but it is only in respect of AY 2010-11, 2012-13 and 2013-14, learned AO started raising dispute to treat this amount as short term and long term capital gain. It is further submitted that in respect of all the three years, learned CIT(A) had taken a consistent view that this receipt must be treated not as income from business but has to be treated as income from short term capital gain and long term capital gain. 15. Absolutely, there is no dispute on the similarity of the facts permeating all through these years. In respect of AY 2010-1....