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2015 (10) TMI 2171 - AT - Income TaxDisallowance u/s 14A - Held that:- Nothing contrary has been brought to the fact that assessee is a dealer in shares and profit in share business has been shown by the assessee under the head “income from business”. A.O. has not made any specific finding to support the disallowance made by him. As undoubted that assessee is a dealer in shares, trading of shares has been shown as income from business, stock in trade in shares is at ₹ 41,16,992 investment in shares not held for business are only ₹ 51,000, and dividend income earned during the year is ₹ 58,963. However, assessee has maintained same books of accounts for his business of trading in cloth, trading in shares, commission income, income from real estate and exempt income. There is no bifurcation available on record to segregate the entire expenses incurred on the type of business activities carried on and some element of cost for earning exempt income cannot be ignored in these circumstances. The assessee has demonstrated that it has carried out the business activity of sale and purchase of shares. The Revenue on the other hand could not place any contrary material on record. Therefore, in the light of decision of Jivraj Tea Ltd. vs. DCIT [2014 (9) TMI 131 - ITAT AHMEDABAD] we are of the considered view that the AO was not justified in invoking the provisions of section 14A of the Act. The dividend so earned is incidental to normal business activities of the assessee. Moreover, the AO has made disallowance of ₹ 4,04,204/- whereas the assessee has earned exempt income in the form of dividend of ₹ 58,963/-. Even assuming that some expenditure is required to be disallowed but such disallowance should not exceed the quantum of exempt income. Therefore, we hereby hold that the addition under section 14A cannot be more than the exempt income and should therefore be restricted to ₹ 58,963/-. - Decided partly in favour of assessee.
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