9911796707
TMI Blog2013 (10) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated on 12.12.1995. The company is in the business of development of Real Estates and in construction of Industrial galas. The return of income for the year under consideration was filed on 31.10.2007 declaring total income at Rs. 7,37,80,200/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. The Assessing Officer observed that the assessee has claimed income long term capital gains to the tune of Rs. 1,00,445/- and claimed the same as exempt u/s. 10(34) of the Act. The AO sought clarification from the assessee vide order sheet noting dt. 10.8.2009 asking the assessee to explain as to why income arising from short term capital gain and long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Counsel for the assessee argued that both the lower authorities have treated the capital gains from shares as business income only on the basis of the volume of transactions entered by the assessee, the frequency of transaction made and there being borrowed funds. It is the say of the Ld. Counsel that merely on the basis of these allegations, the nature of transaction cannot be changed from investment to business activity. The Ld. Counsel for the assessee further argued that during the year the assessee has transacted only 24 scrips . The assessee has shown the investment in the balance sheet under the head 'investment'. The Ld. Counsel for the assessee further submitted that the assessee has itself bifurcated the income in its profit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment" The CBDT has also mentioned in its circular that it is possible for a tax payer to have two portfolios i.e. an investment portfolio and trading portfolio. This view has also been fortified by the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs Gopal Purohit - 336 ITR 287. 9. The assessee had opening investment at Rs. 4,01,49,29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in shares, it has been held by the Tribunal, Delhi Bench in the case of Narendra Gehlaut Vs JCIT 21 Taxmann .com 82 that " it cannot constitute a factor as in none of the case laws or CBDT Circular it has been held that borrowings will not be allowed in investment transactions. The investment in capital assets can also be carried out by way of borrowed funds, there being no bar notified by the law, judicial pronouncement or CBDT circular." 9.2. Considering the entire facts in totality in the light of the judicial decision discussed here in above , we find that it has not been disputed that the assessee has shown shares as investment right from the date of purchase and that was shown as such in the balance sheet of the assessee which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO holding that there is no other parameter or yardstick, therefore, method prescribed under Rule 8D is correct even though the same is not applicable to the current year. 13. Aggrieved by this, assessee is before us. As the issue is well settled that applicability of Rule 8D is from A.Y. 2008-09, we therefore do not find any merit in the observations of the Ld. CIT(A). However, in the interest of justice and fair play, we restore this issue back to the files of the AO. The AO is directed to re-compute the disallowance, if any, u/s. 14A without invoking Rule 8D. Ground No. 3 is allowed for statistical purpose. 14. Ground No. 4 raised by the assessee is as under: "The Ld. CIT(A) has erred in fact and in law in not considering the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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