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2018 (8) TMI 913 - AT - Income TaxDisallowance made under section 14A on account of interest - assessee suo moto disallowed a certain sum - AO observed that, claim of the assessee of having earned the substantial income by way of dividend by incurring a nominal expenditure was not correct. - Held that:- for the purpose of applying Rule 8D(2)(ii) prior to its amendment with effect from 02.06.2016, what would be considered as amount of expenditure by way of interest would be the interest paid by the assessee on the borrowings minus the interest income earned during the financial year. The benefit of netting of interest thus has been allowed by the Hon’ble Gujarat High Court without emphasising on the need of having any inextricable link between the interest earned and interest paid. - Decided against the revenue. Disallwance of long term capital loss - shares had been sold off market to a group company showing a loss - AO treated the said transactions as a colorable devise mainly because it resulted in a substantial long term capital loss on the ground that the said transactions were entered into by the assessee company with its group companies off market. - Held that:- In the present case, the transactions of sale of shares were duly supported by the required documentary evidence and the fact that delivery instructions were also issued by the assessee company to the depository participant on the date of sale itself clearly shows that the same were followed by actual delivery of shares. Moreover, the relevant share transactions were affected at the same price as was quoted on the stock exchange on the same date. Ld. CIT(A) was fully justified in deleting the disallowance made by the AO on account of assessee’s claim for long term capital loss by relying on the said decision [2010 (4) TMI 293 - PUNJAB & HARYANA HIGH COURT] - Decided against the revenue.
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