TMI Blog2015 (12) TMI 1676X X X X Extracts X X X X X X X X Extracts X X X X ..... jority view found that an asset cannot be acquired first as non-capital asset at one point of time and again as a capital asset at a different point of time. The Tribunal found that there can be one acquisition of asset for the first time irrespective of the character at that point of time. Therefore, by majority opinion it was found that what is relevant for the purpose of capital is the cost of acquisition and not the date at which it became the capital asset. Since by majority opinion, the Pune Bench of this Tribunal found that the cost of original acquisition has to be taken into consideration for calculating the cost inflation index and the CIT(A) has apparently followed the above order, we do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. Disallowance of 2% of the dividend income earned - Held that:- Admittedly, Rule 8D of the Income-tax Rules is not applicable for the assessment year under consideration. Therefore, the expenditure for earning the exempted income has to be estimated on a reasonable basis. The CIT(A), after taking into consideration all the circumstances and facts available on record, estimated the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, for the year under consideration, the assessee has valued the closing stock at cost or market price whichever is lower. Since the assessee changed the method of valuing the closing stock, the diminution in the value of ₹ 75.90 lakhs has to be added to the book profit u/s 115JB of the Act. 4. On the contrary, Shri S. Sridhar, ld. Counsel for the assessee submitted that due to scam in the market, the value of the shares was considerably depreciated, therefore, the assessee thought it fit to value the closing stock at market price than the cost price. Since there was no trading account, the diminution in value was provided in the Profit Loss Account. According to the ld. Counsel, the assessee has the option to value the closing stock either at market price or at the cost price whichever is lower. Therefore, merely because the assessee has valued the shares at market price that cannot be a reason to reject the claim of the assessee during the year under consideration. According to the ld. Counsel, in the earlier assessment years, the assessee opted the method of valuation which suits its convenience, therefore, the CIT(A) has rightly allowed the claim of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. On the contrary, Shri S. Sridhar, ld. Counsel for the assessee submitted that the dispute before this Tribunal is not the cost of acquisition of the shares. The dispute is with regard to cost of inflation index. Therefore, the cost of inflation index of the year in which the assessee initially acquired the shares has to be taken into consideration. Referring to Explanation to sec. 48, the ld. Counsel submitted that the inflation index shall be the year when the assessee initially acquired the shares and not subsequent conversion. Referring to the decision of the Pune Bench of this Tribunal in the case of Kalyani Exports Investment (P) Ltd (supra), the ld. Counsel pointed out that an asset cannot be acquired first as a non-capital asset at one point of time and again as a capital asset at a different point of time. According to the ld. Counsel, there will be one acquisition of the asset when the assessee initially acquires it irrespective of its character at the point of time. Therefore, merely because the assessee changed the character of the asset from stock-in-trade to investment, it does not matter when it comes to cost of inflation index. Therefore, the CIT(A), by followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, no interference in the order of the CIT(A) is called for. 14. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, Rule 8D of the Income-tax Rules is not applicable for the assessment year under consideration. Therefore, the expenditure for earning the exempted income has to be estimated on a reasonable basis. The CIT(A), after taking into consideration all the circumstances and facts available on record, estimated the expenditure at 2% of the dividend income. In those circumstances, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. 15. The next issue arises for consideration is advertisement expenses paid to M/s Alpha Systems Ltd. 16. Dr.U. Anjaneyalu, ld. DR submitted that the assessee claimed before the Assessing Officer that a sum of ₹ 60 lakhs was paid to M/s Alpha Systems Ltd towards advertisement expenses. On verification of the accounts, the Assessing Officer found that the assessee, in fact, claimed ₹ 72,30,000/- under the head advertisement. In the earlier assessment year, the assessee has claimed only ₹ 11,19,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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