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2019 (7) TMI 355 - AT - Income TaxAddition u/s 14A r.w.r. 8D - Addition of PPF Interest - According to the assessee, she has made investment in PPF account after receiving maturity amount earlier invested - HELD THAT:- To our mind the assessee has demonstrated the source of fund and no disallowance is required on account of administrative expenses for managing PPF account. Therefore, addition to the extent of ₹ 29,989/- deserves to be deleted. We delete accordingly. Addition of Dividend income - Contentions of the assessee is that she has capital out of which it can be alleged that she made investment - HELD THAT:- Proprietor’s capital has been shown at ₹ 42,08,954/- as on 31.3.2012, but her investments are more than this. Her total investment was at ₹ 1,33,52,645/-. Against immovable properties she has shown investment of ₹ 9,98,150/-. Now what are these immovable properties, is not ascertainable, and what is the source of these, is also not identifiable. Her interest free fund is far less than the investment, and therefore, AO has rightly haboured a belief that interest expenses required to be calculated on the investment made by the assessee. One of the arguments raised by the assessee before the ld.Revenue authorities was that since she was in the business of trading in shares and securities, therefore, no disallowance out of interest expenditure is to be made. This aspect has been settled in the decision of Hon’ble Bombay High Court in the case of Godrej & Boyce vs. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] as well as in the case of Maxopp Investment Ltd v/s CIT [2018 (3) TMI 805 - SUPREME COURT] that if the assessee has been trading in shares and earned incidental income on such trading in the shape of dividend then also expenses relatable to exempt income are required to be calculated and disallowed. For Asstt.Year 2012-13, we allow the appeal of the assessee partly and confirm the disallowance at ₹ 46,625/-. As far as Asstt.Year 2014-15 - assessee failed to give any plausible explanation as to how the expenses are not required to be disallowed. CIT(A) has examined this issue in detail. She has made investment in the mutual fund to the extent of ₹ 94,54,500/- in the financial year 2013-14. She has failed to show that such investment was made out of interest free funds. AO has rightly worked out the disallowance under section 14A. The only amount which requires to be excluded is allowance of ₹ 9600/- which has been received by the assessee as transport allowance. Appeals of the assessee are partly allowed.
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