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2020 (5) TMI 553 - AT - Income TaxAddition u/s 14A r.w.r. 8D - determining the disallowance under rule 8D(2)(ii) of the I.T.Rules AO took the gross interest as against the net interest - Whether AO ought to take net interest for the purpose of computation of disallowance under Rule 8D(2) (ii) of the Rules? - HELD THAT:- We note that this issue is no longer res integra. There are plethora of precedents wherein it was held that only net interest should be taken for the purpose of computation of disallowance under Rule 8D(2) (ii) of the Rules. See M/S UNIVERSAL INDUSTRIAL FUND LTD. [2018 (3) TMI 207 - ITAT KOLKATA] and M/S. SUHAMI POWER & FINANCE CORPORATION VERSUS ACIT, RANGE -17 (3) , MUMBAI [2019 (7) TMI 1621 - ITAT MUMBAI] We direct the AO to compute the disallowance under rule 8D(2) (ii) only after taking net interest (interest received minus interest paid). The assessee is also directed to furnish the details of interest received/paid, before the assessing officer along with documentary evidence, if any. Therefore, we allow the issue of computation of disallowance under rule 8D(2) (ii) of the Rules for statistical purposes. Average value of stock-in-trade will not be taken in determining the disallowance under section 14A read with rule 8D - Counsel submits that the value of investment will not include the value of shares held as stock-in-trade, as the main object of the assessee is to purchase and sale of shares - HELD THAT:- In the light of the above stated judgment of the Hon`ble Supreme Court in the case of Maxopp Investment [2018 (3) TMI 805 - SUPREME COURT] it is abundantly clear that the expenditure incurred in acquiring those shares, which is held in ‘stock-in-trade’ will have to be apportioned. Therefore, section 14A read with rule 8D will be applicable in a situation when the assessee keeps shares in ‘stock-in-trade’. Whether all shares held in ‘stock-in-trade’ should be considered for disallowance under section 14A or only those shares which yielded the dividend income? - HELD THAT:- As respectfully following the judgment of Hon`ble Supreme Court, in the case of Maxopp Investment (supra) and respectfully following the judgment of the Coordinate Bench of Kolkata in the case of REI Agro Ltd [2013 (9) TMI 156 - ITAT KOLKATA] we direct AO to compute the disallowance under section 14A read with rule 8D in respect of shares held in ‘stock-in -trade’ by applying the theory of apportionment of expenditure and taking into account only those shares which yielded dividend income.For statistical purposes, the second issue raised by the assessee is allowed. Order being pronounced after the 90 days of hearing - Covid-19 pandemic - HELD THAT:- Taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JCB Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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