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2012 (12) TMI 630 - ITAT CUTTACKInterest and Service charges incurred for acquisition of share - Capital or Revenue – Held that:- The assessee is a limited Company claiming income from capital gains of ₹ 8,40,047 when the AO tried to bring down the cost of acquisition @ ₹ 67 per share to ₹ 62 per share was to be deriving income of ₹ 11,71,834 under the head “capital gains” when the difference being ₹ 3,31,787 was brought to tax by the AO was purely an imaginary figure having no basis whatsoever either in the books of account for the purpose of computation of capital gains nor for the purpose of disallowance of expenditure on the purported earning of dividend income under the provisions of Section 14A r.w.r. 8DD of the I.T.Rules - the expenditure incurred through the Portfolio Manager to acquire share, is a capital expenditure and attributable to cost of acquisition of share. In view of the matter, at no point of time can it be said that the assessee was to make an extra income of ₹ 3,31,787 which was a total imaginary figure brought to tax by the AO. When two imaginary figures could overlap for disallowance to taxation and it was only the case of the AO to disallow expenditure which has been legitimately claimed capitalised by the assessee which stands otherwise disclosed in the P & L account could not become a hypothetical figure on assumption and presumption when computation of Capital Gains has to necessarily include cost of acquisition also. This makes the addition fit for deletion - appeal of the assessee is allowed.
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