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2018 (11) TMI 254 - ITAT MUMBAIDisallowance of loss claimed on mark to market on account of trading of derivative instruments by treating the same as notional loss and treating the same as contingent liability - AO held this is unascertained liability and merely provision and hence cannot be allowed - Held that:- The assessee is booking profits on derivatives as and when it is valued at the end of the year and as and when the loss is arising, the same is claimed as deduction. This practice is followed by assessee regularly and Tribunal in assessee’s own case in immediate preceding year i.e. AY 2011-12 as allowed the claimed of the assessee, respectfully following the same, we allow the claim of the assessee. This issue is exactly identical in these four appeals of Revenue, hence, taking a consistent view, we dismiss this issue of Revenue’s appeals. Disallowance of expenses relatable to exempt income by the AO by invoking the provisions of Section 14A of the Act read with Rule 8D(2)(ii) & (iii) - Held that:- Once this is the position, the issue is squarely covered by following the case of CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT]. Respectfully following the Bombay High Court decision and considering the facts of the case, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. AO can verify the investment giving exempt and investments which are kept as stock in trade can be disallowed. Apart from that the assessee has recomputed the disallowance which may be accepted. We find that the plea of the assessee is quite reasonable and hence, accordingly we restore this issue back to the file of the AO who will determine the investment held in stock in trade and he will disallow the interest only on the investments kept as stock in trade but only qua the investment giving exempt income. Accordingly, this issue of Revenue’s appeal is partly allowed for statistical purposes.
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