TaxTMI 
TaxTMI 
2014 (1) TMI 1382
X X X X Extracts X X X X
X X X X Extracts X X X X
....disallowance of Rs.2,84,274/- already offered by the appellant. 2. The brief facts are that during the relevant assessment year the assessee had earned exempt income of Rs.3,09,413/- being dividend income. The AO determined the amount of expenditure as per the provisions of Rule 8D at Rs.20,93,398/-. As an amount of Rs.2,84,274/- had already been disallowed by the appellant, hence the AO made the addition of Rs.18,09,124/- into the income of the appellant. Before the ld. CIT(A) the contention of the appellant was that it had not made any investment in shares for the purpose of earning dividend. The dividend received, therefore, were incidental receipts as the appellant had purchased shares for the purpose of selling the same. It was f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....having been incurred for earning of exempt income, the provisions of Rule 8D come into play. The ld. CIT(A) further observed that the appellant's contention that the provisions of section 14A does not provide for apportionment of expenses was not sustainable in view of insertion of sub-section (2) of section 14A with effect from 01.04.07 requiring the AO to determine such amount in accordance with such method as has been prescribed. Such method as mentioned in sub-section (2) of section 14A has been prescribed as per Rule 8D. He further observed that in the absence of cash flow statement and merely, on the basis of balance of own fund and borrowed fund as on the date of the balance sheet, it cannot be presumed that borrowed fund had not bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation made in this regard by the assessee. The AO will be at liberty to call for any record/evidences or statement etc. from the assessee as may be required by him for deciding the issue under consideration. After going through the details provided by the assessee, if the AO will be satisfied with the objection/calculation made by the assessee then he will assess the income accordingly. However, if the AO does not agree with the computation made by the assessee, and in that event he will have to record his dissatisfaction with reasoning for the same by way of a speaking order. Then he will be at liberty to resort to the provisions of Rule 8D. Needless to say that the assessee will co-operate and promptly supply the necessary details etc. to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rate and the predetermined rate is daily calculated and the difference margin, if any, is received/paid to the broker and finally on the stipulated date the contracts are squared off resulting into actual loss or profit. The contracts in such type of cases can be squared off before the arrival of actual performance date of contract, as the profit and loss are calculated on daily basis and the margins are settled accordingly. Such type of contracts are not purely contingent in nature rather loss or profit is somewhat ascertainable in view of constant watch on daily market value and even the quantum of profit or loss though not actually ascertainable, can be anticipated in view of the trends of the market. The difference between the predeter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofits before actual realization. Profits for income-tax purposes are to be computed in accordance with ordinary principles of commercial accounting, unless, such principles stand superseded or modified by legislative enactments. Unrealized profits in the shape of appreciated value of goods remaining unsold at the end of the accounting year and carried over to the following year's account in a continuing business are not brought to the charge as a matter of practice, though, as stated above, loss due to fall in the price below cost is allowed even though such loss has not been realized actually. Accounts regularly maintained in the course of business are to be taken as correct unless there are strong and sufficient reasons to indicate that ....