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TMI Blog2017 (11) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... y of HUF. The assessee did not utilize the borrowed funds for making investment as the entire investment is made out of own capital of the assessee. Thus Tribunal has decided exactly on identical facts in assessee’s own case for AY 2008-09 treated the profit arising out of sale and purchase of shares as capital gains. - Decided against revenue Disallowance of interest expenditure - disallowance as the share transaction is treated as business activity - Held that:- We remand this matter back to the file of the AO to examine whether the assessee has earned FDR income which has nexus with the expenditure of interest and also consider the order of Tribunal of Agra Bench in the case of Raj Kumari Agarwal (2014 (7) TMI 867 - ITAT AGRA). Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness income treated by the AD without appre'1atthThe fact that the assesse is dealing in large volume of shares, most of the shares are bought and said within short period, while some are not sold due to market conditions and their holding with the assesse remains beyond few days, it will not change the nature of transactions and the assesse is very well engaged in the business of share trading. which denote that the motive of the assesse is to carry on business in shares to book profit rather than investment in shares. 3. Briefly stated facts are that the assessee declared a total income of ₹ 2,75,06,690/- in his return of income, which includes short term capital gain of ₹ 2,73,66,432/- and long term capital loss is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.to 3 years 1,500 108,132 2.12 17,377 3 to 4 years - - - - More than 4 years - - - - 39,006 5,108,279 100 (1,157,949) 4. The AO during the course of assessment proceedings noticed that the assessee has earned a small dividend amount of ₹ 60,147/- of 10.26 lakhs shares, which were purchase for a sum of ₹ 17.23 crores. According to AO, dividend earning is only by chance and shares are hold by assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from business because the very fact that in the case of shares, the statute categorized the holding of shares upto one year as short term capital asset and anything more than one year as long term capital asset, itself mandates the need to carefully look into the facts and circumstances of each case to arrive at the correct categorization of the holding pattern to result into either business or capital gains. As can be seen from the entirety of the facts in the present case, the appellant, while certainly making profits from his holdings, cannot be said to be indulged in the business of share trading. Profit motive per se cannot be enough to hold that any short term holding would result in income being classified as business income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08. The assessee is an old person and is regularly making investment in the shares and the number of scrips dealt is also not high. We do not find any differential fact for the year under consideration as compared to the immediate preceding assessment year for which similar activity has been held to be assessable under the head capital gain. There is also no substantial difference in the activities carried out by the assessee in individual capacity vis- -vis in the capacity of HUF. The assessee did not utilize the borrowed funds for making investment as the entire investment is made out of own capital of the assessee. Keeping in view all these facts, which have been accepted by Ld. CIT(A) by detailed discussion in the case of HUF and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable only if the amount borrowed has been utilized for the purpose of earning interest income . 8. At the outset, the learned Senior Departmental Representative, took us through the findings of the AO first and stated that this interest has been disallowed by AO for the reason that the share transaction is treated as business activity. He then took us through the CIT(A) s finding, wherein CIT(A) has not recorded the facts and passed a cryptic order by observing as under: - I have gone through the facts and the circumstances of the case and I md that the issue of not allowing it against business income become irrelevant in light of the decision on ground no, 1. The other claim of the appellant that the same should be all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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