TMI Blog2014 (7) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... end against which the company has offered Rs.241,126/-. Further, there are direct expenses at 56,023/- as calculated by A.O. will apply in view of the provisions of section 14A r.w,r 8D of the rules. In assessee s case only Rule 8D(2)(i) is applicable and not 8D(2)(iii). Clause (ii), which clearly provides that formula giving therein is to be evoked only in a case where assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt. In this case Interest payment is only Rs.4,801/-. This interest is attributable to loans not utilized for investment but for giving loans to Shakti Sugar Ltd i.e. Rs. 3,00,000/- and Rs7,00,000/- paid as security deposit to SKP Securities. Rs.37,00,000/- taken from Parkview Properties Pvt. Ltd. and Rs. 3 Lacs and Rs. 7 Lacs from Bikanna Cornmercial Pvt. Ltd. and Shahjahanpure Electric Co. Ltd. respectively. In view of the above facts, we have no alternative except to confirm the order of CIT(A) and this issue of Revenue s appeal is dismissed. - I.T.A. No. 1511/Kol/2012 - - - Dated:- 4-7-2014 - Shri Mahavir Singh, JM Shri Shamim Yahya, AM For the Appellant : S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the gross total income of the assessee does not consist mainly of income which is chargeable under the head Interest on Securities , Income from House property , capital gains and Income from Other Sources or the principal business of the assessee is not that of banking and granting of loans and advances. Accordingly, he treated the loss claimed by the assessee at Rs.4,70,68,846/- as speculation loss and added to the returned income of the assessee. Similarly, the AO also disallowed the expenditure incurred directly or indirectly in the context of business of purchase and sale of shares and treated the same as speculation business loss to the extent of a sum of Rs.35,62,078/- and Rs.3,97,640/-. Thereby the total speculation income treated by assessee and added to the returned income at Rs.5,10,28,564/-. Aggrieved, assessee preferred appeal before CIT(A) who after considering the submissions of the assessee noted that it is engaged in the business of share trading and derivatives transactions and also carrying on investment activity. 5. He noted the factual position in para (iii) and (iv), which is as under: (iii) The gross total income of the appellant is worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome at Rs.0,92,93,094/- and out of which specified income will be Rs.5,50,31,864/- which is more than half. He computed that interest on loan at Rs.4,03,28,324/-, dividend income at Rs.24,11,255/- and misc. income at Rs.10,622/- and negative figure of loss on sale of investment which is assessable under the head capital gains at Rs.1,22,81,663/- is added the total will be Rs.5,50,31,864/-. Thus, even the principal business is not that of shares and derivatives, rather it is of granting of loans and advances because interest income is the major portion. The CIT(A) also relied on in the case of Aman Portfolio (P) Ltd. Vs. DCIT (2005) 92 ITD 324. 6. We find from the records the deployment of position of the funds of the assesseecompany, which is as under:- (Rs.) Percentage of own Funds (Excluding borrowing) (a) Fixed Assets 14862329 2.72% (b) Investments 474556965 88.51% (c) Stock in Trade (share) 365089 0.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I. T. Rules, 1962 read with section 14A of the Act for expenses incurred for earning exempt income. For this, revenue has raised following ground no.2: 2. That, on the facts and in circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.18,13,375/- made by the AO applying Rule 8D(2)(iii) read with section 14A of I. T. Act, 1961 whereas such decision of the CIT(A) was unjustified without assigning any findings as regards in applicability of the provisions of Section 14A read with Rule 8D(2)(iii) of the I. T. Rules, 1962 in the facts of the assessee company. 8. Briefly stated facts are that the AO noted that the assessee company has earned dividend income to the tune of Rs.24,11,255/- out of the investment in shares and units of mutual fund. The AO admitted that the assessee is a NBFC deploying about 89 of its capital and reserve in investment activity in shares and units of mutual fund. The AO issued show cause notice for disallowance of expenses for earning of this exempt income as the assessee has not made any disallowance qua this issue. He proposed the disallowance as under: Direct expenses disallowable as per rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of Rule 8D(2)(iii) however the AO has not pointed out any reason why he is not satisfied with the correctness of claim of expenditure made by the appellant. It has heen held in following cases by Hon ble High Courts that onus in this matter is on the AO: - CIT Vs. Hero Cycles Ltd. (2010) 323 ITR 518 (P H) - CIT Vs Winsome Textile Industries Ltd. (2009) 319 ITR 204 (P H) - C1I Vs. Printers House (P) Ltd. (2010) 188 Taxman 70 (Del) - CIT Vs. Shapoorji Pallonji And Co. Ltd. (2009) 318 ITR 417 (Bom). In view of the above discussed legal and factua1 position, the disallowance of Rs. 18,13,375/- made by the A.O is deleted. Aggrieved, now revenue is in appeal before us. 9. We have heard rival submissions and gone through facts and circumstances of case. We find that assessee has not spent any amount on interest on borrowing as at 01-04-2008 and borrowing taken this year was not utilized in investment. Assessee has earned big income from derivative transactions at Rs.5,42,61,231/- and suffered loss on investment at Rs.1,22,81,662/- i.e. total expenses claimed are only Rs.1,42,48,311/-. Dividend income being only 1.5% of gross income Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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