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2017 (6) TMI 914 - AT - Income TaxAddition made u/s 94(7) - disallowance of loss on sale of shares - assessee has received dividend income and also the claim loss on sale of same shares from which it has received dividend - Held that:- There were huge opening balances of shares of GHCL coming from earlier years which were more than 1.40 crore shares and during the year assessee has purchased only 5,65,864 shares. As against such huge holding of GHCL shares, only 16,50,414 of these shares were sold. Thus, prima facie it cannot be reckoned that the loss on sale of GHCL is only on account of the shares which were held for less than period of three months. This aspect has not been examined by the lower authorities. Under these facts and circumstances, we are of the considered opinion that this issue should be restored back to the file of the Assessing Officer who shall examine the details as furnished by the assessee and also examine the conditions as laid down in u/s 94(7) before disallowing the loss. Disallowance u/s 14A - Held that:- Neither of the authorities have analysed the assessee’s accounts specifically the nature of expenditure debited to the profit & loss account as well as the stocks of shares recorded in the books of account, i.e., whether it is held as stock-in-trade or as investment or as both. When the assessee has demonstrated that the interest bearing funds have been utilized for giving loans and advances on which huge interest income has been earned, then prima facie there could not be any case of disallowance of interest. Similarly with regard to the working of indirect expenditure there are various aspects which needs to be examined to like nature of expenses debited, working of average value of investment, if rule 8D at all is held to be applicable. None of these fact and assessee’s nature of accounts have been examined by AO or CIT (A) as per law enshrined in section 14(2). Accordingly, the whole matter regarding disallowance u/s 14A should be restored back to the file of the Assessing Officer to re-examine the claim. Appeal of the assessee is allowed for statistical purposes.
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