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TMI Blog2015 (7) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, CIT(A) has only examined increase in loans and advances and not compared it with investment in shares. As the authorities below have lacked in their investigation into the correct facts, we feel that this issue needs re-examination. In term of the above, we set aside this issue to the file of the AO for fresh examination of this issue in terms of the Explanation to section 73 of the Act, wherein the AO will first determine the principal business of the assessee. For this, the AO will find out the deployment of funds in shares and in other business. The AO will also find out the profit or loss from shares and also in other business. The AO will also find out the turnover of the assessee in all the business and then compare the same o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation to Sec. 73 of the Act. For this, revenue has raised following three grounds: 1. That on the facts and circumstances of the case and in law, whether the Ld. CIT(A) is justified in deleting the addition made by the A.O. to the tune of ₹ 1,05,10,702/- on account of ' speculation loss' and to treat the principal business of the assessee is granting of loan advances even though the deployment of fund invested in share trading business is higher than the business of granting of loans and advances? 2. That on the facts and circumstances of the case and in law, whether the Ld. CIT(A) is justified to treat the purchase sale of share as business income/loss instead of 'speculation profit/loss' though the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The income from trading in shares comes to 51.15% as against income from other than share trading at 48.55%. Similarly, in the present AY i.e. AY 2008-09, the investment in shares is to the extent of 14.51% as against the investment in other activities or other business at 85.49% of the total net worth. He narrated the facts relating to AY 2008-09, which reads as under: c) In the Asst. Year 2008-09 that is the Asst. Year under scrutiny it will be not out of the place to mention that the Total Net worth of the Company was ₹ 9,64,88,653/- out of the same investment in shares were ₹ 1,50,00,000/- and investments in other than shares were ₹ 8,24,88,653/- (out of which ₹ 8,07,74,436/- in Loans) which comes to 14.51% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er business income i.e. interest income etc. Aggrieved, assessee preferred appeal before CIT(A), who simply relying on the submissions of the assessee deleted the disallowance vide para 5.2(ii) and (vii) as under: 5.2(ii) As per the Ld. AR there was no purchase of shares in this year. Only the old stock was mostly disposed of and so far as the shares of M/s. Hospet Ispat Ltd. are concerned, the entire stock, brought forward from the earlier year, was fully sold off to increase the deployment of funds in making loans and advances on interest. Due to this reason the loans and advances has increased from ₹ 3,38,33,668/- (as on 31.03.2007) to ₹ 8,07,74,436/- (as on 31.03.2008.) (vii) In view of the above, I am of the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation to section 73 of the Act, wherein the AO will first determine the principal business of the assessee. For this, the AO will find out the deployment of funds in shares and in other business. The AO will also find out the profit or loss from shares and also in other business. The AO will also find out the turnover of the assessee in all the business and then compare the same on comparative basis. He has to give a finding qua the principal business of the assessee and then decide the issue. In term of the above, this issue of revenue's appeal is set aside to the file of AO for fresh examination. This issue of revenue's appeal is allowed for statistical purposes. 5. The next issue in this appeal of revenue is against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act read with Rule 8D of the Income Tax Rules, 1962, against Dividend Income ₹ 58,311/- only. Since I have already held that under the facts and circumstances of the case, the loss in share trading is a business loss, the disallowance of expenses to the extent of ₹ 2,03,570/- under sec. 14A of the Act is also not. Therefore, the addition by way of this disallowance is deleted. Aggrieved, now revenue is in appeal before us. 7. We find that the assessee has earned dividend income of ₹ 58,311/- and the same is exempt income inviting the provisions of section 14A of the Act read with Rule 8D of the Rules. We find from the assessment order that there is no satisfaction recorded for application of Rule 8D of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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