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TMI Blog2016 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... res, consequently, in the instant year also such a finding is inevitable. The Tribunal in its order has noticed that in assessment year 2004-05 the department has itself treated the assessee as an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the case, the action of the income-tax authorities in assessing the gain on sale and purchase of shares and mutual funds as business income is untenable - Decided in favour of assessee Disallowance u/s 14A - Held that:- Quite clearly, the provisions of Rule 8D of the Rules are not applicable for the assessment year under consideration following the ratio of the judgment of Hon'ble Bombay High Court in the case of Godrej 6,24,577/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (A) erred in confirming the disallowance of ₹ 6,24,577/ - under Section 14A of the Income Tax Act, 1961 alleging that the said expenses debited to profit and loss account are pertaining to exempt income. 4. The Ld. Commissioner of Income Tax (A) erred in confirming the charging interest under section 234B & 234C of Income Tax Act, 1961. 5. The Ld. Commissioner of Income Tax (A) erred in invoking the provisions of Section 271(1)(c) of the Income Tax Act, 1961. 3. In so far as the Grounds of appeal No.1 & 2 are concerned, they relate to the assessability of the profit earned by the assessee on sale and purchase of shares and securities. Depending on the period of holding, assessee had declared the gain on sale of shares and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute is mainly in respect of taxing the short term capital gain shown by the assessee between 1.10.2004 to 31.3.2005 of ₹ 6,35,609.19 as short term capital gain prior to 1.10.2004, was assessable @ 30%, the same rate at which business income was to be assessed. On perusal of balance sheet at page 4 of PB as well as profit and loss account placed at page 5 of PB, we observe that assessee has specifically stated investment in shares at ₹ 55,94,573 and has shown in the current assets the stock in trade of Mutual Fund. However, assessee has also stated specifically in the profit and loss account, details of long term capital gain, short term capital gain and speculative dealings in shares, besides showing interest and dividend in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 'investor', it cannot take a different view in subsequent year. In the case before us, it also observed that in assessment year 2004-05, assessee has shown short term capital gain as well as long term capital gain and department while making the assessment u/s.143(3) of the Act vide order dated 11.8.2006, copy placed on record, accepted the capital gain shown by the assessee. In the case of Gopal Purohit vs JCIT, 29 SOT 117(Mum), ITAT has held that most crucial source of gathering intention of assessee as regards nature of transaction is the accounts maintained by the assessee. It is further held that delivery based transactions should be treated as investment transactions. The said finding of 7 the Tribunal has been upheld by Hon'ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has been held by the Tribunal to be an investor in shares, consequently, in the instant year also such a finding is inevitable. The Tribunal in its order dated 12/06/2013 (supra) has noticed that in assessment year 2004-05 the department has itself treated the assessee as an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the case, the action of the income-tax authorities in assessing the gain on sale and purchase of shares and mutual funds as business income is untenable. We hold so. Thus, Grounds of appeal No.1 & 2 raised by the assessee stand allowed. 6. In Ground of appeal No.3, the issue relates to disallowance of ₹ 6,24,577/- by application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of M/s. Godrej & Boyce Mfg. Company Ltd.(supra), but contended that the disallowance under section 14A was required to be made in the absence of any suo-motu disallowance made by the assessee. 9. We have carefully considered the rival submissions. Quite clearly, the provisions of Rule 8D of the Rules are not applicable for the assessment year under consideration following the ratio of the judgment of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(supra). Therefore, the disallowance of ₹ 6,24,577/- worked out by the Assessing Officer is not appropriate. So however, it also emerges from the record that apart from asserting that no amount debited to the P&L Account pertains to the exempt income, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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