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TMI Blog2013 (10) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Pal Rao, JM And Shri N. K. Billaiya, AM,JJ. For the Appellant : Shri Vimal Punamiya For the Respondent : Shri O. P. Singh ORDER Per N. K. Billaiya, AM:- This appeal by the assessee is preferred against the order of the Ld. CIT(A)-20, Mumbai dt.24.11.2010 pertaining to A.Y. 2007-08. 2. The assessee has raised 4 substantive grounds of appeal. Ground No. 1 2 are interlinked and relate to the treatment of capital gains, short term and long term, as business income. 3. The assessee is a Private Limited company which was 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 31.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased as an investments but with the objective of selling them subsequently at a profit. The AO went on to treat the entire activity of purchase and sale of shares as business activity and profits there from was assessed as business income. 4. The assessee carried the matter before the Ld. CIT(A) and reiterated its stand that it is only an investor and not a trader. The Ld. CIT(A) rejected the submissions made by the assessee and confirmed the findings of the AO. 5. Aggrieved by this finding of the Ld. CIT(A), assessee is before us. 6. The Ld. 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of the profit and loss account of the assessee shows that the assessee has separately shown share trading profit, long term capital gains on shares and profit from business. In the balance sheet, the assessee has shown shares under the head 'investment'. These investment shares have been valued at cost . The Hon'ble Supreme Court in the case of CIT Associated Industrial Development Co Pvt. Ltd. 82 ITR 586, which decision has also been considered by the CBDT in its Circular No. 4/2007 dt. 15.6.2007, has observed that : "Whether a particular holding 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been considered as business income only. The fact that the law recognizes such volatility and has specifically provided a separate holding period in respect of such shares makes it very clear that gains on such shares having a holding period of less than 12 months and held as investment would be considered as short term capital gains only. Thus the assessee's claim cannot be negated on the basis of frequency of transaction as held in the case of Gopal Purohit (supra). 9.1. As regards the allegation that the borrowed funds had been applied for investment 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal Mumbai Bench in ITA No. 8057/M/03 in the case of Daga Capital Management and computed the disallowance u/s. 14A r.w. Rule 8D at Rs. 2,23,900/-. 12. The assessee carried the matter before the Ld. CIT(A) and submitted that applicability of Rule 8D has been held to be prospective from A.Y. 2008-09 by the decision of the Hon'ble Bombay High Court in the case of Godrej Boycee Manufacturing Co. Ltd. 328 ITR 81. The Ld. CIT(A) was convinced that Rule 8D is not applicable for the year under consideration. However, confirmed the disallowance made by 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. Aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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