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2017 (6) TMI 61 - AT - Income TaxRevision u/s 263 - Bank Guarantee commission to be considered as interest for disallowance u/s 14A - Held that:- Bank guarantee commission cannot be considered as interest on borrowing. The board notification no. 56/2012 dated 31.12.2012 had clearly held that bank guarantee commission paid to a bank need not suffer deduction of tax at source under Chapter XV of the I T Act. AO in the course of assessment proceedings has called for details of bank guarantee commission paid. The assessee in its reply dated 9.2.2015 had submitted the details called for by the Assessing Officer and on examination of the same no disallowance was made. It also to be noted that the Assessing Officer, in the assessment had made disallowance by invoking provision u/s 14A of the Act. Therefore, according to us, the Assessing Officer has taken a conscious decision not disallow bank guarantee commission paid by the assessee by invoking section 14A of the Act. Bank guarantee commission paid by the assessee is not in the nature of interest expenditure warranting disallowance u/s 14A r.w.r 8D(2)(ii). Investment written off during the year not considered for arriving at disallowance u/r 8D - Held that:- The rule requires the value of investment, the income from which is exempt from tax alone to be considered for the disallowance. The sum of ₹ 8,94,800/- written off during the year is in respect of joint venture in Dubai in Peninsular Middle East DMCC. The Income from this investment is not exempt from tax and hence the same need not be considered for disallowance u/s 14A r.w.r 8D. Therefore, it cannot be said that there is error in the assessment order. Provision for leave encashment - Held that:- The assessee in the statement of total income had mentioned in the footnote that no disallowance was made towards leave encashment, following the decision of the jurisdictional Kerala High Court in the case of Hindustan Latex Ltd.[2012 (6) TMI 713 - KERALA HIGH COURT ] The Assessing Officer has accepted the same while completing the assessment. There is no error in the assessment since the Assessing Officer has followed the judgment of the jurisdictional High Court. Loss on trading in shares not considered as loss from speculation business as required under explanation to section 73 - Held that:- Assessee, in the assessment proceedings, vide its reply dated 9.2.2015 has answered in detail the loss in trading, scrip wise profit and loss etc., (details are furnished from pages 38 to 47 of the paper book filed by the assessee). The AO during the course of assessment proceedings had examined the evidence furnished and had concluded the assessment. On examination of record, it is clear that loss on trading in shares amounting to ₹ 21,30,564/- cannot be from speculative business and there is no error in the Assessment order to the above extent. Appeal decided in favour of assessee.
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