9911796707
TMI Blog2016 (7) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple of consistency will definitely apply and on that basis the claim of the Assessee should be held to be proper. - Decided against revenue Denial of the claim of the assessee for deduction u/s 80HHC - Held that:- The prayer of the learned counsel for the assessee that the decision on this issue was rendered by the Hon’ble Supreme Court in the case of Topman Exports (2012 (2) TMI 100 - SUPREME COURT OF INDIA ) which was after passing the of the impugned order of the CIT(A) and therefore the issue should be directed to examined by the AO in the light of the decision rendered above is acceptable. Accordingly the issue is remanded to the AO for fresh consideration in the light of the decision cited above. Disallowance u/s 14A - Held that:- The Hon’ble Calcutta High Court in the case of CIT Vs. M/S.R.R.Sen & Brothers Pvt.Ltd. [2013 (7) TMI 260 - Calcutta High Court] held that computation of 1% of exempt income as disallowance u/s.14A of the Act was proper. In view of the aforesaid decisions, we are of the view that the request made by the learned counsel is acceptable. The disallowance u/s.14A is accordingly directed to be restricted to 1% of the exempt income. - I.T.A No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down. AO was of the view that if guidelines laid down in the aforesaid circular in the light of the transactions carried out by the assessee are considered then it would be a case where income from purchase and sale of shares/units had to be regarded as income from business. The AO drew the following conclusions in this regard : (a) the assessee is dealing in shares and units throughout the year. (b) the volume of transactions is quite substantial (c) the scale of activity is vast covering a wide range of units and scripts. (d) the typical holding period for the majority of the shares and units varies from as little as a few months to just over a year. 5. Accordingly the AO determined the income from business as follows :- Consequently, the profit on sale of investments in shares and units is being computed under the head Income from business as under : From the audited accounts of the assessee, it is seen that the assessee has shown investments of ₹ 3,99,76,903/- and ₹ 3,69,34,515/- (stated at cost ) as on 31.03.2004 and 31.03.2003 respectively as detailed under : 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as investments. The assessee specifically pointed out that the guidelines laid down in the circular clearly specify that no single criterion listed in the said instruction was decisive and the total effect of all the criteria should be considered. The assessee specifically pointed out that units of mutual funds are generally redeemed and they are listed and sold in the market. Such redemption cannot be treated as any systematic activity in the nature of business. The assessee again reiterated its stand that identical income had been accepted in the past by the revenue as income under the head capital gain. CIT(A) on consideration of the aforesaid grounds held that the income in question has to be assessed under the head capital gain. The following were the relevant observations of the CIT(A) :- Before me the appellant filed copies of its audited final accounts for the relevant year and for earlier years, i.e., 2001-02, 2002-03, 2003-04 2004-05 and other documents. From the perusal of these evidences it is observed that the shares/units of mutual funds purchased by the assessee have been classified as 'Investment' in its books of accounts and the assessee has car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to consider the profit resulting from such Transactions under the head capital gains and quantify the income' as per law. These grounds are, therefore, allowed for statistical purposes. 7. Aggrieved by the order CIT(A) revenue has preferred the present appeal before the Tribunal. 8. The learned DR relied on the order of the AO. The learned counsel for the Assessee relied on the order of the CIT(A) and the decision of the Hon ble Bombay High Court in the case of CIT Vs. Gopal Purohit 228 CTR 582 (Bom). 9. We have considered the rival submissions. The issue to be decided is as to whether the STCG on transaction of purchase and sale of units of mutual funds and shares undertaken by the assessee during the previous year is to be assessed under the head income from business as claimed by the revenue or income under the head capital gain as contended by the assessee. Before we deal with the facts of the case of the assessee, we will briefly narrate the principles applicable in deciding the above issue as laid down in several judicial pronouncements :- (a) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments cannot be treated as giving raise to income from business. 11. Keeping in mind, the above broad principles, we shall now examine the case of the assessee. The assessee during the previous year had entered into transactions of purchase and sale of units of mutual funds of 42 different mutual fund schemes. There were 8 transactions of purchase and 7 transactions of sale of shares. The shares purchased and sold were that of listed companies. It cannot also be said that the volume and frequency of transactions was high so as to draw an inference that the Assessee was engaged in business. The Hon ble ITAT Mumbai Bench in the case of Janak S.Rangwala Vs. ACIT 11 SOT 627 (mum) has held that magnitude of the transaction does not alter the nature of the transaction. The total income declared by the Assessee in the return of income for the present AY is a sum of ₹ 41,03,490 comprising of income under the head Income from Business of ₹ 15,31,885/-. As we have already seen the Assessee s main business is export of iron and steel items and income from the said activity has been declared under the head income from business. 12. It is not in dispute that the Assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decision of the Hon ble Bombay High Court is clearly applicable in this case. As we have already seen that the AO in AY 03-04 accepted similar income as capital gain. It is not disputed by the revenue that the facts and circumstances in the AY 03-04 04-05 are identical. Though the rule of res judicata is not applicable but the principle of consistency will definitely apply and on that basis the claim of the Assessee should be held to be proper. 15. For the reasons given above, we confirm the order of the CIT(A) and dismiss the appeal by the revenue. 16. In the result, appeal by the revenue is dismissed. C.O.No.92/Kol/2010: 17. Grounds raised in the Cross Objection are as follows :- 1. That on the facts and in the circumstances of the case, Ld. CIT (Appeals) is wrong and unjustified in confirming the action of the Assessing Officer who denied deduction U/s. 80HHC of LT. Act, 1961 for ₹ 4,54,165/-. 2. That on the facts and in the circumstances of the case, Ld. CIT (Appeals) is wrong in directing disallowance U Is. 14A in accordance with Rule 8D of IT. Rules. 3. That the respondent craves leave to add, alter, adduce or amend any ground or gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
