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2016 (10) TMI 589 - AT - Income TaxApplicability of explanation to section 73 - whether the principal business of the assessee is granting of loan and advance? - Losses in speculation business - Held that:- CIT(A) has concluded that the main business of the assessee was of granting of loans and advances. When 99% of assessee’s income was derived from interest on loans and advances, therefore, merely because it was not registered as a NBFC, it could not be concluded that the principal business of the assessee was not of granting loans and advances. CIT(A) has also referred to item 5 of the memorandum of association, as per which, one of the main objects was to carry on the business of arranging, organizing, executing all kind of financial services and he has also referred to clause 16 of the incidental objects of memorandum of association, as noted earlier. In the backdrop of these factual findings, it cannot be said that assessee was not primarily in the business of granting of loans and advances. As the assessee’s case was covered by the second exception to the Explanation to section 73 and consequently the addition made by the AO by treating the loss incurred by the assessee company as speculative loss was deleted. Therefore, do not find any reason to interfere with the finding of ld. CIT(A). - Decided in favour of assessee Addition u/s 14A - Held that:- As total dividend income received by the assessee was ₹ 38/- and the same had been offered for taxation in the return of income. Therefore, there was no amount which could be subjected to disallowance u/s 14A. Ld. CIT(A) following the decision in the case of Joint Investment (P) Ltd. Vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] , gave a relief of ₹ 57,881/- as the disallowance u/s 14A could not exceed the exempt income. No reason to interfere with the finding of ld. CIT(A). - Decided in favour of assessee
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