TMI Blog2020 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained the disallowance computed by the A.O under Sec. 14A r.w. Rule 8D(2)(iii), therein uphold the same. Appeal filed by the assessee is dismissed. - ITA No.5599/Mum/2018 (Assessment Year: 2014-15) - - - Dated:- 11-12-2019 - Shri S. Rifaur Rahman, Accountant Member And Shri Ravish Sood, Judicial Member Appellant by: Shri Pra kash K. Jotwani, A.R Respondent by: Shri V.Vinod Kumar, ld. Sr.DR ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the CIT(A)-56, Mumbai, dated 29.08.2018, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short Act ), dated 15.12.2016 for A.Y. 2014- 15. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had during the year under consideration earned exempt dividend income of ₹ 55,95,500/-. Observing, that the assessee had not attributed any expenditure for earning of the aforesaid exempt income, the A.O called upon the assessee to explain as to why the disallowance of expenses incurred in relation to earning of exempt income may not be worked out under Sec. 14A of the Act. In response, it was submitted by the assessee that as it was into trading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidentally in receipt of dividend income on the same, therein relied on the order of the ITAT, Delhi Bench E in the case of Nice Bombay Transport (P) Ltd. Vs. ACIT(OSD), New Delhi (2019) 175 ITD 684 (Del). Also, reliance was placed upon the order of ITAT F Bench, Mumbai in the case M/s Vora Financial Services (P) Ltd. Vs. ACIT-2(3)(1), Mumbai (ITA No.532/Mum/2018, dated 29.06.2018. The Ld. A.R drawing support from the latter order submitted, that the Tribunal taking cognizance of the fact that the assessee before them was in receipt of major portion of dividend income from shares of a single scrip which was held as stock-in-trade, had concluded, that as it would not be appropriate to apply the provisions of Rule 8D(2)(iii), therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly, the exempt income yielding shares were held by the assessee as stock-in-trade . Although, the opening stock of inventories as on 01.04.2013 was reflected at ₹ 21,46,64,955/-, however, the same as on 31.03.2014 stood reduced to nil. In sum and substance, the stock of shares which were held by the assessee as on 01.04.2013 were liquidated during the year under consideration, and no part of the same was reflected in its closing stock as on 31.03.2014. However, in our considered view, the aforesaid factual position would principally have no bearing on the computing of the disallowance under Sec. 14A r.w. Rule 8D. We find that it is the claim of the Ld. A.R that as the exempt dividend income yielding shares were held by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome under the head profits and gains from business and profession . What happens is that, in the process, when the shares are held as stock-in-trade , certain dividend is also earned, though incidentally, which is also an income. However by virtue of Section 10(34) of the Act, this dividend income is not to be included in the total income and is exempt from tax. This triggers the applicability of Section 14A of the Act which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share and Stock Brokers P Ltd. case. Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be opportioned. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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