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2016 (8) TMI 365 - ITAT MUMBAIIncome earned from the sale and purchase of shares - Assessed as Short term capital gains or as business income - Held that:- Lending and borrowing being business of assessee and the assessee having surplus borrowed funds having invested in the share transaction would not change the status of the assessee from an investor to a trader in relation to share transactions carried out by it. There is not repetitive transaction and even the assessee from the income earned from the shares has invested the same in property. The major part of the funds of the assessee being invested either in mutual fund or in the property; over all activity of the assessee suggest that the funds have been used by the assessee for investment purposes only. We do not found any justification on the part of the lower authorities in treating the assessee as a trader in relation to the share transaction when in the earlier as well as in subsequent year, the assessee has been treated as investor in the shares. We accordingly direct the AO to treat the income of the assessee from share transaction as capital gains and not as business income of the assessee. Disallowance made u/s 14A r.w. Rule 8D - disallowance of expenditure incurred for the purpose of earning the tax exempt income - Held that:- The Hon’ble Delhi High Court in the case of “Chem Investments vs. CIT” (2015 (9) TMI 238 - DELHI HIGH COURT) has held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year and that the expression ‘does not form part of the total income’, in section 14A of the Act envisages that there should be an actual receipt of income which is not included in the total income during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income Disallowance u/s 14A is restricted to the dividend income earned of ₹ 46,260/- only.- Decided partly in favour of assessee
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