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2014 (12) TMI 224 - ITAT MUMBAITreatment of foreign currency gain - Business income from separate business activity or not – Held that:- Both the authorities have held that such a gain is not out of shipping activity but it has to be considered as separate business income - the only business activity which is being carried out by the assessee is shipping business i.e., operation of ships, which is its core activity - The foreign exchange gain has arisen to the assessee on account of sundry creditors and debtors which were in the course of shipping business only - the nature of transactions are charter hire income, charter hire deposits and insurance during the course of transaction of goods - once the assessee’s shipping income is taxed under a special provision, then also, it will not make a difference as only the shipping income is to be taxed - There can be no separate assessment on foreign exchange gain on the ground that it is different from operation of ships - the foreign exchange gain or loss directly relates to the export and same is qualified for the purpose of deduction - any foreign exchange gain or loss has to be in relation to the shipping income - There is no basis for separately taxing it as some other kind of business activity – thus, the order of the CIT(A) is upheld – Decided in favour of assessee. Disallowance u/s 14A – Held that:- The interpretation of the AO that sub–section (3) independently provides that in case no claim of expenditure has been made by the assessee than also the disallowance u/s 14A has to be made, is completely misplaced and is legally not tenable - only when the precedent conditions of sub–section (1) are satisfied, then only provisions of sub–section (2) and (3) will come into foreplay, for the purpose of determination of quantum of disallowance - no disallowance u/s 14A is warranted when the assessee has not claimed any expenditure, towards taxable income i.e., it has not claimed any deduction of expenditure debited in the Profit & Loss account while computing the total income – Decided in favour of assessee.
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