TMI Blog2013 (10) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... rading and software development, hence the possibility cannot be ruled out that the business premises was taken on rent taking into consideration the future requirements relating to the said business activity also - a reasonable disallowance of Rs.10 lakhs out of the entire rent disallowance made by the AO will be justified. Accordingly, the disallowance is restricted to Rs.10 lakhs on account of rent paid for the business premises. Restricting the Disallowance u/s 14A of the Income Tax Act r.w Rule 8D of the Income Tax Rules - Held that:- Relying upon Godrej & Boyce Ltd. Mfg. Co. VS. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT ] - Rule 8D was not applicable for the year under consideration - Even otherwise for application of Rule 8D, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Shri P. M. Jagtap And Shri Sanjay Garg,JJ. For the Petitioner : Shri J. D. Mistry, A.T. Jain Mahesh O. Rajora For the Respondent : Shri Javed Akhtar, D.R. ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the assessee against the order of the CIT(A) dated 17.01.12. 2. Vide ground No.1 the assessee company has contested the action of the ld. CIT(A) in confirming the disallowance of rent of Rs.81,60,000/- paid for the business premises of the assessee. 3. The assessee company is engaged in the business of investment in shares and securities. During the financial year under consideration the assessee company paid rent of Rs.81,60,000/- for its business premises. On being asked as to the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther premises from which it was running its business during the financial year under consideration. The contention of the ld. A.R. is that the rent amount was paid for a fully development furnished and infrastructure supported premises which include charges for electricity, telephone, furniture, technology support and parking etc. also. Under such circumstances, the disallowance of the entire expenditure by the AO on the ground that the assessee company intended to engage into trading and software development activity also does not seem to be justified. It was for the assessee company to decide as to what type of premises and the facilities and infrastructure it wanted to occupy to run its business. It is not the case of the Revenue that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. The AO during the assessment proceedings noticed that the assessee had claimed exempt dividend income amounting to Rs.1,15,55,39,795/-, however no part of expenditure was attributed towards earning above said exempt income. The assessee claimed that except de-mat charges of Rs.50,090/-, no expenditure was made for earning of exempt income. It was further contended that there was no nexus to the expenditure incurred and exempted income, hence no disallowance should be made under section 14A of the Act. However, the AO applying the Rule 8D disallowed a sum of Rs.31,46,288/-. In appeal, the ld. CIT(A) while relying upon an authority of the Hon'ble Bombay High Court in the case of "M/s Godrej Boyce Ltd.". Vs. DCIT [(2010) 328 ITR 81 (Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first appellate authority of Rs.30,31,633/- on account of 'mark to market loss' on F O transaction. It may be observed that no such disallowance was made by the AO in the assessment proceedings. However, during the first appeal the ld. CIT(A) observed that the 'mark to market loss' did not pertain to earning of exempt income and further that there was no receipt on sale of share derivatives. 9. It may be observed that the similar issue came into consideration before the co-ordinate bench of this Tribunal in ITA No.1502/M/12 in the case of "DCIT Vs. Kotak Mahindra Investment Ltd." While dealing with the said issue, the co-ordinate bench of this Tribunal observed that the stock future is one of the types of forward contract, which is traded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between the predetermined price and market price is settled daily on mark-to-market basis. In such type of contracts, it is not the stock value which is subject matter of the contract rather the contract itself is the stock in trade which is purchased by paying/depositing the initial margins on percentage basis to the broker taking into consideration maximum anticipated rise or fall in the price of the stock in future. As observed above, the difference of margin in calculated and settled on daily basis in view of the market rates and trends. The Hon'ble Supreme Court in the case of CIT v. "Woodward Governor India (P.) Ltd." (2009) 179 Taxman 326, while dealing with the question as to whether the additional liability arising on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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