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2013 (3) TMI 393 - AT - Income TaxDisallowance u/s 14 A r.w.r. 8D - as per CIT(A) the provisions of rule 8D donot come into play in this case as the shares are not held as 'investments' - Held that:- The provisions of rule 8D can never be applied in a case where exempt income yield assets are not held as investments, and that the related assets, i.e. shares, having been held as stock in trade all along, there is no occasion to invoke rule 8 D. There is no infirmity in this approach, nor do revenue authorities stand to lose anything by this approach canvassed by the assessee. Quite to the contrary of what DR perceives to be advantageous to the AO, in case the application of rule 8 D was to be upheld, there would have been no disallowance at all since not only that no investments were held by the assessee, admittedly there are no direct expenses are incurred on earning of the dividends and as such in all the three segments of disallowance under rule 8D(2) i.e. 8D (2) (i), (ii) and (iii), there will be zero disallowance. As against this zero disallowance under rule 8D, the CIT(A) has upheld disallowance to the extent of ₹ 1,57,227 in respect of indirect expenses attributed to the earning of dividends, and it has even the case of revenue that this disallowance for indirect expenses is unfair or unreasonable - confirm the conclusions of CIT(A) and decline to interfere in the matter.
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