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2015 (12) TMI 386 - AT - Income TaxAddition u/s 14A - CIT(A) deleted the addition - AO submitted that the assessee made the investment and had not bifurcated the investment and stock-in-trade. Therefore, the addition was rightly made by the AO by making the disallowance u/s 14A - Held that:- In the present case, it is an admitted fact that the provisions of Rule 8D of the IT Rules, 1962 are not applicable for the year under consideration because those rules are applicable for the assessment year 2008-09. It is also not in dispute that if any expenditure is incurred for earning the dividend income which is exempt from payment of tax, the said expenditure cannot be deducted against the taxable income. However, in the present case, the assessee had not retained the shares with the intention of earning dividend income. The investment was incidental to his business of sale of shares. Therefore, the ld.CIT(A) was justified in holding that the AO wrongly apportioned the expenditure incurred by the assessee in acquiring the shares to the expenditure of dividend income and making the disallowance u/s 14A of the Act. In the present case, the assessee did not make the fresh investment and even out of the stock-in-trade 75% of the shares were sold during the year which clearly shows that bulk of the shares which were purchased earlier, were sold and the income derived from those shares was offered to tax as ‘Business income’, the shares which could not be sold remained with the assessee and yielded the dividend for which the assessee had not incurred any expenditure at all. Therefore, the ld.CIT(A) rightly deleted the addition made by the AO. No valid ground to interfere with the findings of the ld.CIT(A). - Decided in favour of assessee.
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