TMI Blog2014 (4) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... did not commit any error in accepting the claim of the assessee – Decided against Revenue. Disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules – Held that:- The third component to compute disallowance u/s 14A as described in Rule 8D(2)(iii) is an amount equal to ½ % of the average of the value of investment, income from which does not or was not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year - the third component which to be is taken into consideration while calculating the disallowance is prescribed in the Rules - In absence of concrete material made available by the assessee to show that such component was not warranted, the case of the assessee cannot be accepted - no concrete material has been brought on record by the assessee to come out of the component described in Rule 8D(2) (iii) to content that the same was not applicable – thus, there is no reason to interfere in the order of CIT(A) – Decided against Assessee. - I.T.A. No. 3756/MUM/2012, I.T.A No. 2918/MUM/2012 - - - Dated:- 2-4-2014 - Shri I. P. Bansal, JM And Rajendra, AM,JJ. For the Petitioner : Shri Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) The decisions cited by the assessee don t address the instant issue and are distinguished on facts. 2.2 Accordingly, the AO treated the said loss to be hit by explanation to Section 73 and the said loss was treated as speculative loss and added to the income of the assessee. The addition was agitated in the appeal filed before Ld. CIT(A). Before Ld. CIT(A) it was pleaded that assessee is broker for retail sales for institutional clients which places order for the trade in bulk, and the same need to be executed immediately with order specification i.e. quantity, rate and time. While executing the deal, there are all the chances of committing error. The normal nature of error are causes or causes of disputes and can be summarized as under: (i) Some times orders placed for sale, and while dealer by mistakes execute trade for purchase. (ii) Rate difference, where the order placed to buy / or sale at particular rate, but the trade is executed at the some different rate. (iii) The difference in quantity, sometimes order ( buy or sale) placed for quantity and order is executed for quantity. (iv) Sometimes order placed are for higher quantity, but during the trading hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable as loss. He submitted that Ld. CIT(A) has rightly accepted the claim of the assessee and such acceptance by Ld. CIT(A) is supported not only by aforementioned decisions which have been relied upon by the assessee before Ld.CIT(A) but also by the following decisions: (1) 33 CCH 124 (Mum-Trib) HSBC Securities Capital Markets India P. Ltd., vs. ACIT (2) 139 ITR 149 (AP), CIT vs. Shah Pratapchand Nowpaji (3) 91 TTJ 57 (Del-Trib) ACIT vs. Subhash Chandra Shorewala. (4) 50 SOT 592 (Ahd-Trib) ITO vs. Rajiv Securities P. Ltd. Thus, it was pleaded by Ld. AR that there is no error in the order of Ld. CIT(A) and his order in this regard should be upheld. 5. We have heard both the parties and their contentions have carefully been considered. Right from the assessment proceedings it was the case of the assessee that the impugned loss has occurred to the assessee in respect of error trade. Due to dispute with the clients, for the transaction, it does not change the relation of principal and the agent. The assessee for business consideration chooses not to recover the losses. These losses are in the course of business and should be allowed as such under section 28 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. During the course of hearing before us it was submitted by Ld. AR that the basis of disallowance under Rule 8D(2)(iii) by the AO is stated at page 2 of the assessment order in para (ii) where the reason stated is as assessee is maintaining consolidated accounts precluding possibility to establish one to one nexus between expenses and exempt income yielding investment, he is satisfied on an objective basis that the assessee is unable to establish the correctness of its claim. He submitted that it is in this manner the AO has discarded the claim of the assessee that the disallowable amount calculated by the assessee at Rs.96,524/- was not acceptable. He submitted that non-maintenance of separate accounts for earning tax free income does not debar the assessee to claim that disallowance cannot be with reference to Rule 8D(2)(iii). 8. On the other hand, Ld. DR relied upon the order passed by Ld. CIT(A). 9. We have heard both the parties and their contentions have carefully been considered. The calculation of disallowance by the AO is as under: The disallowance is computed as under:- A = Rs. 3,15,22,321/- B = Rs. 27,89,18,820/- C = Rs. 1,45,36,90,551/- Disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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