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TMI Blog2016 (10) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... e from salary, trading and investments in shares, dividend, interest, etc. Assessee filed his return of income for AY 2009-10 on 29/09/2009 declaring total income of Rs. 2,12,830/-. The case was selected for scrutiny and thereafter assessment was framed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 23/12/2011 and the total income was determined at Rs. 2,12,830/- wherein disallowance u/s.14A was made by AO. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 02/09/2013(in Appeal No.CIT(A)- VIII/ITO/Wd.4(2)/387/11-12) decided the issue in favour of assessee. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the provisions of Rule 8D and section 14 A. The appellant has submitted that he was maintaining two sets of account, the personal and for business. He was doing business of trading in shares. The account of that business were subjected to Audit and the tax Audit Report under section 44AB was also obtained and submitted during the course of assessment proceedings. For the purpose of business the appellant has shown the shares held as stock in trade. The personal account that is the investment portfolio contains the capital assets like immovable property, shares and securities and other investment. A perusal of the computation of income shown by the appellant show that it has shown income from salary, income from self occupied house prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has followed the decision of Karnataka High Court and the decision of ITAT Pune Bench in the case of Aporva Patni 24 taxman.com 223. The facts of the appellant has shown that the income from the sale and purchase of shares as trading and business and has kept separate accounts and further it is not claimed any expenditure out of any other income are undisputed. Therefore, in view of the above mentioned decisions and the facts of the case the disallowance made by the AO under section 14 A read with Rule 8D is directed to be deleted. The ground of appeal is allowed." 3.1. Aggrieved by the order of the order of the ld.CIT(A), Revenue is now in appeal before us. 4. Before us, ld.Sr.DR supported the order of AO. Ld.AR on the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the issue is covered by a coordinate bench decision in the case of DCIT Vs Gulshan Investment Co Ltd [(2013) 31 taxmann.com 113 (Kol. - Trib.)] inasmuch as even if the provisions of Section 14A are to be held applicable in this case-as was held therein, computation provisions under rule 8D2 (ii) and (iii) will fail because the dividend yielding shares are held as stock in trade and not as investments, and the disallowance under rule 8D(2)(i) will be confined to only direct expenses for earning the tax exempt income. In this regard, following observations may be referred to: 5. We consider it appropriate to begin with reproducing Rule 8 D of the Income Tax Rules, which is as follows: "Method for determining amount of expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce sheet of the assessee, on the first day and the last day of the previous year; (iii) an amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year." 3. For the purposes of this rule, the 'total assets' shall mean, total assets as appearing in the balance sheet excluding the increase on account of revaluation of assets but including the decrease on account of revaluation of assets." 6. A plain look at the above rule shows that 8 D(2)(ii) and (iii) can only be applied in the situations in which shares are held as investments, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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