Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (2) TMI 1054 - ITAT KOLKATAAddition being the profit on sale of investments - Held that:- Clause (b) was omitted by the Finance Act, 1988 leading to the situation that now neither the loss written off or reserved in the accounts to meet depreciation is required to be reduced from the profits nor appreciation in or gain on the realization of investments is to be added. This position has been clarified by the Memorandum Explaining the Provision in the Finance Bill, 1988. As seen from the legislative intent made explicit through Memorandum Explaining the Provision, Notes and Clauses and also circular issued by the CBDT exemption is to be provided in respect of the profits earned by the insurance company on sale of investment and consequently no deduction is to be allowed towards losses incurred on the realization of investments. In simple words the prescription of the hitherto cl. (b) of r. 5 has been taken back, which granted deduction towards the depreciation reserve or loss on realization of investments and increment towards appreciation in or gains on the realization of investments. The AO’s viewpoint cannot be accepted for the reason that with the omission of cl. (b) of r. 5 it has been made clear that neither the loss on account of diminution in the value of investment shall be allowed as deduction nor any income on investment shall be subjected to tax. Both the items of loss and income from the investments are to be considered as neither deductible nor includible in the total income of the assessee. Therefore the CIT(A) was justified in deleting the addition made by the AO. We do not find any grounds to interfere with the order of the CIT(A). Accordingly the appeal of the revenue is dismissed. Addition u/s 14A - Held that:- The Assessee’s case being for the Assessment Year 2006-07, there cannot be any applicability of the above-referred subsection (2) of section 14A or Rule 8D in the Assessee's case for the Assessment Year 2006-07. In the given circumstances, the quantum of disallowance had to be decided in the light of the decisions rendered by the ITAT Kolkata Benches in the cases referred to by the CIT(A) in the impugned order. In those decisions, the ITAT, Kolkata Benches have consistently taken a view that 1% of the exempted income/dividend shall be considered as expenses/expenditure relating to the earning of exempted income u/s 14A in the assessment years where the rule 8D was not applicable.
|