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2018 (3) TMI 810 - AT - Income TaxDisallowance of interest - Held that:- No disallowance of interest can be made merely because advance was given at a lower rate of interest or without charging any interest to the wholly owned subsidiaries. In the instant case before us, advance was given to the wholly owned subsidiaries at an interest rate of 9%. No infirmity in the order of CIT(A) for deleting the disallowance of interest so made by the AO. Disallowance u/s. 14A r.w.R. 8D(2)(iii) - Held that:- Since the assessee’s own funds were more than the investment no disallowance of interest is warranted under Rule 8D2(ii) of the IT Act. Accordingly, there is no infirmity in the order of CIT(A) for deleting the disallowance of interest u/s.14A. No merit for the disallowance of corporate membership fees paid to be treated as revenue expenditure incurred for business purposes. Disallowance made by AO under Rule 8D(2)(iii) - Held that:- Restore the matter back to the file of AO and direct the AO to recompute the disallowance after excluding the investment on which no exempt income has been earned as well as investment in subsidiary companies. Reopening of assessment - allowing setting of speculation loss from trading in shares out of income from trading in commodities - Held that:- Since assessee was trading at un-recognised stock exchange, therefore, income arising out of trading of commodities at such unrecognized stock exchange also amounts to speculation income, therefore, there is nothing wrong for allowing set off speculation loss against speculation income and for carry forward of unabsorbed speculative loss to be set off against the future speculation income. The AO has not disproved that the commodity trading income was not out of unrecognized commodity exchange market and as long as when the assessee earned out of unrecognized commodity exchange, the income or loss out of transaction on such unrecognized exchange will remain speculative in nature- the amendment in Sec 43(5)(d) was only to provide benefit to the assessees to treat their losses as non speculative only when such losses were incurred while trading on any recognized stock exchange and not otherwise. In view of decision of Bharat Ruia [2011 (4) TMI 37 - BOMBAY HIGH COURT ] the assessee has correctly set off speculation loss on shares against speculative income from trading in commodity and carried forward the unabsorbed speculative loss to the subsequent year to be set of against speculative income. - Decided in favour of assessee.
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