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2016 (12) TMI 45 - ITAT PUNE

2016 (12) TMI 45 - ITAT PUNE - TMI - Additional disallowance made u/s. 14A r.w. Rule 8D - dividend income earned by the assessee on shares and mutual funds held as stock-in-trade - Held that:- The issue raised in the present set of appeals is identical to one adjudicated by the Co-ordinate Bench of the Tribunal in the case of Kunal Polymers Pvt. Ltd. Vs. Dy. Commissioner of Income Tax [2015 (10) TMI 2373 - ITAT PUNE] wherein held that assessee has not held the shares for earning dividend income. .....

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ith the intention of earning dividend and the dividend income is incidental to business of sale of shares no disallowance u/s. 14A of the Act is to be made. - Decided in favour of assessee - ITA No. 1557/PN/2014, ITA Nos. 1558 & 1559/PN/2014 - Dated:- 28-9-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri C.H. Naniwadekar For The Revenue : Shri Rajeev Kumar ORDER PER VIKAS AWASTHY, JM : These appeals by the assessee are directed against the order of Commissioner of In .....

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he business of trading and dealing of shares, mutual funds, bonds and derivatives. During the impugned assessment years the assessee received dividend income on shares held as stock-in-trade. Assessment Year Dividend Income 2008-09 ₹ 92,55,832/- 2009-10 ₹ 46,06,943/- 2010-11 ₹ 45,28,366/- The assessee made disallowance u/s. 14A in three impugned assessment years as follows : Assessment Year Disallowance u/s. 14A 2008-09 ₹ 15,592/- 2009-10 ₹ 45,000/- 2010-11 ₹ .....

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of Income Tax (Appeals) upheld the findings of Assessing Officer. Now, the assessee is in second appeal before the Tribunal. 3. Shri C.H. Naniwadekar appearing on behalf of the assessee submitted that the assessee is engaged in the business of trading in shares, mutual funds, bonds and derivatives. The assessee purchase and sell shares on delivery as well as non-delivery basis. During the period relevant to the assessment years under appeal, the assessee received dividend income on the shares h .....

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554 has reiterated the law laid down by the Hon'ble Jurisdictional High Court. The Commissioner of Income Tax (Appeals) has erred in upholding the findings of Assessing Officer by placing reliance on the decision in the case of DCIT Vs. D.H. Securities (P.) Ltd. reported as 99 DTR (Mumbai) (TM) 298. The Hon'ble Karnataka High Court in the case of CCI Ltd. Vs. JCIT reported as 71 DTR 141 and the Hon'ble Allahabad High Court in the case of Additional Commissioner of Income Tax Vs. M/s .....

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the authorities below. The only issue raised in all the three appeals is additional disallowance made u/s. 14A r.w. Rule 8D in respect of dividend income on shares and mutual funds held by assessee as stock-in-trade. It is an undisputed fact that the shares and mutual funds held by the assessee are for trading purpose and are stock-in-trade of the assessee. It is not the case of Revenue that any part of shares, mutual funds etc. are held by assessee as investment. The assessee has earned divide .....

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ance made u/s. 14A r.w. Rule 8D on shares held as stock-in-trade. The assessee has offered dividend income from the shares held as stock-in-trade as business income. The treatment given by the assessee to the dividend income is against the provisions of section 10(23F). The dividend income has been specifically excluded in the Act, thus, it does not form part of total income. The question before us is : Whether disallowance u/s. 14A is to be made on dividend received on shares held as stock in t .....

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IT Vs. M/s. India Advantage Securities Ltd. for the assessment year 2008-09 decided on 14-09-2012. In the said case, the assessee had received dividend income of ₹ 1,40,859/- on shares shown as stock-in-trade in the books of account of the assessee. The assessee had not made any disallowance of expenses relating to exempt income. The Assessing Officer made disallowance u/s. 14A r.w. Rule 8D. The Commissioner of Income Tax (Appeals) held that disallowance under Rule 8D could be made only wi .....

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