TaxTMI 
TaxTMI 
2014 (2) TMI 70
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....of the following ground:- "On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that payment of interest to Broking Companies and NBFC are excludable for the purpose of disallowance made u/s 14A r.w. Rule 8D(2)(ii), without appreciating the fact that as per the provisions of the said Rules there is no distinction between any type of assessee as to whether the borrowings were used for share trading or not." 2. The assessee in the present case is a company which is engaged in the business of investing and trading in shares and securities. The return of income for the year under consideration was filed by it on 15-9-2008 declaring total income of Rs. 2,56,06,196/-. In the said return,....
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....8D r.w.s. 14A as per Sp. Bench decision in ITO vs. Daga Capital Management (P) Ltd. 26 SOT 603 (SB Mum) is enclosed herewith whereby the disallowance works to Rs. 50,16,015/-." 3. The A.O. did not find the above submission made by the assessee to be acceptable and applying Rule 8-D of the Income Tax Rules, 1962, he worked out the disallowance to be made u/s 14A of the Act at Rs. 50,16,015/- as under:- "1. Amount of expenses directly related to such income Amount (Rs) Nil 2. Amount of the interest expenses indirectly attributable to such income, in accordance with the formula AxB/C, where A. Total interest expenditure minus direct interest expenditure on such income. Rs. 13856039 - Rs. Nil &nb....
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....iture claimed is at Rs. 2.82 crores which are related to business income and from the total expenditure, expense in relation to exempt income can be adjudicated; (iv) the appellant's average value of investment is nil as it has dividend income of Rs. 4,74,224/- from shares held as stock-in-trade. (v) The appellant's interest expense consists of interest which has direct nexus to earning of business income and the same are allowable expenditure u/s 36(1)(iii)." 5. After considering the submissions made on behalf of the assessee as well as the material available on record, the ld. CIT(A) directed the A.O. to recompute the disallowance to be made u/s 14A of the Act as per Rule 8-D of the Income Tax Rules, 196....
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.... Khandwala Securities Ltd. Broker 978 Total Interest 1,38,56,040 The appellant shall produce evidence and the AO shall verify whether the payment of interest made to broking companies and NBFC are towards purchase and sale of shares and the AO, thereafter, shall exclude the amount of such interest for the purpose of Rule 8D(2)(ii) accordingly. 4.2 The appellant's submission that the 'average value of investment' in its book is nil is found to be not correct as shares owned by appellant is shown in Schedule-6 of the Balance-sheet and all investments, whether shown as investments or stock-in-trade as held by Special Bench of ITAT Mumbai in case of M/s Daga Capital Management Ltd. (119 TTJ....