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2015 (10) TMI 182 - AT - Income TaxDisallowance of expenses u/s 14A with Rule 8D of the IT Act - Held that:- We have considered rival contentions and found that relevant assessment year under consideration are 2005-06 to 2007-08 in which rule 8D is not applicable, however, reasonable disallowance is warranted. The Tribunal in assessee's own case for the assessment year 1997-98 & 2000-01 & 2001-02 has decided the similar issue and restricted the disallowance to the extent of 5% of the dividend income. As the facts and circumstances of the case are same, we direct the AO to restrict the disallowance to 5% of the dividend income. - Decided partly in favour of assessee. Taxing interest income as income from other sources - Held that:- Major portion of the interest income was received by the assessee through ICD and not from securities as is stated u/s.56 of the I.T.Act. In case of M/s Chennai Properties & Investment Ltd. (2015 (5) TMI 46 - SUPREME COURT), the Hon'ble Supreme Court held that where the main object of the company is letting out of the property, rental income received from such letting out, is assessable as business income and not under the head of income from house property. In this case also one of the main objections of the assessee company was lending money on interest. Accordingly, we restore this issue to the file of the AO for deciding afresh the nature of income received - Decided partly in favour of assessee. Receipt of share from Venture Capital Company - Held that:- In the instant case before us what has been distributed by the Venture Capital Company to assessee is the surplus in the account of assessee with the Venture Capital Company. The distribution of the surplus is definitely chargeable to tax. In the present case a doubt has arisen only because this distribution has been done not in terms of money but in terms of kind, shareholding in a corporate entity. However, the nature of distribution of surplus can neither decide nor govern the taxability of income in the hands of assessee. Income has definitely been earned in terms of kind. In the present facts the income has really been earned in terms of kind as shares of the corporate entity. Nevertheless the nature of receipts in the hands of assessee is income being surplus in its account held with the Venture Capital Company distributed to assessee at the time of squaring up the account of assessee with the Venture Capital Company. Accordingly, we do not find any infirmity in the order of lower authorities for taxing the amount distributed by Venture Capital Company to the assessee. - Decided against assessee.
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