2013 (7) TMI 1064 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against CIT(A) order for A.Y. 2006-07, including short term and long term capital gain treatment, disallowance of V-SAT, Leaseline, and transaction charges u/s 40(a)(ia), and assessee's Cross Objection (C.O.) regarding disallowance u/s 14A and bad debt claim.

Short term and long term capital gain treatment: The Revenue challenged CIT(A)'s decision to allow short term and long term capital gain, arguing that the conversion of stock-in-trade into investment was not permitted. Tribunal upheld CIT(A)'s order based on previous rulings and accepted the conversion of stocks, dismissing Revenue's appeal.

Disallowance of V-SAT and Leaseline charges: Tribunal upheld CIT(A)'s decision to delete disallowance of V-SAT and Leaseline charges u/s 40(a)(ia) based on a High Court ruling that these charges do not constitute income. However, disallowance of transaction charges to stock exchange was sent back to AO for reassessment based on a subsequent High Court decision.

Assessee's Cross Objection (C.O.): Delay in filing C.O. was condoned. Disallowance u/s 14A was restored to AO for reevaluation based on High Court ruling on Rule 8D applicability. Bad debt claim of the assessee, a share broker, was allowed based on a Special Bench decision and subsequent High Court approval.

Conclusion: Revenue's appeal and assessee's C.O. were partly allowed, with various issues being decided in favor of both parties based on legal precedents and High Court rulings.