TMI Blog2012 (11) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Management P. Ltd. (2008 (10) TMI 383 - ITAT MUMBAI). - ITA No. : 6711/Mum/2011 - - - Dated:- 14-9-2012 - SHRI RAJENDRA SINGH, AND SHRI VIJAY PAL RAO, JJ. Appellant by : Shri K. C. Kutty Respondent by : Shri Dharmesh Shah O R D E R Per Rajendra Singh, A.M. : This appeal by the Revenue is directed against the order dated 25.07.2011 of CIT(A), Mumbai for the A.Y. 2008-09. The only dispute raised by the Revenue in this appeal is regarding the disallowance of expenses in relation to the exempt income u/s.14A of the I.T. Act. 2. The facts in brief are that the A.O. during the assessment proceedings noted that the assessee had received dividend income of Rs.1,40,859/- which was exempt from tax. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed the disallowance both direct expenses and indirect expenses at Rs.47,247/- and disallowance was upheld only to that extent and the balance addition made by the A.O. was deleted. Aggrieved by the said decision, the Revenue is in appeal before the Tribunal. 4. Before us, the ld. DR appearing for the Revenue assailed the order of the Ld.CIT(A). It was submitted that the provisions of section 14A were applicable even in relation to the dividend income received from the trading in shares as held by the Special Bench of the Tribunal in the case of ITO vs. M/s. Daga Capital Management P. Ltd. (117 ITD 169). He also referred to the latest decision of the Tribunal dated 08.08.2012 in ITA No.5904 6022/Mum/2000 in the case of M/s. America ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n trading account. The Revenue has placed reliance on the decision of Mumbai Bench of the Tribunal in the case of M/s. American Express Bank Limited (supra) in which the Tribunal has held that the expenditure u/s.14A has to be disallowed even in respect of dividend income received from trading shares. The Tribunal followed the decision of the Special Bench of the Tribunal in the case of ITO vs. Daga Capital Management Pvt. Ltd. (supra). The assessee in that case had relied on the judgment of Hon ble High Court of Kerala in the case of CIT vs. Smt. Leena Ramachandran (339 ITR 296) to argue that the disallowance could not be made in relation to the dividend received from trading shares. The Tribunal had however, distinguished the said judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 8D by the A.O. and confirmed by the Ld.CIT(A). The Tribunal agreed with the authorities below that the expenditure relatable to earning of dividend income though incidental to the trading in shares was also to be disallowed u/s.14A of the I.T. Act. The Tribunal however, had observed that the entire broking commission was not relatable to earning of dividend income as the loan had been utilised for the purchase of shares and the profit shown from the sale of shares had been offered as business income. The Tribunal, therefore, directed the A.O. to bifurcate the expenditure proportionately. The order of the Tribunal was however, not upheld by the Tribunal. The High Court noted that 63% of shares which were purchased were sold and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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