TIKUCHAND D. JOGANI, MUMBAI V. ACIT 12(3), MUMBAI

ITA 2285/MUM/2010

• Counselvise Citation: 228519914 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 07-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Salary income; Opportunity of being heard; Question of law; Initiation of penalty proceedings
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH , MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI R.S.SYAL , A M TA NO. 2285 / M UM / 20 1 0 ( ASSESSMENT YEAR : 200 6 - 07 ) TIKUCHAND D. JOGANI, 301, GUNDECHA CHAMBERS, N.M.ROAD, FORT, MUMBAI - 23 VS. ACIT 12(3), MUMBAI PAN/GIR NO. : A AA PJ 8019 Q ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. ASHOK PATIL /REVENUE BY : MR. ANURAG SHRIVASTAVA DATE OF HEARING : 7 TH AUGUST , 201 3 DATE OF PRONOUNCEMENT : 21 ST AUGUST , 2013 O R D E R P ER SHRI R.K.G UPTA, JM : TH IS APPEAL HA S BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 21 - 1 - 2010 , PASSED BY THE LEARNED CIT ( A) - 23 , MUMBAI , RELATING TO ASSESSMENT YEAR 2006 - 07 . 2 . THE FIRST GROUND IN APPEAL OF THE ASSESSEE IS AG AINST TREATING THE AMOUNT OF RS. 1,21,42,192/ - UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION INSTEAD OF INCOME FROM SHORT TERM CAPITAL GAINS SHOWN BY THE ASSESSEE. 3 . DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAINS ON SHARES OF RS. 1,21,42,192/ - . THE AO PLACING RELIANCE ON THE BOARD CIRCULAR I TA NO. 2285 /20 1 0 2 NO. 1827, DATED 31 - 8 - 1989, WHEREBY IT HAS BEEN CIRCULATED THAT THE TRANSACTION IN SHARES HAS TO BE SEEN AS TO WHETHER THEY ARE HELD AS STOCK - IN - TRADE OR THEY HAVE H ELD AS INVESTMENT. THE AO NOTED THAT THE ASSESSEE HAS MADE FREQUENT TRANSACTION OF PURCHASE AND SALES AND HE FOUND THAT 363 TRANSACTIONS ACROSS 363 SCRIPS HAS BEEN MADE DURING THE YEAR. THE CONTENTION OF THE ASSESSEE THAT ALL THESE SHARES WERE SHOWN UNDER THE INVESTMENT PORTFOLIO, THEREFORE, THE LONG TERM CAPITAL GAINS OR SHORT TERM CAPITAL GAINS, AS THE CASE MAY BE, HAS TO BE ACCEPTED. H OWEVER, SINCE THE TRANSACTIONS WERE VOLUMINOUS AND FREQUENT, THEREFORE, THE AO CONCLUDED THAT THE PURCHASE AND SALE OF SH ARES ON FREQUENT TRANSACTIONS ARE TO BE HELD AS BUSINESS TRANSACTIONS. ACCORDINGLY, HE TREATED THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS INCOME FROM BUSINESS. 4 . DETAILED SUBMISSIONS WERE FILED BEFORE THE CIT(A) . RELIANCE WAS PLACED ON VARIOU S CASE LAWS. IT WAS EXPLAINED THAT IN EARLIER YEAR ALSO, THE ASSESSEE HAS SHOWN INVESTMENT IN SHARES UNDER INVESTMENT PORTFOLIO. IT WAS SUBMITTED THAT THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO HIMSELF. ACCORDINGLY, IT WAS SUBMITTED THAT THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE HAS TO BE ACCEPTED. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF GOPAL PUROHIT VS. JCIT, REPORTED IN 120 TTJ 877 (MUM) AND VARIOUS OTHER DECISIONS. L EARNED CIT(A) WAS ALSO IN AGREEMENT WITH THE FINDINGS OF THE AO. ACCORDINGLY, HE CONFIRMED THE ORDER OF AO. I TA NO. 2285 /20 1 0 3 5. THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED HERE BEFORE THE TRIBUNAL . RELIANCE WAS PLACED ON VARIOUS CASE LAWS I.E. IN THE CASE OF NARENDRA GEHLAUT VS. JCIT , DECIDED IN ITA NO. 1648/DEL/2010 , IN THE CASE OF GOPAL PUROHIT VS. JCIT, REPORTED IN [2009] 29 SOT 117 (MUM) , IN THE CASE OF SURESH KUMAR SEKSARIA VS. ACIT, REPORTED IN (2010) 1 ITR (TRIB) 783 AND VARIOUS OTHER CASES, COPIES OF WHICH ARE PLACED IN THE REC ORD. 6 . ON THE OTHER HAND, LEARNED DR STRONGLY PLACED RELIANCE ON THE ORDER OF CIT(A) . 7 . AFTER CONSIDERING THE ORDER OF AO, CIT(A) AND THE SUBMISSION OF THE ASSESSEE, WE FIND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE INVOLVED. IT IS SEEN THAT THE ASSESSEE HAS SHOWN ALL THE PURCHASES UNDER THE INVESTMENT PORTFOLIO. IT IS FURTHER SEEN THAT THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO HIMSELF. UNDER THE PROVISION OF LAW , IT IS CLEARLY PROVIDED THAT IF THE HOLDING OF SHARE IS MORE THAN ONE YEAR THEN THE GAIN ON ACCOUNT OF SALE OF SHARES HAS TO BE TREATED AS LONG TERM CAPITAL GAIN AND IF HOLDING PERIOD OF SHARES ARE LESS THAN ONE YEAR THEN THE GAIN ON ACCOUNT OF SALE OF SHARES HAS TO BE TREATED AS SHORT TERM CAPITAL GA IN. NO WHERE IT IS PROVIDED THAT IF THE TRANSACTIONS ARE FREQUENT AND VOLUMINOUS THEN THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN AS THE CASE MAY BE . THE ONLY QUESTION WHICH IS TO BE EXAMINED AND SEEN BY THE AO AS TO WHAT TREATMENT HAS BEEN I TA NO. 2285 /20 1 0 4 GIVEN BY THE ASSESSEE IN RESPECT TO PURCHASE OF SHARES. WHETHER THE PURCHASE OF SHARES ARE SHOWN UNDER THE HEAD STOCK - IN - TRADE OR UNDER THE HEAD INVESTMENTS. IF PURCHASES HAVE BEEN SHOWN UNDER THE HEAD STOCK - IN - TRADE TH EN THE SALE TRANSACTIONS HAS TO BE TREATED AS BUSINESS TRANSACTIONS AND IF THE SALES HAVE BEEN EFFECTED FROM INVESTMENT ACCOUNT THEN THE GAIN HAS TO BE TREATED AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN, AS THE CASE MAY BE. IN THE PRESENT CASE, T HE ASSESSEE HAS SHOWN ALL THE PURCHASES UNDER THE HEAD INVESTMENT PORTFOLIO, THEREFORE, IN OUR CONSIDERED VIEW, THE GAIN ON ACCOUNT OF SALE OF SHARES HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN ON THE FACTS OF THE PRESENT CASE. SIMILAR ISSUE CAME BEFORE T HE E - COURT OF NAGPUR BENCH IN THE CASE OF SHRI SANJAY ISHWARLAL RANKA , DECIDED IN ITA NO. 161/NAG/2012, VIDE ORDER DATED 8 - 2 - 2013 . THE FINAL FINDINGS OF THE TRIBUNAL HAS BEEN RECORDED IN PARAS 9 & 10, WHICH ARE AS UNDER : - 9 . WE FURTHER NOTED THAT AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2006 - 07, THE DEPARTMENT PREFERRED APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL DISCUSSING THE ISSUE IN DETAIL AND PLACING RELIANCE ON VARIOUS DECISIONS OF THE TRIBUNAL I.E. IN THE CASE OF DINESHBHAI C. PATEL (HUF),PAS SED IN ITA616/NAG/2008, VIDE ORDER DATED 5 - 6 - 2009 ; GOPAL PUROHIT, 20 DTR (MUM)(TRIB) 99 ; THE DECISION IN THE CASE OF CIT VS. V.A.TRIVEDI, 172 ITR 95 (MUM) AND THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT, 228 CTR 582 , ALLOWED THE ISSUE IN FAVOUR OF ASSESSEE. THE FINDINGS OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006 - 07 HAVE BEEN RECORDED IN PARA 12 TO 16, WHICH ARE AS UNDER: - 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE MATERIAL ON RECORD ALONG WI TH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAW AS HAS BEEN CITED BEFORE US. WE FIND THAT IN THE CASE OF CIT (CENTRAL), CALCUTTA VS ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY (P) LTD. (82 - ITR - 586), THE HONBLE SUPREME COURT HAS HELD AS UNDER: WHETHER A PARTICULAR HO/DING OF SHARES IS BY WAY OF IN VESTMENT OR FORMS PART OF THE STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND HE SHOULD, IN NORMAL CIRCUMSTANCES, BE IN A POSITIO N TO PRODUCE I TA NO. 2285 /20 1 0 5 EVIDENCE FROM HIS RECORDS AS TO WHETHER HE HAS. MAINTAINED ANY DISTINCT/ON BETWEEN THOSE SHARES WHICH ARE HIS STOCK - IN - TRADE AND THOSE WHICH ARE HELD BY WAY OF IN VESTMENT. 12.1 IN THE CASE OF CIT, BOMBAY VS H HOLCK LARSEN (160 - ITR - 67), THE ORDER TO DETERMINE WHETHER ONE WAS A DEALER IN SHARES OR AN INVESTOR, THE QUESTION WAS NOT WHETHER THE TRANSACTION OF BUYING AND SELLING THE SHARES LACKS THE ELEMENT OF TRADING, BUT WHETHER THE LATER STAGES OF THE WHOLE OPERATION SHOW THAT THE FIRST STEP THE PURCHASE OF THE SHARES WAS NO KEN AS, OR IN THE COURSE OF A TRADING TRANSACTION. THE TOTALITY OF ALL THE FACTS WILL HAVE TO BE BORNE IN MIND AND THE CORRECT LEGAL PRINCIPLES APPLIED TO THESE. IF ALL THE RELEVANT FACTORS HAVE BEEN TAKEN INTO CONSIDE RATION AND THERE HAS BEEN NO MISAPPLICATION OF THE PRINCIPLES OF LAW, THEN THE CONCLUSION ARRIVED AT BY THE TRIBUNAL CANNOT BE INTERFERED WITH BECAUSE THE INFERENCE QUESTION OF LAW, IF SUCH AN INFERENCE WAS A POSSIBLE ONE, SUBJECT, HOWEVER, THAT ALL THE RE LEVANT FACTORS HAVE BEEN DULY WEIGHED AND THE CONSIDERED BY THE TRIBUNAL, THE INFERENCE REACHED BY THE TRIBUNAL SHOULD NOT BE INTERFERED WITH. 13. IN VIEW OF THE AFORESAID DECISIONS, WE ARE OF THE VIEW THAT WHETHER THE PROFIT FROM THE SHARES IS A CAPITAL GAIN OR BUSINESS INCOME - WHETHER THE SHARES ARE HELD BY THE ASSESSEE AS INVESTMENTS OR - WHETHER THE SHARES ARE PURCHASED WITH AN INTENTION TO KEEP THEM - WHETHER THE SHARES PURCHASED WITH AN INTENTION TO SELL; - WHETHER THE SHARES WERE PURCHASED WITH AN INTENTION TO EARN THE PROFIT IN THE SHORT TERM; - WHETHER THE SHARES ARE HELD TO MAXIMIZE THE RETURN; - WHETHER THE SHARES HAVE BEEN PURCHASED FROM THE PRIMARY MARKET; - WHETHER THE SHARES HAVE BEEN PURCHASED FROM THE SECONDARY MARKET; - WHETHER THE SHARE S HAVE BEEN PURCHASED BY SUBSCRIPTION TO PUBLIC - WHETHER THE SHARES HAVE BEEN HELD FOR FAIRLY LONG PERIOD, AND - WHETHER THE SHARES ONCE SOLD HAVE NEVER BEEN RE - PURCHASED 14. WE NOTED THAT IN THE CASE OF CIT VS V A TRIVEDI 172 ITR 95 (BORN) HONBLE JURISD ICTION HIGH COURT HAS CLEARLY LAID DOWN UNDER PARA 12 OF THE ORDER THAT THE ONUS OF ESTABLISHING THAT A PURCHASE IS MADE WITH THE INTENTION TO TRADE IS ON THE REVENUE. 15. WE NOTED THAT THE MAIN CONTENTION OF THE REVENUE IN TREATING THE GAIN TO BE THE INC OME FROM BUSINESS IS THE NUMBER OF TRANSACTIONS AND THE PERIOD OF THE HOLDING BY THE ASSESSEE. THE PERIOD OF THE HOLDING AND NUMBER OF TRANSACTIONS CANNOT BE THE ONLY BASIS TO DETERMINE WHETHER THE ASSESSEE HAS CARRIED OUT THE BUSINESS IN SHARES TRANSACTIO NS. IT MAY BE ONE OF THE RELEVANT CONSIDERATION BUT CANNOT BE THE MAIN CONSIDERATION FOR DECIDING WHETHER THE ASSESSEE IN THIS CASE IS ENGAGED IN A BUSINESS OR NOT. WE HAVE TO LOOK INTO ALL THE SURROUNDING CIRCUMSTANCES. THIS IS A FACT ON RECORD THAT THE A SSESSEE IN THIS CASE IS ENGAGED IN THE EMPLOYMENT AND HAS DERIVED THE SALARY INCOME. OUT OF THE SURPLUS FUND, HE INVESTED INTO THE SHARES I TA NO. 2285 /20 1 0 6 AND THE UNITS AND THOSE SHARES AND UNITS HAS DULY BEEN SHOWN BY THE ASSESSEE AS INVESTMENT IN HIS BALANCE SHEET IN THE EARLIER YEAR AS WELL AS DURING THE YEAR. IN THE EARLIER YEAR ALSO, THE ASSESSEE DERIVED THE INCOME ON THE SALE OF THE SHARES, WHICH HAS BEEN RETURNED BY THE ASSESSEE AS CAPITAL GAIN AND REVENUE HAS DULY ACCEPTED THE SAME. THE ASSESSEE WAS NOT HOLDING THE SHARES OF THE UNITS AS A STOCK IN TRADE. THIS FACT IS ALSO NOT DENIED BY THE REVENUE. THE PERIOD OF HOLDING ITSELF HAS BEEN TREATED BY THE LEGISLATURE TO BE A RELEVANT CONSIDERATION FOR DETERMINING WHETHER THE CAPITAL GAIN DERIVED IS A LONG TERM CAPITAL GA IN OR A SHORT TERM CAPITAL GAIN. THERE IS NO PROVISION UNDER THE INCOME - TAX ACT WHICH HAS PROVIDED THAT IN CASE THE ASSESSEE IS HOLDING THE SHARES FOR A LESSER PERIOD THAN THE ONE PRESCRIBED, IT WILL BE REGARDED TO BE THE BUSINESS INCOME. DIVIDING THE CAPI TAL GAIN INTO TWO PARTS I.E. THE SHORT TERM GAIN OR THE LONG TERM GAIN ITSELF PROVE THAT THE PERIOD OF THE HOLDING CANNOT BE THE CRITERIA FOR DETERMINING WHETHER THE PROFIT DERIVED BY THE ASSESSEE IS A LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN. 16 . THE CIT(A), WE NOTED IN THIS CASE WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS RELIED ON THE DECISION OF THE ITAT NAGPUR BENCH IN THE CASE OF DINESHBHAI C. PATEL (HUF) IN 1TA NO.616/2008, WHICH CONFIRMED THE DECISION OF THE C1T(A), THE COPY OF THE DECIS ION WAS FILED BEFORE US. THE APPEAL AGAINST THE DECISION OF THE NAGPUR BENCH IN THE CASE OF DINESHBHAI C. PATIL (SUPRA) HAS BEEN DISMISSED BY THE HIGH COURT VIDE ORDER DATED 28 10 2010 HOLDING THAT NO SUBSTANTIAL POSITION ARISE AND THE TRIBUNAL, ON THE BAS IS OF THE MATERIAL ON RECORD, HOLD THAT THE SHARES WERE PURCHASED BY THE ASSESSEE AS INVESTMENT AND THE GAIN ARISING ON SALE OF THOSE SHARES WERE ALLOWABLE TO BE TAXED AS CAPITAL GAIN. IT IS NOT DENIED THAT IN THIS CASE ALSO, THE ASSESSEE WAS HOLDING THE S HARES AS INVESTMENT. HOLDING OF THE SHARES AS INVESTMENT ITSELF PROVE THE INTENTION OF THE ASSESSEE AS REGARDS TO THE NATURE OF THE TRANSACTION. HAD THE SHARES BEEN THE BUSINESS ASSETS, IT WOULD HAVE SHOWN BY THE ASSESSEE AS A STOCK IN TRADE. APPARENT IS R EAL, IF THE REVENUE FEELS THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS INVESTMENT. THE ONUS IN OUR OPINION IS ON THE REVENUE TO PROVE THAT APPARENT IS NOT REAL. NO EVIDENCE WAS BEING PLACED OR BROUGHT TO OUR KNOWLEDGE BY THE LD. D.R. WH ICH MAY PROVE THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS INVESTMENT. IT IS ALSO A FACT THAT THE ASSESSEE DERIVED THE DIVIDEND INCOME AND HAS ALSO MADE THE INVESTMENT IN THE SHARES NOT OUT OF THE BORROWED FUNDS, BUT OUT OF ITS OWN SURP LUS FUNDS. THE CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS EXTENSIVELY DEALT WITH THE VARIOUS FACTORS AS WELL AS VARIOUS CASE LAWS TO ARRIVE AT A FINDING THAT THE SHARES WERE HELD BY THE ASSESSEE AS A CAPITAL INVESTMENT AND NOT AS STOCK IN TRADE. HE HAS ALSO RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF CIT VS. DINESHBHAI C. PATEL (SUPRA). IT IS NOT DENIED THAT THE FACTS INVOLVED IN THIS CASE IN THE CASE OF DINESHBHAI C. PATEL (SUPRA) ARE SIMILAR TO THE FACTS IN THE CASE OF THE ASSESSEE. SIMILARLY, THE FACTS INVOLVED IN THE CASE OF GOPAL PUROHIT VS. JC1T 20 DTR 99 (MUMBAI) WERE ALSO THE SAME AS IN THE CASE OF THE ASSESSEE. IN ALL THOSE CASES, THE TRIBUNAL TOOK THE VIEW THAT PERIOD OF HOLDING CANNOT BE THE BASIS TO DETERMINE WHETHER THE SHA RE TRANSACTION ENTERED INTO I TA NO. 2285 /20 1 0 7 BY THE ASSESSEE IS A BUSINESS INCOME OR CAPITAL GAIN. IN THIS CASE ALSO, WE NOTED THAT THE ASSESSING OFFICER HAS BUILT UP HIS CASE MAINLY ON THE BASIS O PERIOD OF HOLDING AND ON THAT BASIS, HE TOOK THE VIEW THAT THE SHARES HELD FOR A SHORT PERIOD OR FOR A NUMBER OF DAYS WOULD NOT BE CAPITAL GAIN. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). THE CIT(A) HAS RIGHTLY TAKEN THE VIEW THAT THE DECISION OF THIS TRIBUNAL IN ITA NO.616/2008 IN THE CASE OF ACIT VS. DINESHBHAI C. PATEL (HUF) IS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE. THE DECISION OF THE COORDINATE BENCH WHICH HAS BEEN APPROVED BY THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON US. WE CANNOT TAKE A DIFFERENT VIEW. WE NOTED THAT THE NAGP UR BENCH OF THIS TRIBUNAL IN THE CASE OF DINESHBHAI C. PATEL I (SUPRA) HAS FOLLOWED THE DECISION OF GOPAL PUROHIT VS. JCIT (SUPRA), THAT DECISION HAS ,ALSO BEEN APPROVED BY THE HONBLE JURISDICTIONAL HIGH COURT AND SLP AGAINST THAT DECISION HAS BEEN DISM ISSED BY THE SUPREME COURT WE ACCORDINGLY, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS BOTH THE APPEALS. 10 . SIMILAR FACTS ARE INVOLVED FOR THE ASSESSMENT YEAR 2007 - 08, THE YEAR UNDER CONSIDERATION. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDING OF THE LEARNED CIT(A), WHO ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEES FOLLOWING THE DECISION OF ITS PREDECESSOR FOR ASSESSMENT YEAR 2006 - 07 AND THE SAME HAS BEEN CONFIRMED BY THE TRIBUNAL AS STATED ABOVE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) IN BOTH THE CASES. 8. SINCE FACTS ARE SIMILAR IN THE PRESENT CASE, THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI SANJAY ISHWARLAL RANKA (SUPRA) , WE ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE GAIN ON ACCOUNT OF SALE OF SHARES AS SHORT TERM CAPITAL GAIN. 9 . THE NEXT ISSUE RELATES TO DISALLOWING A SUM OF RS. 34,26,643/ - UNDER SECTION 14A READ WITH RULE 8D(2) OF THE IT RULES. 10 . THIS ISSUE REQUIRES TO SET ASIDE TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT, REPORTED IN (2010) 328 ITR 081 (BOM) AS THE RULE 8D IS APPLICABLE FROM ASSESSMENT YEAR 2008 - 09. THE YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2006 - 07 AND I TA NO. 2285 /20 1 0 8 RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION AS HELD BY THE H O N BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA) . ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FIL E OF THE AO TO DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11 . GROUND NO. 3 IS AGAINST CHARGING INTEREST UNDER SECTION 234ABC & D, IS CONSEQUENTIAL IN NATURE, WHICH REQUIRES NO SEPARATE ADJUDICATION. 12 . GROUND NO. 4 IS AGAINST INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C), WHICH IS PREMATURE AT THIS STAGE. THEREFORE, THE SAME IS REJECTED. 13 . RESULTANTLY , APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND PARTLY FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF AUG . 201 3 . SD/ - ( ) ( R.S.SYAL ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21/08 / 2013 /PKM , PS I TA NO. 2285 /20 1 0 9 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE C I T(A) , MUMBAI . 4. / C I T 5. / DR, ITAT, MUMBAI . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( /ASSTT. REGISTRAR) / ITAT, MUMBAI