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2012 (5) TMI 482 - AT - Income TaxDisallowance of expenses under section 14A - held that:- the claim that expenses such as salary etc. which are not directly relatable to earning of dividend income cannot be disallowed, is not legally tenable. The disallowance of expenses has however to be made on a reasonable basis. - suo-moto disallowance computed by the assessee can be reasonably taken as the expenditure relatable to the exempt income - disallowance under section 14A @ 10% if general expenses in the PD division upheld. Regarding interest u/s 234C - held that:- Once there is shortfall in payment of advance tax installment, the levy of interest is mandatory as we have pointed out earlier. In case, under estimate of income for advance tax payment was due to conditions beyond the control of the assessee, it could always apply to the competent authority, for waiver of interest in terms of the CBDT Circular - Decided against the assessee Regarding validity of opening of assessment under section 147 - reason to believe - held that:- The only requirement is that there should be some relevant material for formation of belief and the sufficiency of material cannot be questioned. There was material available before AO clearly showed that no expenses in relation to exempt income had been disallowed by the assessee under section 14A which in our view was relevant material for formation of reasonable belief that some income had escaped assessment as it was not possible to earn such huge dividend without incurring any expenses. - Decided against the assessee Speculation loss - setting off - section 73 - held that:- profit from purchase and sale of shares are not to be excluded from the deeming provisions of Explanation to section 73. It was accordingly held that the assessee was entitled to set off brought forward speculation loss against profit from sale and purchase of shares in the current year. - Decided in favor of assessee.
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