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2012 (10) TMI 210 - ITAT MUMBAIDis-allowance u/s 14A - non-claim of any expenditure by assessee in relation of dividend income - assessee contended that mode of acquisition of shares was through amalgamation and no shares having been acquired either out of interest bearing funds or surplus funds - Held that:- It is evident from the record that the assessee has earned dividend mainly from shares of 'OBC' and 'CG' which was acquired through amalgamation of two companies. Further, it is also noticed that most of the expenses are directly attributable to assessee's business as per the details furnished. Hence, it cannot be held that assessee might have incurred any kind of expenditure for earning of dividend income. Moreover, looking to the fact that assessee has itself disallowed 1% of the dividend income as an expenditure. Hence, no further disallowance is called for. Deduction of Short Term Capital Loss on sale of shares of M/s BILT - acquired vide transfer from holding company at book value (Rs 128.02 per share) as per the provisions of section 49(1)(iii)(e), when market value was ₹ 73.3 per share - dis-allowance - Held that:- It is seen firstly, that transaction is between parent company and subsidiary company which cannot be treated as transfer as it is undisputed fact that assessee is a 100% subsidiary of its parent company; secondly, the shares have been transferred as per the book value and, therefore, the cost of acquisition of the asset shall be deemed to be the cost of which it has been shown in the books of the parent company i.e. previous owner. In these circumstances whether the cost of the shares was higher or lower does not make any difference. In view of clear cut provisions of S47(iv) r.w.s. 49(1)(iii)(e), deduction of short term capital loss by the AO is legally not correct - Decided in favor of assessee
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