TaxTMI 
TaxTMI 
2020 (4) TMI 255
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.... consideration declaring the total income of Rs. 1,78,125/-. The AO passed the assessment order u/s 143 (3) of the Act determining the total income of Rs. 1,78,130/- inter alia making addition of Rs. 9,74,375/- on account of disallowance u/s 14A of the Act and treating the income of Rs. 74,05,599/- under the head income from business or profession against the claim of the assessee as Short Term Capital Gain. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee dismissed the appeal. Against the said findings of the Ld. CIT (A), the assessee is in appeal before the Tribunal. 2. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- 1. "The learned Commissioner of Income (Appeal) erred om treating an amount income of Rs. 74,05,599/- under the head 'income from Business or Profession' instead of ' income from Short Term Capital Gains' disclosed by the appellant and while doing so he amongst others failed to appreciate that:- (a) The income arising on transfer of the capital assets held by the appellant by way of shares was on account of the investments ....
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....of the Ld CIT(A) submitted that there is no infirmity in the order of the Ld. CIT(A) since each assessment proceeding is a separate and independent, the Ld. CIT(A) has rightly confirmed the action of the AO in the light of the facts of the case. However, the Ld. DR did not point out any material change of facts in the present case. 5. We have heard the rival submissions and perused the material on record including the decision of the coordinate Bench rendered in assessee's appeal ITA No. 2285/Mum/2010, relied upon by the assessee. We notice that the coordinate Bench has dealt with the identical question in assessee's own case for the assessment year 2006-07 and vide order dated21.08.2013, the Tribunal has decided the identical issue in favour of the assessee holding as under:- "7. After considering the order of AO, CIT(A) and the submission of the assessee, we find that the assessee deserves to succeed on the issue involved. It is seen that the assessee has shown all the purchases under the investment portfolio. It is further seen that the long term capital gain shown by the assessee has been accepted by the AO himself. Under the provision of law, it is clearly provided....
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....We have also gone through the case law as has been cited before us. We find that in the case of CIT (Central), Calcutta vs Associated Industrial Development Company (P) Ltd. (82-ITR-586), the Hon‟ble Supreme Court has held as under: "Whether a particular ho/ding of shares is by way of in vestment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and he should, in normal circumstances, be in a position to produce evidence from his records as to whether he has. maintained any distinct/on between those shares which are his stock-in-trade and those which are held by way of in vestment." 12.1 In the case of CIT, Bombay vs H Holck Larsen (160-ITR-67), the order to determine whether one was a dealer in shares or an investor, the question was not whether the transaction of buying and selling the shares lacks the element of trading, but whether the later stages of the whole operation show that the first step - the purchase of the shares - was no ken as, or in the course of a trading transaction. The totality of all the facts will have to be borne in mind and the correct legal principles applied to these....
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....uly been shown by the assessee as investment in his balance sheet in the earlier year as well as during the year. In the earlier year also, the assessee derived the income on the sale of the shares, which has been returned by the assessee as capital gain and revenue has duly accepted the same. The assessee was not holding the shares of the units as a stock in trade. This fact is also not denied by the revenue. The period of holding itself has been treated by the legislature to be a relevant consideration for determining whether the capital gain derived is a long term capital gain or a short term capital gain. There is no provision under the Income-tax Act which has provided that in case the assessee is holding the shares for a lesser period than the one prescribed, it will be regarded to be the business income. Dividing the capital gain into two parts i.e. the short term gain or the long term gain itself prove that the period of the holding cannot be the criteria for determining whether the profit derived by the assessee is a long term capital gain or short term capital gain. 16. The CIT(A), we noted in this case while allowing the appeal of the assessee ....
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....on the basis o period of holding and on that basis, he took the view that the shares held for a short period or for a number of days would not be capital gain. In our opinion, no interference is called for in the order of the CIT(A). The CIT(A) has rightly taken the view that the decision of this Tribunal in ITA No.616/2008 in the case of ACIT Vs. Dineshbhai C. Patel (HUF) is clearly applicable in the case of the assessee. The decision of the coordinate bench which has been approved by the Hon‟ble jurisdictional High Court is binding on us. We cannot take a different view. We noted that the Nagpur Bench of this Tribunal in the case of Dineshbhai C. Patel "I (supra) has followed the decision of Gopal Purohit Vs. "JCIT (supra), that decision has ,also been approved by the Hon‟ble jurisdictional High Court and SLP against that decision has been dismissed by the Supreme Court We accordingly, confirm the order of the CIT(A) and dismiss both the appeals." 10. Similar facts are involved for the assessment year 2007-08, the year under consideration. Therefore, we see no reason to interfere in the finding of the learned CIT(A), who allowed the issue in favour of the ass....
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....the disallowance as per the provisions of the Act and the Rules framed there under, the impugned order does not suffer from any infirmity to interfere with. 10. We have perused the material on record including the cases relied upon by the authorities below and the case relied upon by the Ld. counsel for the assessee. We notice that the Ld. CIT (A) has confirmed the disallowance amounting to Rs. 9,74,375/- computed by the AO against the exempt income of Rs. 4,21,042/-, which is contrary to the ratio laid down by the Hon'ble Delhi High Court in the case of Joint Investments, as the disallowance confirmed by the Ld. CIT (A) is more than the exempt income earned by the assessee. The Hon'ble Delhi High Court in the case of Joint Investments vs. CIT, (2015) 59 taxmann.com 295, has held that section 14A and Rule 8D cannot be interpreted to mean that the entire tax exempt income can be disallowed. The observations of the Hon'ble Court read as under:- "9. In the present case, the AO has not firstly disclosed why the appellant/assessee's claim for attributing Rs. 2,97,440 as a disallowance under s. 14A had to be rejected. Taikisha Engg. India Ltd. (supra) says that the jurisd....