Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 110 - ITAT AHMEDABAD

2015 (11) TMI 110 - ITAT AHMEDABAD - TMI - Disallowance under section 14A - Held that:- Having noted that there are admittedly no direction expenses incurred in earning the dividends which could qualify for being covered by rule 8D2(i), we delete the impugned disallowance. The assessee gets the relief accordingly. - Decided in favour of assesae

Allocation of STT - Held that:- With the consent of the parties, this issue is remitted to the file of the Assessing Officer for fresh adjudic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X


Allocation of common expenses - Held that:- Allocation of common expenses between speculation and non-peculation business is covered by Tribunalís decision in assesseeís own case for the immediately preceding assessment year. Explanation to Section 73(1) is not applicable and, therefore, loss from business of purchase and sale of shares on delivery basis cannot be considered as speculation loss and only the loss from commodity transaction business has to be considered as speculation loss. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sly erred in law and on facts in confirming the following additions/ disallowances:- (a) disallowance under section 14A - ₹ 42,97,650; (b) allocation of STT- ₹ 10,12,199;and (c) allocation of common expenses- ₹ 27,57,751 . We will take up these three issues one by one. 3. As far as disallowance of ₹ 42,97,650 under section 14A is concerned, the relevant material facts are like this. The assessee company is engaged in the business of trading in shares. It had a closing sto .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

compute the disallowance by taking the value of closing stock of shares as investment income from which does not form part of the total income . On this basis, as against a dividend income of ₹ 5,28,274, a disallowance of ₹ 42,97,650 was computed. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) noted that in view of the judgment of Hon ble Bombay High Court in the case of Godrej & Boyce Mfg Co Ltd Vs DCIT [ 328 ITR 81 (Bo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are to be held applicable in this case-as was held therein, computation provisions under rule 8D2 (ii) and (iii) will fail because the dividend yielding shares are held as stock in trade and not as investments, and the disallowance under rule 8D(2)(i) will be confined to only direct expenses for earning the tax exempt income. In this regard, following observations may be referred to: 5. We consider it appropriate to begin with reproducing Rule 8 D of the Income Tax Rules, which is as follows: & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). (2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income which does not form part of total income; (ii) in a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng in the balance sheet of the assessee, on the first day and the last day of the previous year; (iii) an amount equal to one-half per cent of the average of the value of investment, income from which does not or shall 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." 3. For the purposes of this rule, the 'total assets' shall mean, total assets as appearing in the balance sheet excluding the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted is the value of "investments, income from which does not or shall not form part of total income", and, when there are no such investments, the rule cannot have any application. When no amount can be computed in the light of the formula given in rule 8 D(ii) and (iii), no disallowance can be made under rule 8D (2)(ii) and (iii) either. As held by Hon'ble Supreme Court in the case of CIT v. B C Srinivasa Setty [1981] 128 ITR 294, when computation provisions fail, the charging pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pugned disallowance of ₹ 42,97,650. The assessee gets the relief accordingly. 6. In the next grievance, the assessee is aggrieved of allocation of STT amounting to ₹ 10,12,199. However, with the consent of the parties, this issue is remitted to the file of the Assessing Officer for fresh adjudication in the light of the principles laid down by Hon ble Bombay High Court in the case of CIT Vs Manish D Innai [370 ITR 679 (Bom)] and in the light of such other binding judicial precedents .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ibunal s decision dated 18th May 2013 assessee s own case for the immediately preceding assessment year. In the said decision, the coordinate bench has, inter alia, observed as follows: 9. We have considered the rival submissions, perused the material on record and have gone through the order of authorities below and the judgments cited by both the sides. Regarding this aspect as to whether allocation is to be made or not, we find that the judgement of Hon'ble Allahabad High Court cited by L .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ered opinion, the total expenses considered by the A.O. for allocation of ₹ 13,76,995/- should be allocated to all the three activities i.e. purchase and sale of shares, having turnover of ₹ 1437.85 lacs, speculative loss of commodity transaction of ₹ 21.40 lacs and income from derivative transaction of shares of ₹ 50.43 lacs. If these expenses are allocated to these three activities in the ratio of the turnover of these three activities then, the amount to be allocated t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ale of shares by way of delivery ₹ 13,08,145 and the remaining expenses of ₹ 48195/- is required to be allocated to income from derivative transaction of shares. Accordingly, the profit and loss of these three activities should be as under: A Profit & Loss in the business of purchase and sale of shares by delivery: Sale of shares Rs.14,37,85,465 Add: Closing Stock ₹ 2,99,59,113 Rs.17,37,44,578 Less: purchase se of shares Rs.17,37,34,136 Less DMAT charges Rs.95,496 Less: Ser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nses allocated as above ₹ 48,195 Total expenses Rs.16,70,336 Net income Rs.33,72,982 I.T.A.No. 1330 /Ahd/2011 10. Now, we consider the third aspect as to whether the loss in the business of share trading by delivery should be considered as speculation loss by invoking the provisions of Explanation to Section 73(1). For this issue, reliance was placed by the Ld. A.R. on the judgement of Hon'ble Bombay High Court rendered in the case of CIT Vs Darshan Securities Pvt. Ltd. (supra). In tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 15,66,518/- from business of share trading and there is loss of ₹ 21,60,668/- from business of commodity. After adjusting these two losses against the income from derivative transaction, there is net loss of ₹ 3,54,204/- and income under the head income from other sources as assessed by the A.O. is ₹ 5,46,854/- and hence, income from other sources is more than the business loss and, therefore, the Explanation to Section 73(1) is not applicable because gross total income co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version