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2016 (8) TMI 682 - AT - Income TaxDisallowance under section 14A - Held that:- A person may make investment in shares and the shares so purchased may be held either as stock-in-trade or investment. The word "investment" in Rule 8D refers to the making of purchase of shares and not holding it as investment. The applicability of Rule 8D to compute the disallowance to be made under section 14A on account of expenditure in relation to the exempt dividend income earned by the assessee from shares held as stock-in-trade thus was upheld by the Tribunal in its Third Member decision rendered in the case of DH Securities (P.) Ltd. (2015 (9) TMI 373 - ITAT MUMBAI) and respectfully following the same, we reject the contention of the ld. counsel for the assessee that the disallowance in the case of the assessee can be restricted only to direct expenses incurred in relation to the earning of exempt dividend income by applying Rule 8D(2)(i). We direct the Assessing Officer to compute the disallowance as per Rule 8D by taking into consideration only those shares, which have yielded dividend income in the year under consideration. The alternative contention of the ld. counsel for the assessee is accordingly accepted. Interest income - business income or income from other sources - Held that:- There was a direct nexus between the earning of interest income in question as well as the business income of the assessee, inasmuch as the same was earned on Fixed Deposits kept by the assessee as margin money with NSE through its broker in order to enable it to trade in Future & Options. The interest income earned on the said Fixed Deposits thus was directly attributable to the business of the assessee and the ld. CIT(Appeals), in our opinion, is fully justified in treating the same as business income of the assessee instead of income from other sources by relying on the decision of the Hon'ble Supreme Court in the case of Govinda Choudhury & Sons (1992 (4) TMI 8 - SUPREME Court) as well as Chinna Nachimuthu Constructions (2007 (11) TMI 40 - HIGH COURT, KARNATAKA ).
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