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2015 (6) TMI 529 - AT - Income TaxDisallowance of claim of set off of Long term Capital Loss on sale of shares - Security Transaction Tax (“STT”) was deducted against the Long Term Capital Gain arising on sale of land at Chennai- Held that:- section 10(38) excludes in expressed terms only the income arising from transfer of Long term capital asset being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares. It does not lead to exclusion of computation of capital gain of Long term capital asset or Short term capital asset being shares. Accordingly, Long term capital loss on sale of shares would be allowed to be set off against Long term capital gain on sale of land in accordance with section 70(3). We allow the assessee’s ground no.1 and direct the Assessing Officer to allow the claim of set off of Long term capital loss on sale of shares against the Long term capital gain arising on sale of land. - Decided in favour of assessee. Disallowance of expenses u/s. 14A made after applying Rule 8D - Held that:- On perusal of the impugned orders, we find that the assessee had made the claim before the Assessing Officer that no expenditure can be said to be attributable in relation to the earning of dividend income. Once such a claim has been made, the Assessing Officer was required under the statute to satisfy himself having regard to the accounts of the assessee about the correctness of the claim of the assessee. There has to be some finding of the Assessing Officer that the assessee’s claim is prima facie not tenable. The assessee has pointed out that entire investments have been made out of its own capital and internal accruals, therefore, no expenses can be said to be attributable. This claim of the assessee required examination by the AO having regard to the accounts of the assessee and the nature of expenditure which can be said to be attributable for earning of the exempt income. The AO while deciding this issue may consider the decision of Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). - Decided in favour of assessee for statistical purposes. Penalty u/s. 271(1)(c) levied on account of disallowance for assessee’s claim for set off of loss and disallowance made u/s. 14A in the quantum appeal have no legs to stand. Accordingly, the penalty levied is deleted and the appeal is allowed. - Decided in favour of assessee
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