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2018 (10) TMI 1115 - AT - Income TaxDisallowance u/s 35D - deduction on account of preliminary expenses - Held that:- The income from freight having been received by the assessee-company from its operation for the first time in the financial year 1995-96, the business had commenced in that year and the assessee was entitled for deduction on account of preliminary expenses to the extent of 1/10th in each of the ten successive years. It is, however, observed that the similar claim made by the assessee of having commenced the business of transportation in the financial year 1995-96 was rejected by the Assessing Officer on the ground that there was no evidence produced by the assessee to support and substantiate the same. CIT(Appeals), on the other hand, confirmed the said disallowance made by the Assessing Officer by referring to Clause (ii) of sub-section (1) of section 35D, whereas the claim of the assessee, as submitted by the ld. Counsel for the assessee, is made as per Clause (i) of sub-section (1) of section 35D. Restore this issue to the file of the Assessing Officer for deciding the same in accordance with Clause (i) of sub-section (1) of section 35D after verifying the claim of the assessee of having commenced the business of transportation in the financial year 1995-96. Disallowance of assessee’s claim for set off of speculation loss against the profit earned by the assessee from delivery based transactions - Held that:- The gross total income of the assessee would not consist mainly of income, which is chargeable under the head “capital gains” as its business income could be more than income from capital gains and the profit from the purchase and sale of shares could be deemed to be a speculation profit as per Explanation to section 73. Consequently the assessee would be entitled to set off this speculation loss from the said profit as per section 73 as rightly claimed by it. Therefore, allow the claim of the assessee for such set off and allow assessee's appeal Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - Held that:- As clearly evident from the relevant balance-sheet of the assessee-company showing that sufficient own funds were available with the assessee-company to make the investment in shares at the relevant time, find merit in the contention of the ld. Counsel for the assessee that the disallowance on account of interest under section 14A as made by the Assessing Officer by applying Rule 8D and confirmed by the ld. CIT(Appeals) is not warranted. The disallowance under section 14A read with Rule 8D thus works out to ₹ 4,03,050/- as against ₹ 15,23,813/- worked out by the Assessing Officer. I accordingly direct the Assessing Officer to re-compute the disallowance to be made under section 14A read with Rule 8D and allow partly the appeal of the assessee for A.Y. 2010-11.
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