9911796707
TMI Blog2019 (2) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... which assails the order of the Ld. Commissioner of Income-Tax (Appeals)-9 [CIT(A)], Mumbai, Appeal No.CIT(A)-9/Cir.4/343/2013-14 dated 28/01/2016 by raising the following grounds of appeal:- 1. Commissioner of I.T.(A) erred in confirming the treatment of Short Term Capital Gain earned by appellant as business income without appreciating arguments of appellant and ignoring fact that scripts in which capital gain is earned are acquired from IPO (Public issue) and assessee has not traded in same scripts. 2. Commissioner of I.T. (A) erred in confirming the treatment of Short Term Capital Gain earned by appellant as business income by making reliance on holding period of shares allotted/acquired from IPO (Public issue) and assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same vide its letter dated 05/02/2014 wherein it inter-alia submitted that the shares were allotted in public issues and investments were out of own capital. However, Ld. AO noted that the assessee traded in 11 scrips / transactions during the year out of which the holding period of 10 transactions was less than five days. Placing reliance on several judicial pronouncements, Ld. AO came to a conclusion that the aforesaid income was assessable has business income instead of Short Term Capital Gains as offered by the assessee. The head of the income assumes importance in view of the fact that Short Term Capital Gains on sale of shares assessable under the head capital gains attracts concessional rate of tax as against the rate when the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crips / transactions is five or less than five days which indicate that the investments were made by the assessee as a trader only and not as an investor and the primary objective of the investments was to earn the gains in a business-like manner rather than to earn accretion to the same by way of dividend. The intention of the assessee gets manifested from the fact that the scrips have been sold within a very short span of time so as to reap the benefits of listing gains only. This is further fortified by the fact that the assessee was engaged as share broker and as evident from memorandum of association as placed on record, dealing in shares was one of the main objectives of the assessee company. Hence, after due consideration, we find o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer to: - i) To delete the disallowance of Rs. 26,90,759/- made u/s 14A read with rule 8D(2)(ii) ii) To allow the claim of the appellant that disallowance u/s 14A read with rule 8D should be calculated by considering all facts stated in grounds of appeal & Rule should not be applied automatically. iii) To Allow claim of sundry balance written off amounting to Rs. 11,40,522/- iv) To grant appropriate reliefs on all grounds raised herein the Appeal. As evident from grounds of appeal, the subject matter of appeal is disallowance u/s 14A and taxability of sundry balances written-off. 7.1 The assessee has been assessed u/s 143(3) on 19/02/2015 at Rs. 671.56 Lacs under normal provisions after certain additions / disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O disallowed the same. 8. Aggrieved, the assessee agitated the same with partial success before first appellate authority vide impugned order dated 28/01/2016 wherein Ld. CIT(A), following its own decision in AY 2011-12, restricted the expense disallowance u/r 8D(2)(iii) to 5% of the exempt income but confirmed the interest disallowance u/r 8D(2)(ii). The addition of amounts written-off was confirmed by following Ld. AO's reasoning. Aggrieved, the assessee is in further appeal before us. 9. The Ld. Auhtorized representative for Assessee [AR], Shri Rajiv Khandelwal, submitted that in the absence of satisfaction as envisaged by the provisions of Section 14A, Rule 8 D could not be applied to the facts of the case. Without prejudice, it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that extent, stands dismissed. 10.2 So far as interest disallowance u/r 8D(2)(ii) is concerned, we find that the assessee has not offered any disallowance against the same and therefore, to contend that the Ld. AO failed to reject the workings made by assessee and record a proper satisfaction in that respect could not help the assessee in any manner. The same is devoid of any merits. However, we find substantial force in the argument of Ld. AR that the assessee had sufficient interest free funds in the shape of Share Capital & Free Reserves to make new investments including stock in trade. The perusal of financial statements as placed on record reveals that there is no change in non-current investments made by the assessee during impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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