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2015 (1) TMI 1012 - AT - Income TaxDisallowance of loss arose on account of revaluation of securities - Held that:- No merit in the action of lower authorities for disallowing loss arose on the year end revaluation of securities as relying on CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], Investment Ltd. Vs. CIT, [1970 (4) TMI 15 - SUPREME Court] and CIT Vs. Bank of Baroda [2003 (3) TMI 80 - BOMBAY High Court]. - Decided in favour of assessee. Disallowance u/s.14A r.w.Rule 8D - assessee-bank has declared dividend income of ₹ 17,86,785/- and claimed it as exempt u/s10(35) - Held that:- The mutual funds under which investments were made were notified under See 10(23D) of the Income Tax Act 1961 and are exempt under Sec 10(35) of the Income Tax Act. The IPO closed on June 21, 2005 and shares were allotted on July 5, 2005. A part of the capital funds raised from the IPO were invested in mutual funds till allotment of shares. Thus, we found that its investments were from interest-free funds and accordingly, no interest expenditure can be said to have been incurred in relation to earning the tax-free dividend income and accordingly, no disallowance of interest can be made in this regard under section 14A of the Act. The AO is directed to delete the same. - Decided in favour of assessee. Disallowance of expenses other than interest, we direct the AO to uphold the disallowance at 5% of exempt income. Disallowance of provision of re-valuation of investments transferred from HTM to AFS category - Held that:- Decision of the Hon'ble Bombay High Court in the case of CIT v. HDFC Bank (2014 (7) TMI 724 - BOMBAY HIGH COURT) and that of the Bangalore bench of the Tribunal in the case of State Bank of Mysore (2009 (5) TMI 610 - ITAT BANGALORE) are in support of assessee’s claim of provision for re-valuation in respect of securities transferred from HTM to AFS category should be allowed as a deduction. - Decided in favour of assessee.
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