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2014 (7) TMI 166 - AT - Income TaxDisallowance of damaged paper stock – Held that:- The AO disallowed the claim of loss observing that the assessee had given a general explanation that the paper was damaged in the rain - the purchase of the stock of paper was of the year 1996 and it was observed by the AO that by the year 2005, the paper otherwise would have become scrap - CIT(A) also was of the view that the assessee failed to prove his claim with any cogent and convincing evidence – there is no infirmity in the order while making the disallowance – Decided against Assessee. Diminution in value of shares held as stock in trade – Held that:- The shares were investments and not stock in trade - The assessee in subsequent years could not have claimed the said shares as stock in trade as per its own will - assessee after the finding of the Income Tax Authorities that the shares were investments, had not made any attempt or action to convert the shares into stock in trade - the shares are required to be held as investments only and the assessee is not entitled to claim any diminution in the value of the said shares treating the same as stock in trade – Decided against Assessee. Disallowance u/s 14A of the Act – Investments made for earning tax free income - Held that:- The decision in Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - rule 8D of the Income Tax Rules is applicable for AY 2008-09 onwards - CIT(A) observed that the assessee had earned certain exempt income, the assessee had not appropriated any expenditure for earning the exempt income - the finding of the CIT(A) in directing the AO to make a reasonable disallowance after apportionment of the expenses out of the composite expenditure for earning taxable and tax free income is in accordance with the law and does not require any interference – Decided against Revenue.
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