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2018 (9) TMI 948 - AT - Income TaxDisallowance of expenses relatable to exempt income invoking the provisions of section 14A r.w.r. 8D - Held that:- As compared the investments earlier to this year and find in the immediate preceding year i.e. as on 31-03-2009 investment to the tune of ₹ 71,45,14,402/-, which ultimately reduced in this year to ₹ 20,73,35,924/-. Accordingly we presume that no interest bearing loans have been invested in these investments. The assessee is having interest free funds available with the assessee in the shape of shares capital and reserve surplus to the tune of ₹ 235,49,56,327/- as against the available funds at ₹ 149,41,49,811/- in the immediate preceding year. We agree with the argument of the assessee that in the immediate preceding year the interest expenses paid by assessee to PCFC and PSFL amounting to ₹ 5,46,97,902/- has already been considered in earlier year and finding is given by the Tribunal in assessee’s own case that the same has been invested in the business of the assessee. In view of the above, we are of the view that only proportionate disallowance on the interest on loan taken from Infoline Finance Ltd. of ₹ 67,30,620/- can be considered for making disallowance under the formula prescribed under Rule 8D(2)(ii) of the Act. AO will only verify the figures and restricted the disallowance only on proportionate interest. This issue of assessee’s appeal is decided in favour of assessee subject to above direction. Disallowing set off of carry forward business loss from trading activity in shares by treating the same as speculation loss - Held that:- Tribunal in earlier year has treated the loss from trading activity in shares as speculation loss and that finding has neither been challenged by Revenue nor by Assessee. Once, the finding of fact is final, the only alternative left is that the loss is to be considered as speculation loss. Once the loss is considered as speculation loss, the same is to be set off against the business loss from trading activity of shares treating the same as speculation loss in view of the decision in the case of Lokmat Newspapers P. Ltd [2010 (2) TMI 94 - BOMBAY HIGH COURT] as held that once the assessee is carry on a speculative business and the profit and gains after arising from that business during the course of assessment year, the assessee is entitled to set off the losses carried forward for a speculation business arising out a previous assessment year - direct the AO to allow this speculation loss against the income earned form trading in shares. - Decided in favour of assessee
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