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TMI Blog2016 (9) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... d any ground to interfere with this order, therefore we uphold this issue in favour of the assessee and against the revenue. Accordingly, this issue is decided in favour of the assessee and against the revenue. - I.T.A. No.5235/M/2014, I.T.A. No.5223/M/2014 - - - Dated:- 3-3-2016 - SHRI G.S.PANNU, AM AND SHRI AMARJIT SINGH, JM For The Assessee by: Shri Dilip V. Lakhani For The Department by: Shri Bhanwar Singh Ratnoo The assessee as well as revenue has filed an appeal against the order dated 26.05.2014 passed by the Commissioner of Income Tax (Appeals)- 30, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the assessment year 2009-10. 2. The assessee has raised the following grounds:- 1. On the facts and in the circumstances of the case the Learned Commr. Of Income Tax (A) has erred in confirming the addition made by the Learned Assessing Officer regarding the disallowance u/s.14A amounting to ₹ 1,35,25,433/-. The conclusion reached by the Learned Commr. Of Income Tax (Appeals) that disallowance be restricted to ₹ 1,35,25,433/- is erroneous. The appellant prays that no addition be made u/s.14A and the addition confirmed by the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It s main business activities is the investment in shares and securities, dealing in shares, debentures and other securities. The income of the assessee was assessed to the tune of Rs.(-)3,20,61,655/-, thereafter, the assessee filed an appeal before the learned CIT(A) and the learned CIT(A) confirmed the expenditure incurred to earn the exempt income u/s.14A of the Act to the tune of ₹ 1,35,25,433/- and also confirmed the disallowance made by the Assessing Officer to the tune of ₹ 52,31,313/- on account of diminution in the value of the shares and also confirmed the interest u/s.234B of the Act to the tune of ₹ 14,12,268/- and ₹ 64,299/- u/s.234C of the Act, therefore the present appeal has been filed before us. Whereas the revenue has challenged the direction given by the CIT(A) to the Assessing Officer to compute the Long Term Capital Loss on account of sale/transfer of share of ILFS during year by determining cost of acquisition u/s.45(2A) of the Act read with Circular No.768 dated 24.06.1998 of the CBDT instead of average cost method adopted by the Assessing Officer whereby the Assessing Officer disallowed the Long Term Capital Loss to the tune of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to assess the income of the assessee in view of the observations made above. Accordingly this issue is decided in favour of the assessee against the revenue. ISSUE NO.2:- 7. Under this issue the assessee challenged the confirmation of disallowance made by the Assessing Officer regarding the diminution of value of shares amounting to ₹ 52,31,313/-. The contention of the appellant is that the investment in which the above diminution have been treated by the Trust as stock in trade and as per the accounting standard it has been valued at market value or cost, whichever is lower. Assessing Officer was of the view that as the stock in trade was not sold therefore notional profit or loss could not be taken for assessment under the provision of the Act. The contention of the assessee is that the assessee has treated shares of listed companies as stock in trade and the regular profit and loss on the sale of the shares if any has been offered to tax as business income and as the market value as on 31.03.2009 for such shares is less than its cost sub diminution in the value of the shares is to be treated as business loss. The Assessing Officer relied upon the case India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of income-tax as stated earlier, that is to be taxed is the real income which is to be deducted on the basis of the accounting system regularly maintained by the assessee and that was done by the assessee in the present case. 8. In view of the said observation, we allowed the diminution in the value of the share amounting to ₹ 52,31,313/-, therefore, we set aside the order passed by the CIT(A) on this issue. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.3:- 9. According to issue no.3, the assessee has challenged the interest u/s.234B to the tune of ₹ 14,12,268/- and ₹ 64,299/- u/s.234C. Since the issue no.2 has also been decided in favour of the assessee and against the revenue, therefore the consequential result is liable to be followed. Accordingly, we set aside the finding of the learned CIT(A) on this issue. I.T.A. No.5223/M/2014 (Revenue s Appeal) ISSUE NO.1:- 10. The revenue has challenged the direction given by the CIT(A) on this issue to the Assessing Officer to compute the Long Term Capital Loss on account of IL FS during the year by determining cost of acquisition u/s.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bted the computation of capital gain on FIFO basis. He has merely applied the above two referred decisions without discussing as to how se.45(2A) is not applicable in the above case and how the two decisions without discussing as to how sec.45(2A) is not applicable in the above case and how the two decisions over-ride specific provisions of the Act. I further find that the decision in the case of Bombay High Court in the case of Dahiben Umedbhai (Supra) and Emerald Co. (Supra) were rendered prior to the insertion of provision of sub-section (2A) u/s. 45 of the Act. In view of the same, the above two conditions are not applicable. I therefore, direct the AO to compute the Long Term Capital Gain / Loss on account of sale/transfer for shares of IL FS during the year by taking into account the provisions of sec.45(2A) of the Act and Circular No.768 dated 24.06.1998. Further, while computing the income / loss under the above head, he should take into account the correct figures of opening stock as also for the purpose of calculation of cost of the shares. 4.1 The above grounds of appeal taken by the appellant, thus, stand allowed. 11. At the time of argument no distinguishabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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