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2015 (12) TMI 140 - ITAT MUMBAI

2015 (12) TMI 140 - ITAT MUMBAI - TMI - Disallowance made u/s. 14A - Held that:- As relying on Derive Trading Pvt. Ltd case [2014 (12) TMI 1152 - ITAT MUMBAI ] we direct the AO to recompute the disallowance u/s. 14A with the rider to the actual expenditure which can be attributable to the receipt or earning of the dividend income excluding the expenditure related to business activity of share trading. - Decided in favour of assessee for statistical purposes.

Disallowance of Broken Per .....

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ated:- 4-11-2015 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER For The Assessee : Shri Satish Mody For The Revenue : Shri A.K. Srivastava ORDER PER N.K. BILLAIYA, AM: These are cross appeals by the assessee and the Revenue against the very same order of the Ld. CIT(A)-6, Mumbai dated 21.10.2013 pertaining to Assessment year 2010-11. Both these appeals were heard together and disposed of by this consolidated order for the sake of convenience. ITA No. 820/M/2014 - .....

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interest is not allowed as business expense, then broken period interest should be allowed as cost of acquisition of such securities. Any long term capital gain (LTCG) on sale of such securities should be taxed @ 20% after allowing indexed cost of acquisition (currently profit on sale of such securities are taxed @ 30% as business income.) 3. The first ground relates to the disallowance made u/s. 14A of the Act. 3.1. This issue has been considered by the AO at page-10 in para-5 of his order whe .....

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e assessee can earn both tax free as well as taxable income from the same investments cannot be considered to calculate disallowance under Rule 8D. The submissions of the assessee did not find favour with the AO who proceeded by computing the disallowance at ₹ 15,63,697/-. 4. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) but without any success. 5. Before us, the Ld. Counsel for the assessee reiterated what has been stated during the course of the assessment proc .....

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indings of the lower authorities. 7. We have given a thoughtful consideration to the orders of the authorities. We have given a thoughtful consideration to the orders of the authorities below. We are inclined to accept the contention of the Ld. Counsel. In our considered opinion, the facts in issue before us are similar to what has been considered by the Co-ordinate Bench in the case of Derive Trading Pvt. Ltd (supra) wherein the Coordinate Bench has considered the decision in the case of Rmkuma .....

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e case of D.H. Securities (P) Ltd. vs. DCIT (2014) 41 taxmann.com 352 and the matter was referred to the Third Member. The decision of the Hon ble Karnataka High Court in the case of CCI Ltd. vs. JCIT (2012) 250 CTR (Kar) 291 was referred to and discussed before the Tribunal and it has been held that in view of the decision of the Hon ble jurisdictional High Court of Bombay in the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT [2010] 328 ITR 81 (Bom) and the Hon ble Kolkata High Court in the .....

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ed or not, is embedded in the expenditure incurred for share trading activity and is liable to be apportioned in the light of the provisions of section 14A of the Act. The decision of the Hon ble Karnataka High Court relied upon by the assessee has been duly discussed and distinguished in the Third Member Case of D.H. Securities (P) Ltd. vs. DCIT (supra). However, it has been further observed in the said Third Member decision of the Tribunal that the shares which yield tax exempt dividend income .....

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tion. The tribunal observed that while scaling down the said amount no hard and fast rule can be applied and the same can be determined only on adhoc basis. The Tribunal also observed that where the share trading is the dominant object of purchase and sale of shares, the turnover of the year would be very high in comparison to the available share holding because of the continuous activity of sale and purchase of shares. Hence, mechanical application of Rule 8D(2)(ii) would be wrong. The Tribunal .....

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Co-ordinate Bench of the Tribunal in the case of Damani Estates & Finance Pvt. Ltd. (in ITA No. 3029/Mum/2012 dated 17.07.2013). 4. In our view, taking into consideration the fact that the primary object of holding the shares is trading and the dividend income is incidental and further that due to continuous activity of sale and purchase of the shares, the annual turnover would be much higher in case of share trading as compared to the investments made for the purpose of earning of exempt in .....

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red to be scaled down which we think that should be restricted to 10% of the amount so calculated under Rule 8D(2)(iii). In view of our above observations, the disallowance u/s.14A read with Rule 8D is, accordingly, restricted to 5% of the amount arrived at under Rule 8D(2)(ii) and 10% of the amount calculated by the A.O. under Rule 8D(2)(iii). 8. The Tribunal further observed as under: Therefore, the disallowance computed under Rule 8D of the Income Tax Rules cannot be more than the actual expe .....

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s 14A with the rider to the actual expenditure which can be attributable to the receipt or earning of the dividend income excluding the expenditure related to business activity of share trading. Respectfully following the findings of the Co-ordinate Bench, we direct the AO to recompute the disallowance u/s. 14A with the rider to the actual expenditure which can be attributable to the receipt or earning of the dividend income excluding the expenditure related to business activity of share trading .....

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not be disallowed as the amount needs to be considered as the part of cost price of the securities acquired by the assessee. The assessee explained its claim vide reply dated 28.12.2012 wherein strong reliance was placed in the decision of the Hon ble Bombay High Court in the case of American Express International Banking Corpn. 258 ITR 601. 9.2. After considering the detailed submissions made by the assessee, the AO was of the opinion that on identical set of facts, the department has not accep .....

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ax Appellate Tribunal was correct in law in holding that the broken period interest is allowable as a deduction, in spite of the hon'ble Supreme Court's decision in the case of Vijaya Bank Ltd. v. Addl. CIT [1991] 187 ITR 541(SC) and the Rajasthan High Court's decision in the case of CIT v. Bank of Rajasthan Ltd. [2009] 316 ITR 391? 11.1. The Hon ble High Court answered the question as under: Even as far as question (B) is concerned, we find no infirmity in the orders passed by the C .....

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of this court in the case of American Express International Banking Corporation (supra). In view thereof, we do not find that even question (B) gives rise to any substantial question of law that needs to be answered by this court. 12. As the issue has been decided in favour of the assessee and against the Revenue, we set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of ₹ 11,50,42,776/- in the light of the decision in the case of HDFC Bank (supra). Ground No .....

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rated below: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred allowing the depreciation of ₹ 27,09,894/- on assets leased out, when the related transactions were purely financial transaction. 2. On the facts and in circumstances of the case and in law, the Ld.CIT(A) erred in not following the decision of Special Bench in the case of Indusind Bank, as reported in 135 ITD 165, and the ratio laid down by the Hon'ble Supreme Court of India in the case of .....

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and coming to a conclusion that the assessee is entitled for deduction with respect to the diminution in value of the investment held to maturity on the ground of mandate by RBI guideline without appreciating the ration of the decision of Hon'ble Supreme Court in the case of Southern Technologies vs. CIT 320 ITR 577. 16. Ground No. 1,2 & 3 relate to the same issue in relation to the claim of depreciation on leased assets amounting to ₹ 27,09,894/-. 16.1. The AO at para-7.1 of his o .....

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er mainly in ITA Nos. 3006/M/01 and 4892/M/03 and ITA No. 3620/M/01 alongwith other appeals order dated 20.3.2013 has held at para-34 as under: After having examined all the transactions which have been impugned before us, we are of the opinion that the assessee is entitled for the claim of depreciation under all the three circumstance i.e. Sale lease back, genuineness of transaction and asset having being put to use. We, therefore, allow ground No.1 of the assessee s appeal and dismiss both the .....

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sue has been considered by the AO at para-4 of his order wherein the AO observed that on the claim of ₹ 10,64, 19,514/- being amortisation of premium on HTM securities. The assessee was asked to explain why the same should not be disallowed as there is no provision in the Act for such deduction. The AO further at para- 4.4. on page-9 of his order observed that a similar claim has not been accepted by the Department in the case of HDFC bank and keeping in view the stand taken by the Departm .....

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