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2015 (8) TMI 79 - AT - Income TaxDisallowance u/s 14A - Held that:- By applying rule 8D, the AO had disallowed the entire business expenditure on the plea that same was incurred for the earning of exempt income, ignoring the fact that assessee was having taxable business income of ₹ 78,48,948/-, as compared to the tax free dividend of ₹ 8,95,949/-. The relevant assessment year is 2006-07, wherein rule 8D is not applicable but at the very same time, reasonable disallowance is warranted as per decision of Godrej & Boyce Mfg. Co. Ltd., [2010 (8) TMI 77 - BOMBAY HIGH COURT ]. Considering the amount of expenditure incurred for earning the total income main part of which was taxable i.e. ₹ 78.48 lakhs as against exempt income of ₹ 8.95 lakhs, we deem it appropriate to restrict the disallowance to the extent of ₹ 20,000/-. Decided partly in favour of assessee. Taxing of interest - business income OR income from other sources - Held that:- If the assessee is engaged in the business of financing in addition to the business of trading in shares, the interest earned on loans and advances are liable to tax as business income. However, where the assessee is having interest income out of the surplus fund deployed with bank or party, the same is liable to be taxed as income from other sources. It is not in dispute that assessee has substantially earned interest income out of the financing business undertaken by it. Accordingly, we do not find any merit in the action of the lower authorities for treating the income earned in its financing business as income from other sources. Loss suffered on account of future and options transactions - whether has to be considered as business loss and not be considered as speculation loss as held by CIT(A) - Held that:- CIT(A) has restored the matter back to the file of AO with a direction to decide the issue as per the order of the ITAT in assessee's own case for the assessment year 2003-04 and to allow the necessary carry forward loss as per law if the assessee is entitled for the same. We do not find any infirmity in the direction so given by the CIT(A).- Decided against revenue.
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