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2014 (12) TMI 1196 - ITAT DELHIProfits and gains on purchase and sale of shares - assessed under the head ‘capital gains’ or ‘profits and gains of business’ - Held that:- we have to necessarily hold that the gains derived from the purchase and sale of shares by the assessee is rightly offered to tax under the head capital gains and not business income. The facts show that out of the total short term capital gain of ₹ 1,75,51,496/- the undisputed fact is that an amount of ₹ 1,39,41,555/- was earned on shares which were held by the assessee for more than 30 days. In fact short term capital gain of ₹ 83,56,196/- was earned on shares which were held for more than 4 months. Similarly the assessee earned capital gains of more than ₹ 40 lakhs for shares which were held for more than 5 months. This is not a characteristic of a trader. There are no borrowed funds. The assessee has always classified the purchases as investments in its books of accounts. In the earlier year the assessee has disclosed capital gains and the AO in the order passed u/s 143(3) accepted the same. On this factual matrix we agree with the contentions of the Ld.Counsel for the assessee that the gains in question cannot be assessed under the head income from business.’ We hold that the entire profits from the purchase and sale of shares have to be assessed under the head ‘capital gains’. - Decided in favour of assessee Disallowance u/s 14A - Held that:- t the entire or whole expenditure has been disallowed as if there was no expenditure incurred by the respondent assessee for conducting business. The CIT(A) has positively held that the business was set up and had commenced. The said finding is accepted. The respondent-assessee, therefore, had to incur expenditure for the business in the form of investment in shares of cement companies and to further expand and consolidate their business. Expenditure had to be also incurred to protect the investment made. The genuineness of the said expenditure and the fact that it was incurred for business activities was not doubted by the AO and has also not been doubted by the CIT(A). Thus we set aside this issue to the file of AO for fresh adjudication in accordance with law as the facts are not clearly coming out in the assessment order as to whether the assessee has earned tax free income during the year - Decided in favour of assessee for statistical purposes.
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