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2015 (5) TMI 1034 - ITAT PUNE

2015 (5) TMI 1034 - ITAT PUNE - TMI - Addition u/s. 14A r.w. Rule 8D in respect of dividend income received by the assessee - Held that:- 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.

In assessment year 2007-08 the assessee has also raised issue with respect to disallowance of interest. The asses .....

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ccepted the contentions of the assessee and reduced the disallowance of interest to ₹ 1,23,389/-. The Commissioner of Income Tax (Appeals) also accepted the rate of interest admitted by the assessee @ 7.58%. The grievance of the assessee is that the Commissioner of Income Tax (Appeals) has not properly appreciated the detailed interest calculations. We observe that the detailed computation of interest which was filed by the assessee before the Commissioner of Income Tax (Appeals) was not a .....

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K. Panda (Accountant Member) And Vikas Awasthy (Judicial Member) For the Petitioner : Sunil Ganoo For the Respondent : B. C. Malakar ORDER Vikas Awasthy (Judicial Member) ITA No. 1082/PN/2012 for the assessment year 2006-07 and ITA No. 1083/PN/2012 for the assessment year 2007-08 have been filed by the assessee impugning the orders of Commissioner of Income Tax (Appeals)-II, Nashik. Both orders are dated 14-03-2012. Since, the issues involved in both the appeals are common, the appeals are taken .....

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e Assessing Officer inter alia made addition of ₹ 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 portfolio and investment portfolio are maintained. The assessee has not furnished details of expenditure incurred for earning exempt income. In the absence of separate accounts, apportionment of dividend income between shares held as investment and shares held as stock-in-trade is not possible. Therefore, .....

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wing grounds: 1). Addition made on account of charging of notional interest ₹ 1,23,389/-. 2). Disallowance made under section 14A at ₹ 3,27,585/-. 3). Without prejudice to relief claimed at item No. 2, restricting disallowance under section 14A r.w. Rule 8D to ₹ 74,061/-. 4. In assessment year 2007-08, the assessee earned exempt income of ₹ 3,27,585/- and claimed the entire income as exempt u/s. 10(34) of the Act. For the reasons stated in assessment year 2006-07 the Asse .....

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ses. 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 ₹ 3,27,585/- u/s. 14A r.w. Rule 8D. However, with regard to disallowance of interest, the Commissioner of Income Tax (Appeals) granted part relief by confi .....

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pect to the share held by the assessee as stock-in-trade. Since, the assessee is not maintaining any investment portfolio there is no question of making any disallowance u/s. 14A. In order to support his submissions the assessee placed reliance on the decision of Coordinate Bench of the Tribunal in the case of DCIT Vs. Vishweshwar Sahakari Bank Ltd. in ITA No. 358/PN/2014 decided on 24-04-2015. With respect to disallowance of interest in assessment year 2007-08, the Ld. AR submitted that in stat .....

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ssment 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 dis .....

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. The common issue in both the appeals is addition u/s. 14A r.w. Rule 8D in respect of dividend income received by the assessee. The assessee has received dividend income of ₹ 2,21,782/- in assessment year 2006-07 and ₹ 3,27,585/- in the assessment year 2007-08. It is an undisputed fact that the assessee is engaged in trading of shares and securities. As per the contentions of the assessee the dividend was received on shares held as stock-in-trade. The assessee is not maintaining any .....

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nnot be made out. Moreover, in view of the judgment of Hon'ble Bombay High Court rendered in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. CIT reported as 328 ITR 81 (Bom.) the provisions of Rule 8D are not applicable in the impugned assessment 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 .....

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