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TMI Blog2015 (5) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in both the appeals are common, the appeals are taken up together for adjudication. 2. The brief facts of the case as emanating from records are : The assessee is engaged in trading of shares and securities. The assessee filed its return of income for the assessment year 2006-07 on 28-09-2006, declaring total income of Rs. 22,19,960/- and for the assessment year 2007-08 on 30-10-2007, declaring net loss of Rs.(-)20,79,601/-. The returns of the assessee for both the assessment years were selected for scrutiny. In this assessment year 2006-07 the Assessing Officer inter alia made addition of Rs. 98,124/- u/s. 14A r.w. Rule 8D. The Assessing Officer held that the assessee has earned dividend income. No separate accounts for trading portfol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer observed that the assessee has paid total interest of Rs. 15,85,460/- on loan amount of Rs. 1,74,35,318/-. The average rate of interest paid by assessee is 9.09%. Part of interest bearing funds (Rs.67,89,847/-) were utilized by the assessee for non-business purposes. Accordingly, the Assessing Officer made proportionate disallowance of interest on funds allegedly diverted for non-business purpose. Aggrieved by the assessment order dated 24-12-2009, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) sustained the addition of Rs. 3,27,585/- u/s. 14A r.w. Rule 8D. However, with regard to disallowance of interest, the Commissioner of Income Tax (Appeals) grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 for the assessment year 2005-06 decided on 13-04-2011 has upheld the findings of Commissioner of Income Tax (Appeals) in deleting the disallowance of interest. 7. On the other hand Shri B.C. Malakar representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals). The Ld. DR submitted, that from the perusal of records it is not clear that the dividend income received by the assessee is from the shares held under investment portfolio or for trading purposes. So far as disallowance of interest is concerned, the Commissioner of Income Tax (Appeals) after considering the submissions of the assessee and calculation of interest given in statement of facts granted partial relief to the assessee. The Ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years. The Hon'ble High Court has held that the provisions of Rule 8D shall be applicable from assessment year 2008-09. 9. In the present case, since the shares were not held as investment and dividend was received by the assessee on the shares held as stock-in-trade in the course of business, there is no question of making disallowance u/s. 14A of the Act. Similar view has been taken by the Co-ordinate Bench of the Tribunal in the case of Vishweshwar Sahakari Bank Ltd. (supra). Accordingly, this ground of appeal of the assessee in both the assessment years is allowed. 10. In assessment year 2007-08 the assessee has also raised issue with respect to disallowance of interest. The assessee has paid total interest of Rs. 15,85,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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