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TMI Blog2015 (8) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of mutual funds, he held the assessee as investor and directed the Assessing Officer to treat the same as LTCG. We are unable to agree with the contention of the revenue that since the assessee is primarily an investment company, so the income earned should be treated as business income. Law has been now settled on the point through various judicial decisions that even a company having business in trading in shares or securities can also maintain a separate investment portfolio. We therefore do not find any reason to interfere with the well reason order of the CIT(A) on this issue. - Decided against revenue. Loss in sale and purchase transaction of shares - business loss OR Short Term Capital loss - Held that:- The assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a speaking order, then he will be at liberty to resort to the provisions of Rule 8D - Decided in favour of assessee for statistical purposes. - ITA No.8699/Mum/2011, ITA No.8870/Mum/2011 - - - Dated:- 14-1-2015 - R C Sharma And Sanjay Garg JJ . For the Appellant : Shri Asghar Zain For the Respondent : Shri Prakash Jotwani ORDER Per: Sanjay Garg: The above titled cross appeals one by the revenue and the other by the assessee directed against the order dated 28.10.2011 of the Commissioner of Income Tax (Appeals) [ here in after referred to as CIT(A)] are taken together for disposal by this common order. First we take up revenue's appeal in ITA No. 8699/Mum/2011 2. The revenue through its grounds of appeal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the CIT(A) on this issue. The appeal of the revenue, thus having no merit is therefore dismissed. 3. Now we take up the assessee's appeal in ITA No. 8870/Mum/2011 4. The assessee vide ground No.1 has agitated the action of the lower authorities in treating the loss of ₹ 16,09,558/- in sale and purchase transaction of shares as business loss as against the claim of Short Term Capital loss. 5. The assessee during the year purchased shares of 19 listed companies aggregating to ₹ 5,24,53,139/- and sold shares of just one scrip i.e. Kotak Mahindra Bank Ltd. at a loss. The scrips of other listed companies had not been sold and were shown under the head investments in the balance sheet. The assessee company had appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the assessee has given the plausible explanation, cannot be held to be justified. This issue is accordingly decided in favour of the assessee and it is directed that the said loss to be treated as short term capital loss. 8. The next issue is relating to disallowance u/s. 14A. 9. The AO noted that the assessee had received dividend income of ₹ 50,26,984/- during the year under consideration which was claimed as exempt. The AO calculated the disallowance u/s. 14A by way of applying Rule 8D at ₹ 37,18,573/-. 10. Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A). 11. The Ld. CIT(A) upheld the order of the AO on this issue. 12. The Ld. AR of the assessee before us has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and recording of reasons by the Assessing Officer in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee. 12. However, a perusal of the assessment order reveals that the AO has not followed the guidelines of objective satisfaction as laid down by the Hon'ble Bombay high Court in the case of Godrej Boyce (supra) while making the disallowance. He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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