2013 (2) TMI 602

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.... Act' hereinafter) vide order dated 30.08.2010. 2. The brief facts of the case are that the assessee-company, engaged in the business of investment in shares and securities, returned its income for the year at Rs. 26,95,408/- on 27.09.2008. As the profit and loss account, filed along with, disclosed dividend income at Rs. 50,000/-, which had been claimed exempt by the assessee per its return, section 14A r.w.r. 8D was attracted. In fact, the assessee had itself made a disallowance to the extent of Rs. 1,09,783/- u/s.14A. As per the Assessing Officer (A.O.), the same, however, worked out to Rs. 10,30,481/- in terms of rule 8D (of the Income Tax Rules, 1962), so that he framed the assessment accordingly. The same having been since confirme....

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.... a specific plea that only investments that generated tax-free income could be considered for the purpose of working out the disallowance u/s.14A r/w r. 8D, to however no finding by him. The ld. DR, on the other hand, relied on the orders of the authorities below, stating that irrespective of the quantum of the tax-free income, the provision read with rule 8D being mandatory, would have to be applied. The ld. CIT(A) has, in any case, given appropriate relief in the matter, so that no further relief is called for. 4. We have heard the parties, and perused the material on record. Section 14A r/w r. 8D is mandatory in its application where the assessee earns income which is claimed tax-exempt, as dividend income in the instant case. In f....

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....state so as the 'share application money' would ordinarily only be 'public money' and, thus, except perhaps where toward shares of private limited companies, subject to stringent procedure, as is generally in place for such funds. We may further clarify that the exclusion of 'share application money', as opined by us, is not in the least for the reason that it did not yield any tax-free income for the relevant year, but for the reason that it is incapable of any such income. The same is only in the nature of application (offer) money, which would though, on allotment, get adjusted against the cost of the said shares, and only whereupon any rights in the investee company inure to the allottee. No rights, not even inchoate, in the share capit....