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2019 (9) TMI 388 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - average value of investments for the purpose of Rule 8D(2)(ii) & (iii) - HELD THAT:- As in the case of REI Agro Ltd. Vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by HC [2014 (4) TMI 713 - CALCUTTA HIGH COURT] We note that assessee has suomoto disallowed direct expenses of ₹ 3,940/- under Rule 8D(2)(i), the said disallowance is hereby confirmed. So far Rule 8D(2) (iii) is concerned, we direct the AO to compute the disallowance taking into account dividend bearing securities as held by the Coordinate Bench in the case of REI Agro(supra). Hence, we allow the ground No. 1 raised by the assessee for statistical purposes. Addition on account of loss incurred by the assessee on account of forward and option derivative contract - HELD THAT:- A liability is said to have accrued when a pending obligation on the balance sheet date was determinable with reasonable certainty. Hence, the loss on account of unexpired future contracts should be allowed by the A.O. We note that the assessee company follows method of valuation of stock in trade as 'lower of cost or market price'. This method is consistently followed by the company. Futures and options in the share trading business are derivatives in the nature of stock-in-trade which are required to be valued at the method of valuation adopted by the Company by using accounting standards and therefore accordingly loss arising from 'Marked to Market' valuation is allowable as deduction. Such loss is not considered as notional as per accounting standard-30 (Now, as per Ind AS 109 which is applicable to big companies in India). DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. As relying on M/S. NAGREEKA EXPORTS LTD. [2016 (9) TMI 638 - ITAT KOLKATA] we allow the ground raised by the assessee. Disallowance of STT - AO noticed that as per Form No. 10DB there is difference between STT paid and amount debited by assessee - AO treated the balance sum as income of the assessee from undisclosed sources and hence he disallowed the same - HELD THAT:- Assessing Officer did not understand the factual position as it was given in certificate 10DB submitted by the assessee. The amount of ₹ 7,94,107/- considered by the Assessing Officer includes three forms for F.Y. 2008-09. We note that copies of Form No. 10DB reflecting aggregate amount of ₹ 4,50,677/- with respect to STT paid for F.Y. 2007-08 has not been considered by AO. Therefore, we direct the Assessing Officer to examine form No. 10DB and allow the claim of the assessee to the tune of ₹ 4,50,677/- in accordance to law. Therefore, we allow this ground raised by the assessee for statistical purposes.
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