2015 (10) TMI 1062 - AT - Income Tax

Income arising on the purchase and sale of shares - business income or capital income - Held that - We observe parity of facts, with the assessee dealing in shares on futures and options basis as well as by way of share trading. The matter has been discussed at length by both authorities below for the current year, as also stands duly considered by the Tribunal in his own case for the preceding year, referring to the decisions of CIT v. Madan Gopal Radhey Lal 1968 (9) TMI 14 - SUPREME Court as well as the Circular No. 4 of 2007 dated June 15, 2007 by the Central Board of Direct Taxesto held sale proceeds of bonus shares which had been issued in respect of shares which formed part of the assessees stock-in-trade of the share dealing business are liable to inclusion in the assessees total incomes for the respective years as profits of the share dealing business. Under the circumstances, we find no reason not to adopt the findings by the Tribunal, as well as inferences by the authorities below in the matter. - Decided against the assessee Disallowance under section 14A read with rule 8D - Held that - In principle a disallowance under section 14A read with rule 8D would arise, of course having regard to the facts of the case, and towards which the provisions of section 14A(2) and 14A(3), though procedural in nature, would have to be observed, and towards which we may advert to the decision in the case of AFL P. Ltd. v. Asst. CIT 2013 (8) TMI 597 - ITAT MUMBAI . Thus we only consider if fit and proper to restore the matter back to the file of the Assessing Officer (A.O.) to allow opportunity to the assessee to present its case before him - Decided in favour of assessee for statistical purposes. Non-consideration of claim for depreciation under section 32(1)(ii), i.e., in respect of tenancy rights of a rented business premises - Held that - Non-raising of a claim by the assessee per its return of income does not constrain an appellate authority from admitting the same where the circumstances justify it, in the sense that there is nothing mala fide in the said raising of the claim before it. No such case having been made out by the Revenue in the instant case, we, accordingly, admitting the assessee s claim, restore the matter back to the file of the Assessing Officer for his adjudication in accordance with law after allowing the assessee a reasonable opportunity of being heard. We may further clarify that we are in doing so not in any manner adverting to the merits of the said claim, but only enabling a decision thereon. We decide accordingly.- Decided in favour of assessee for statistical purposes. Non-grant of rebate under section 88E on account of security transaction tax (STT) paid - Held that - The language of the section 88E is clear and unambiguous. However, we do not observe any dispute in the matter inasmuch as the Assessing Officer has allowed the assessee s claim in principle, which becomes all the more maintainable in view of the Revenue s stand of the assessee s income being assessable as business income having been confirmed by us (refer para 3 of this order). The assessee s grievance, which though cannot be discounted, is sans any material on record. The same having also been raised before the first appellate authority, which has not disposed of the same, we only consider it fit and proper to restore the matter back to his file to decide the issue of non- grant of the rebate under section 88E, where so, consistent with the law and the facts of the case after hearing both sides. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Treatment of income from purchase and sale of shares as business income or capital gains.
2. Disallowance under section 14A read with rule 8D of the Income-tax Rules, 1962.
3. Non-consideration of claim for depreciation under section 32(1)(ii) for tenancy rights.
4. Claim for non-grant of rebate under section 88E for security transaction tax paid.

Issue 1:
The first issue revolves around the treatment of income from shares as either business income or capital gains. The Tribunal upheld the order treating the income as business income based on the assessee's trading activities and previous decisions. The Tribunal referred to relevant case law and Circular No. 4 of 2007 by the Central Board of Direct Taxes to support its decision. The Tribunal confirmed the impugned order on this ground.

Issue 2:
The second issue concerns the disallowance under section 14A read with rule 8D of the Income-tax Rules, 1962. The Tribunal acknowledged the conflicting decisions on this matter but referred to specific cases to establish a basis for disallowance. However, considering the facts and circumstances, the Tribunal decided to restore the matter back to the Assessing Officer for a proper decision in accordance with law and relevant precedents.

Issue 3:
The third issue involves the non-consideration of a claim for depreciation under section 32(1)(ii) for tenancy rights. The Tribunal allowed the claim, citing a decision by the jurisdictional High Court that the Tribunal has the authority to entertain a claim for deduction even if not raised in the original return of income. The matter was restored to the Assessing Officer for further adjudication.

Issue 4:
The final issue pertains to the claim for non-grant of rebate under section 88E for security transaction tax paid. The Tribunal noted discrepancies in the assessment order regarding the rebate but ultimately decided to restore the matter back to the Assessing Officer for a proper decision after considering all relevant aspects. The Tribunal partially allowed the assessee's appeal in this regard.

In conclusion, the Tribunal's judgment addressed various complex issues related to income treatment, disallowances, depreciation claims, and rebate grants under different sections of the Income-tax Act. The decision-making process involved a thorough analysis of legal precedents, factual considerations, and procedural requirements to ensure a fair and just outcome for the parties involved.