9911796707
TMI Blog2014 (8) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A r.w. Rule 8D by the AO – the order of the CIT(A) is set aside. Assessee’s nature of business as claimed is trading in shares - Whatever little details are available from the assessment order show that the assessee is purchasing and selling shares of a Private Limited Company and claiming it to be its business activity – it could not be understood as to how can a person trade in shares of a Private Limited Company - This aspect has not even considered by the AO during the course of the assessment proceedings nor the CIT(A) cared to apply his mind on the nature of activity of the assessee before deleting the addition of Rs. One crore - thus, the matter is remitted back to the AO for verification of nature of business activity – Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for scrutiny assessment, statutory notices were accordingly issued and served upon the assessee. 3.1. While scrutinizing the return, the Assessing Officer noticed that the assessee has shown dividend income of ₹ 1,49,800/- which was claimed to be exempt from tax. Demat charges found to be debited ₹ 36,300/-. The assessee was asked to give the working u/s. 14A r.w. Rule 8D of the Act. The assessee replied that no expenditure had been incurred to earn income not included in the total income. Hence, no disallowance is called for u/s. 14A of the Act. 3.2. The AO did not accept this submission of the assessee and went on to compute the disallowance by invoking Rule 8D. The disallowance so computed was at ₹ 2,24,086/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business expediency. The details of the shares purchased and sold are exhibited at pages 5 to 7 of the assessment order. The AO observed that the assessee has purchased 8,34,561 No. of shares and sold 13,04,761 No. of shares during the year. The value involved in purchases and sales is at ₹ 8.70 crores and 9.49 crores respectively. The AO further observed that the assessee could not produce the copies of balance sheet of the said companies at the time of sale as well as at the time of purchase of the shares therefore it was not possible to verify whether the shares were purchased and sold on the basis of some definite valuation and hence, the purchase value and sale value as shown by the assessee cannot be relied upon. In the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he findings of the Ld. CIT(A). 8. We have carefully perused the orders of the lower authorities. No details of shares held as investments and shares held as stock-in-trade has been furnished before the lower authorities nor any such details furnished before us. A perusal of the statement of purchase and sale of shares during the year under consideration which is exhibited at page 5 to 7 of the assessment order shows that the assessee has been purchasing and selling shares of Private Limited Companies. In our understanding of the Companies law, a person can only invest in shares of a Private Limited Co. and cannot trade in the shares of a Private Limited Company. As no details have been brought on record in respect of shares held as stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are: Share holders cannot sell or transfer their shares without offering them first to other share holders for purchase. Further, share holders cannot offer the shares to the general public over a Stock exchange and the No. of share holders cannot exceed a fixed figure namely 50. 10. The assessee s nature of business as claimed is trading in shares. Whatever little details which are available from the assessment order show that the assessee is purchasing and selling shares of a Private Limited Company and claiming it to be its business activity. We fail to understand how can a person trade in shares of a Private Limited Company. This aspect has not even considered by the AO during the course of the assessment proceedings nor the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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