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TMI Blog2016 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... essable under the head "Capital Gains". 2. The Learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the assessee had carried out business of trading in shares/mutual funds in a systematic and organized manner by utilizing the services of Portfolio Management Service Providers to act as an agent. 3. The Learned Commissioner of Income-tax (Appeals) erred in not appreciating that most of the transactions effected were of short term nature, clearly indicative of the motive of the assessee to earn profits by resorting to frequent trading rather than to earn dividend by holding shares for long durations. 4. The Learned Commissioner of Income-tax (Appeals) erred in not appreciating that the assessee had carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aging PMS was an investment activity and the resultant gain is assessable under the head capital gains. 5. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 6. After hearing both the sides, we find the issue stands decided in favour of the assessee and against the revenue by the decision of the Tribunal in assessee's own case for A.Y.2008-09 which has been followed by the CIT(A). We find following the above decision the Tribunal in the case of Smt. Sadhana Ashok Kumar Patni and other connected appeals vide ITA No.1835 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014 for A.Y. 2009-10 has held that activity of transaction in shares/mutual funds by engaging PMS was an investment activity and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in assessee's own case for A.Y.2008-09 deleted the disallowance by observing as under : "4.2 The A.O. has applied the Rule 8D to arrive at the disallowance of Rs. 10,48,138/-. However, disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has incurred or claimed, disallowance u/s.14A cannot stand. The expenditure on PMS has not been claimed by the assessee and, therefore, there does not remain any other expenditure other than this expenditure which is otherwise liable to be disallowed under Rule 8D of the I.T. Rules. 4.3 This has also been elaborately discussed in the appellate order passed by the undersigned vide order dated 06-09-2011 and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 5,57,396/- being 0.5% of the average investment of the funds deployed as expenditure incurred for earning tax free dividend income. In appeal the learned CIT(A) deleted such disallowance on the ground that disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has been incurred or claimed disallowance u/s.14A cannot stand. He observed that the expenditure on PMS has not been claimed by the assessee and therefore there does not remain any other expenditure other than this expenditure which otherwise is liable to be disallowed under Rule8D of the Income Tax Rules. He accordingly directed the AO to delete the disallowance made at Rs. 5,57,396/-. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f closure u/s.176(3) of the Act and also on wrongly relying upon the decision of Bright Star Investment Pvt. Ltd.(2009) 17 DTR 399 (Mum Trib.)." 14. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has closed its share trading business in F.Y. 2005-06 and all the stocks were transferred at cost to the investment account. The stand of the assessee was not accepted by the AO in the order passed u/s.143(3) during A.Y. 2006- 07 by holding that merely showing the stock of shares as on 31-03- 2006 as investment may not be treated as closure of business. Since the shares have remained in the same Demat account and merely by passing the book entries the nature of scrips cannot indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 176(3) of the I.T. Act, 1961. Considering the facts and circumstances of the case and the legal position enunciated by the above referred to decision of the Mumbai Tribunal the appellant's claim is held to be tenable in law. Accordingly, ground No.4(a) & (b) are held to be allowed. Since ground No.4(a) & (b) are allowed, there is no need to adjudicate on ground No.4(c) which is on a without prejudice basis." 5.2 In view of the above, as the facts and the legal position has not undergone any change in the year under consideration, the ground being the same as in A.Yrs. 2007-08 and 2008-09, following the decision taken by my predecessor which was also followed by me while adjudicating the matter in appellant's case for A.Y. 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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