TMI Blog2012 (4) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... income and that should be disallowed from deductions. When no expenditure is incurred by the assessee in earning the dividend income, no notional expenditure could be deducted from the said income – Decided in favor of assessee. - IT Appeal NO. 359 OF 2011 - - - Dated:- 28-2-2012 - N. KUMAR AND RAVI MALIMATH, JJ. S. Parthasarathi, P. Dinesh and Mallaha Rao for the Appellant. K.V. Aravind for the Respondent. JUDGMENT N. Kumar, J. The assessee is a distributor of state lotteries and a dealer in shares and securities. The assessee has earned dividend income of ₹ 46,67,190/- from shares of certain companies and 93% of shares of M/s. Kurlon Ltd., and further the assessee has purchased 24,000 fully paid shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowed proportionately. The expenditure, which is relatable to earning of dividend income though incidental to the trading of shares, is also to be disallowed under Section 14A of the Income Tax Act However, the Tribunal found that the Assessing Officer attributed the entire broking commission as relatable to earning of dividend income only, which is not correct. The loan has been utilized for the purchase of shares and the profit earned by sale of these shares is offered as business income. Hence, the broking expenditure has to be considered as business expenditure, as well and allowed the appeal accordingly. The Assessing Officer was directed to bifurcate all the expenditure proportionally and allow the expenditure in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted from payment of income tax proportionately, the expenditure incurred in acquiring that dividend also should be excluded from expenditure. In that view of the matter, the orders passed by the authorities are legal and valid. 5. When no expenditure is incurred by the assessee in earning the dividend income, no notional expenditure could be deducted from the said income. It is not the case of the assessee retaining any shares so as to have the benefit of dividend. 63% of the shares, which were purchased, are sold and the income derived therefrom is offered to tax as business income. The remaining 37% of the shares are retained. It has remained unsold with the assessee. It is those unsold shares have yielded dividend, for which, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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