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2019 (1) TMI 258 - AT - Income TaxDisallowance made u/s 14A - Held that:- Referring to ISG TRADERS LTD. VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL-III, KOLKATA. [2011 (9) TMI 58 - CALCUTTA HIGH COURT] that interest relatable to earning of exempted dividend by working out the percentage of dividend vis a vis total turnover during the year we hold that the expenditure to be disallowed u/s 14A of the Act is to be worked out in the similar fashion - Accordingly we hold that the disallowance u/s 14A of the Act should be restricted to ₹ 2,74,633/- in the facts and circumstances of the instant case - decided partly in favour of assessee Addition u/s 68 - unexplained cash credit and unexplained expenditure towards alleged commission - Held that:- We find that the assessee had clarified before the ld AO more than once in writing that it had not claimed any long term capital gains as exempt or claimed any short term capital loss in the return of income.Since the lower authorities had proceeded on an erroneous assumption that the assessee had claimed bogus long term capital gains as exempt or incurred short term capital loss with a view to evade tax, the entire findings given by them in their respective orders becomes totally irrelevant. The profits from sale of shares of Tuni Textile Mills Ltd is to be taxed as income from business as offered by the assessee and not u/s 68 of the Act under the head ‘income from other sources’, the provisions of section 115BBE of the Act cannot be made applicable in the instant case - lower authorities had erred in making and confirming the addition being gains on sale of shares of Tuni Textile Mills Ltd as bogus and consequentially adding as unexplained expenditure towards commission. Both the additions directed to be deleted - decided in favour of assessee Revisionary jurisdiction u/ 263 - disallowance u/s 14A of the Act was not made by the ld AO by applying the computation mechanism provided in Rule 8D - Held that:- Provisions of section 14A of the Act are applicable even if the shares are held as stock in trade as decided in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. We find that we have already held elsewhere in this order that the disallowance u/s 14A should be restricted to ₹ 2,74,633/- in the facts and circumstances of the instant case in the light of ISG Traders Ltd vs CIT [2011 (9) TMI 58 - CALCUTTA HIGH COURT] - As we have held that the disallowance u/s 14A of the Act cannot be made by applying the computation mechanism provided in Rule 8D of the Rules in the facts and circumstances of the instant case, we have no hesitation in quashing the revision proceedings u/s 263 - decided in favour of assessee
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