1. CIT Vs. M/s D & M Components Ltd., ITA No. 561, 566/2012, Date of Pronouncement: 21.04.2014, Delhi High Court
Whether
frequent transactions of large amounts in shares without maintaining
separate books accounts will lead to business income instead of STCG?
Held_Yes
The assessee
is engaged in business of auto spare pails and investment in bonds,
mutual funds and other securities. The assessee filed his return
declaring STCG on the basis that the shares were purchased with an
intention of investment. But the Ld. AO rejected the assesse’s claim
making profit from sale of shares taxable under the provisions of
business income. On further appeal to Ld. CIT (A), the same was upheld
stating that assessee failed to maintained separate books of accounts
for the investment and the sale purchase took place in very short time
period. Whenever any share is purchased with the intention of
investment, it cannot be sold off within a very short span of time,
since the share market is always fluctuating. However, Hon’ble ITAT
allowed the assessee’s claim overlooking the revenue’s contention.
The Hon’ble
High Court held in favour of revenue stating that having regard to the
short duration of holding of the shares, and the lack of clarity in the
account books the said amount shall be treated as business income and
not capital gains.
(Please click here for judgment)
2. Mahindra Forgings Ltd. Vs. ADIT (International Taxation),
ITA Nos. 1985, 2563, 2564 & 2565 of 2012, Date of Order: 27.02.2014,
ITAT - Pune
In case
of purchase of complex machinery from abroad, where installation charges
of said machinery were included in purchase price itself, assessee was
not required to deduct tax at source on payment of said charges.
It is
undisputed that the machinery is complex equipment, hence could not be
installed by any ordinary person that is why only machinery seller non
resident was given contract of erection and installation and services
thereof. Such erection/installation of highly complex machinery was not
comparable to ordinary installation just because two separate agreements
were reached, one for sale transaction and other for
installation/erection and other related services. The principle of
"inextricable nexus" does not change. In the facts before us, the part
payment for purchase of sale of machinery transaction was linked to
successful erection of machinery at Chakan, Pune in all these contracts.
So, it was not obligatory on the part of assessee to deduct the tax at
source on entire payment even if it does not offer u/s. 195(2) for
deduction at a lower or nil rate. The Assessing Officer is directed
accordingly.
(Please click here for judgment)
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