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2015 (9) TMI 1432 - ITAT MUMBAI

2015 (9) TMI 1432 - ITAT MUMBAI - tmi - Disallowance u/s.14A - Held that:- AO had rejected enhanced the disallowance made by the assessee as per the provisions of section 14A r.w.Rule 8D of the Rules,that the assessee had FAA had not dealt with the arguments taken by the assessee during appellate proceeding namely holding of shares as stock in trade and interest expenditure incurred for personal or business purposes,that while calculating the total assets appearing in the balance sheet the AO ta .....

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issue of proportionate disallowance u/s.14A r.w.Rule 8D was discussed by the Tribunal in length and it was held that stock in trade(Shares)cannot be considered for disallowance and that shares held as investment could be taken into consideration for calculation of Rule 8D. The said judgment was confirmed by the Hon’ble Bombay High Court (2015 (6) TMI 140 - BOMBAY HIGH COURT ). Considering the above we are of the opinion that the disallowance made by the AO under rule 8D was on higher side.Follo .....

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Senior Finance Executive.We do not know from where the AO arrived at the conclusion that she was a director.The FAA has not considered the arguments advanced before him about the educational qualification of BKM and duties performed by her.We find that in subsequent years she has been given higher salary and the AO has not made any disallowance in that regard while passing order u/s.143(3)of the Act. - Decided in favour of assessee - ITA No.3632/Mum/2013 - Dated:- 11-9-2015 - S/Sh. Rajendra,Acco .....

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circumstances of the case and in law, no disallowance under section 14A is called for and the said addition be deleted. Without prejudice to the above, your appellants submit that the disallowance u/s.14A is excessive and ought to be reduced substantially. 2) The learned Commissioner of Income Tax (Appeals) erred in confirming the addition made by the Assessing Officer in respect of salary paid to Mrs. Bina K. Mehta, Senior Finance Executive of ₹ 1,01,800/-. Your appellants submit that und .....

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.2010,u/s.143(3)of the Act, the AO determined the income of the assessee at Rs.(-)15,63,232/-. 2.First ground of appeal deals with disallowance made u/s.14A of the Act, amounting to ₹ 11.04 lakhs.During the assessment proceedings,the AO found that the assessee had earned dividend income of ₹ 1.67 lakhs,that it had suo motto disallowed a sum of ₹ 2.18 lakhs as expenditure incurred to earn exempt income.Referring to the provisions of section 14A r.w. Rule 8D(2)of the Income tax,R .....

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e itself had disallowed ₹ 2.18 lakhs,so,it resulted in disallowance of ₹ 11,04,298/-. 2.1.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him,it was argued that the assessee itself had disallowed certain portion of expenditure,that expenses bearing nexus with the earning of exempt income had already been disallowed,that all other expenses were in nature of routine business expenses which were necessary to keep the bus .....

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submitted that the disallowance made by the AO was on higher side.It gave two different calculations and stated that the disallowance should be restricted to ₹ 7.55 lakhs or to ₹ 6.89 lakhs. 2.2.Before us,the Authorised Representative(AR)contended that the AO had made disallowance u/s.14A with regard to the shares that were part of stock in trade,that the assessee was not investor in shares,that the interest paid on account of IPO,car purchase were wrongly included in the interest d .....

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partmental Representative(DR)supported the order of the FAA. 2.3.We have heard the rival submissions and perused the material.We find that the AO had rejected enhanced the disallowance made by the assessee as per the provisions of section 14A r.w.Rule 8D of the Rules,that the assessee had FAA had not dealt with the arguments taken by the assessee during appellate proceeding namely holding of shares as stock in trade and interest expenditure incurred for personal or business purposes,that while c .....

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ndia Advantage Securities Ltd.(supra)the issue of proportionate disallowance u/s.14A r.w.Rule 8D was discussed by the Tribunal in length and it was held that stock in trade(Shares)cannot be considered for disallowance and that shares held as investment could be taken into consideration for calculation of Rule 8D. The said judgment was confirmed by the Hon ble Bombay High Court on 13.04.2015(ITA 1131 of 2013).Considering the above we are of the opinion that the disallowance made by the AO under r .....

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of ₹ 2.47 Crores,to BKM a person covered u/s.40A(2)(b)of the Act.He directed the assessee to justify the reasonableness of the payment made.After considering the submissions filed by it,he held that BKM was stated to be director of the company,that in the return of income her name did not figure as director,that the assessee had misled the department and had gave colour of salary paid to her as salary payment to finance director,that last year she was paid ₹ 1.46 lakhs only,that in .....

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