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TMI Blog2016 (6) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal, but the solitary dispute is with regard to an addition of Rs. 17,45,347/- made by the Assessing Officer by invoking the provisions of section 14A of the Act. 3. Briefly put, the relevant facts are that the appellant is a Private Limited Company incorporated under the provisions of Companies Act, 1956, and is a broker and member of Bombay Stock Exchange and National Stock Exchange and is, inter-alia, deriving income from brokerage and trading in shares and securities. For the assessment year under consideration, it filed a return of income declaring a loss of Rs. 2,83,240/-, which was subject to scrutiny assessment, whereby the total income has been assessed at Rs. 14,72,950/-. The Assessing Officer had noticed that duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/- and the said amount was added to the returned income under section 14A of the Act. The said action of the Assessing Officer has been affirmed by the CIT(A) also. In this background, the assessee is in further appeal before the Tribunal. 4. Before me, apart from other grounds, a pertinent plea that has been raised is that the Assessing Officer erred in holding that the disallowance under section 14A of the Act has also to be made in relation to income received from shares held as stock-in-trade. In this context, Ld. Representative for the assessee contended that said issue has been considered by the Mumbai Bench of the Tribunal in the case of DCIT vs. M/s. India Advantage Securities Ltd.,ITA No.6711/Mum/2011 dated 14/09/2011 for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) in the following words:- 5. We have perused the records and considered the rival contentions carefully. The dispute is regarding the disallowance of expenses u/s.14A in relation to the exempt dividend income received from shares held on trading account. The A.O. disallowed the expenses holding that the provisions of section 14A were applicable even in relation to the dividend received from the trading shares. The Ld.CIT(A) has however held that the provisions of section 14A will not apply to the shares held on trading account. The Revenue has placed reliance on the decision of Mumbai Bench of the Tribunal in the case of M/s. American Express Bank Limited (supra) in which the Tribunal has held that the expenditure u/s.14A has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dividend income received from trading in shares. 6. However, the Hon'ble High Court of Karnataka have recently considered the disallowance of expenses incurred on borrowings made for purchase of trading shares u/s.14A of the I.T. Act in case of CCL Ltd. vs. JCIT (supra). The assessee in that case was distributor of state lotteries and a dealer in shares and securities. The assessee had taken loans for the purchase of certain shares and it had incurred expenditure for broking the loans which had been disallowed under Rule 8D by the A.O. and confirmed by the Ld.CIT(A). The Tribunal agreed with the authorities below that the expenditure relatable to earning of dividend income though incidental to the trading in shares was also to be disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCL Ltd. Vs. JCIT (supra) the disallowance of interest in relation to the dividend received from trading shares cannot be made. We, therefore, see no infirmity in the order of the Ld. CIT(A) in deleting the disallowance u/s.14A computed by the A.O. in relation to the stock-in-trade. The order of the Ld. CIT(A) is accordingly upheld" 5.1 Following the aforesaid decision of the Tribunal, which has since been affirmed by the Hon'ble High Court vide its order dated 13/4/2015(supra), the shares and securities treated as stock-in-trade cannot be considered for the purposes of working of disallowance under section 14A of the Act r.w. Rule 8D of the Rules. Accordingly, the disallowance under section 14A of the Act quantified by the income tax au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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