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II. Direct Taxes Case Laws:
1. PCIT Vs. The Totagars Co-operative Sale Society, I.T.A. No. 100069/2016, Date of order: 05.01.2017, High Court of Karnataka
Issue:
Whether for the purpose of Section 80P(2)(d) of the Income Tax
Act,1961, a Co-operative Bank should be considered as a Co-operative
Society?
Held: Yes
Brief Facts:
The assessee filed its return of income, and claimed a deduction for
the interest income earned from a co-operative bank u/s 80P of the Act.
The AO was of the opinion that this interest income is not deductible
u/s 80P and added the same to the total income of the assessee. However,
CIT(A) has deleted the addition and aggrieved by the same, the revenue
has preferred the appeal before the Hon’ble ITAT, whereas the Hon’ble
ITAT has confirmed the order of CIT(A). Therefore, revenue has preferred
an appeal before the Hon’ble High Court.
Held:
In this regard, the Hon’ble High Court held that “Co-operative Banks”
was merely a variety of a Co-operative society, thus co-operative bank
would necessarily be covered by the word “Co-operative society”.
Therefore, the appeal of the revenue is dismissed.
(Please click here for judgment)
2. ACIT Vs. Shri Sachin R. Tendulkar, I.T.A. No. 3217/Mum/2014 & 1411/Mum/2015, Date of Order: 25.01.2017, ITAT - Mumbai
Issue:
Whether the assessee has discretion to show income earned on
account of sale of shares and mutual funds either as Income from Capital
Gain or Business Income?
Held_Yes
Brief Facts:
The assessee had shown Long Term Capital Gains and Loss and Short
Term Capital Gains and Loss from Sale of shares in his Return of Income
from the past many years. The sale or purchase of shares is managed by
the Portfolio Managers for which a huge amount of fees was paid every
year. AO contended that this level of operations was not ordinary for a
normal investor and therefore issued a show cause notice as to whether
these capital gains should not be treated as business income. The
assessee contended that the assessee is earning business income from
sports endorsements and the investment in shares were made from long
term point of view to earn dividends and maximize wealth. Also, the
assessee was not a trader or dealer in shares.
The
assessee contended that the services of the Portfolio Manager were
availed for better administration and maximization of his wealth held in
the form of shares and the same does not mean that the assessee was
engaged in the business of sale-purchase of shares. In denial to the
submissions made by the assessee, AO assessed all the income earned from
sale and purchase of shares with or without the involvement of
Portfolio Manager under head Income from Business. CIT(A) accepted the
contentions made by the assessee. Aggrieved by which, the Revenue filed
an appeal before ITAT.
Held:
It was held that the major income of the assessee is from sports
endorsements and other shares. Also, the investment in the shares has
been made by the assessee from his own funds. Further, the investment in
shares with Portfolio Manager is merely to the extent of 4.8% of the
total investments. The shares have been disclosed in the Balance Sheet
on the purchase value and have not been revalued at market price as done
in ordinary course of business for stock-in-trade. In the present case,
the assessee did not carry out the activity of making investment in
shares as a systematic and organized activity of carrying out share
trading or business. As per the CBDT Circular No. 6 of 2016 dated
29.02.2016, it was clarified that the assessee on his own discretion can
opt to treat shares and securities held by him as stock-in-trade or as
investment but once a stand is taken, the same shall be applicable in
the subsequent years and the assessee shall not be allowed to take a
contrary stand in the subsequent assessment years. On the view of the
above, the order of CIT(A) is upheld.
Therefore, the appeal of revenue is dismissed.
(Please click here for judgment)
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