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2019 (10) TMI 1069 - AT - Income TaxDisallowance u/s 14A r.w. Rule 8D - HELD THAT:- In the present case the AO was not satisfied with the claim of the assessee. The AO, having regard to the accounts of the assessee has arrived at a finding that it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. Only thereafter, the AO has made the disallowance u/s 14A r.w. Rule 8D. Therefore, we are not inclined to agree with the contentions of the Ld. counsel that no satisfaction has been recorded by the AO in an objective manner. In MAXOPP INVESTMENT LTD. [2018 (3) TMI 805 - SUPREME COURT] held if expenditure in incurred on earning dividend income, that much of the expenditure which is attributable to dividend income has to be disallowed and cannot be treated as business expenditure. In those cases, where shares are held as stock-in-trade, main purpose is to trade in those shares and earn profits therefrom, in the process, certain dividend is also earned, though incidentally, which is also an income. This triggers applicability of section 14A which is based on theory of apportionment of expenditure between taxable and non-taxable income. Therefore, to that extent, expenditure incurred in acquiring those shares will have to be apportioned In Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. We are of the considered view that the ratio laid down in the above decision is squarely applicable in the instant case. Therefore, we set aside the order of the Ld. CIT(A) for the impugned assessment years and restore the matter to the file of the AO to make a de novo order after following the ratio laid down in Vireet Investment (P.) Ltd.(supra). We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give a reasonable opportunity of being heard to the assessee before finalizing the order.
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