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2015 (11) TMI 1013 - AT - Income TaxDisallowance u/s. 14A - Held that:- We find that the assessee is in the business of share broking and share trading activity. Earning of dividend income is incidental to such business activity and whatever expenditure is incurred i.e. for the business. The assessee has earned total dividend income during the year under consideration at ₹ 2,72,349/- out of the total income declared at ₹ 15,39,12,042/-, which is a meagre 0.18% of the total income. Further, we have noticed from the assessment order that the AO has not recorded any satisfaction for application of the provisions of section 14A of the Act read with Rule 8D of the Rules. In fact, there is no whisper of any satisfaction in the assessment order that the provisions of section 14A of the Act are applicable. We find that the AO made disallowance mechanically calculating the figures solely on the basis of Rule 8D of the Rules. Here, the coordinate Bench of ITAT in the case of REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] has held that for applicability of Rule 8D of the Rules, satisfaction of the AO about the correctness of the accounts of the assessee is necessary - Decided in favour of assessee. Disallowance in respect to those unsold shares which have yielded dividend - Held that: - As the assessee undisputedly dealing in the shares and securities as admitted by AO itself while mentioning the nature of business as “dealing in shares and securities”. This earning of dividend on such shares is merely incidental to such business activities. Accordingly, on this aspect also the assessee succeeds. Hence, this issue of assessee’s CO is allowed and revenue’s ground is dismissed. - Decided in favour of assessee. Rebate u/s. 88E - CIT(A) restricted the rebate - whether the rebate u/s. 88E of the I. T. Act should be allowed after allocating expenses and after deducting the full amount of the STT paid? - Held that:- CIT(A) required the assessee to give calculation of the turnover in different business segments and found that the turnover of share business segment to the gross turnover was 5.87% under the head own business turnover in term of % of total turnover. Therefore CIT(A) apportioned the expenses on share segments and some of the expenses were apportioned @ 5.87% and some of the expenses i.e. balance other expenses on income basis as per calculation ‘c’ @68.83%. We find that revenue has not disputed the proportionate determination on turnover basis but has contested the AO’s method to bifurcate the expenses on proportionate of income basis. According to assessee, all the expenses should bifurcated in proportion to turnover of share business segment to the gross turnover. We find that qua the expenses, the plea of the assessee that all the expenses should be bifurcated in proportion to turnover of share business segment to that of the gross turnover is quite reasonable. Therefore, the part of the expenses, which were bifurcated by the CIT(A) on income basis is directed to be determined on the basis of percentage of turnover of own business @ 5.87%. - Decided in favour of assessee
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