AI Drafter 
TaxTMI 
TaxTMI 
2014 (4) TMI 395
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....loss of Rs.2,36,36,821/- as business loss even when the same is specifically covered under section 73 of the Act. 2. The appellant craves to leave to add, to amend and/or alter any of the grounds of appeal, if need be." Assessee's Grounds of Appeal in ITA No.2918/Mum/2012: "1. Under the facts and in Law, the Learned CIT(A), has erred in confirming disallowance of Rs.13,94,594/- u/s. 14A of Income Tax 1961 r.w. Rule 8D(2)(iii) of the I.T.Rule, 1962. Revenue's appeal: 2. The assessee is engaged in the business activity of institutional stock broking in shares etc. A sum of Rs.2,65,07,464/- was claimed on sale of misdeal stocks. The assessee was required to explain the same. Vide letter dated 21/12/2010 it was submitted as under....
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....ome of the assessee. The addition was agitated in the appeal filed before Ld. CIT(A). Before Ld. CIT(A) it was pleaded that assessee is broker for retail sales for institutional clients which places order for the trade in bulk, and the same need to be executed immediately with order specification i.e. quantity, rate and time. While executing the deal, there are all the chances of committing error. The normal nature of error are causes or causes of disputes and can be summarized as under: "(i) Some times orders placed for sale, and while dealer by mistakes execute trade for purchase. (ii) Rate difference, where the order placed to buy / or sale at particular rate, but the trade is executed at the some different rate. (iii) The diffe....
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....ions of Tribunal, Ld. CIT(A) has arrived at a conclusion that the said amount was allowable as business loss to the assessee. Accordingly, addition is deleted. The Department is aggrieved and has filed aforementioned grounds. 3. After narrating the facts it was submitted by Ld. DR that the said amount was rightly disallowed by the AO and Ld. CIT(A) has rightly deleted the same. He submitted that assessee is engaged in the business activity of sale and purchase of shares, therefore, provisions of explanation to Section 73 were applicable and Ld. CIT(A) has committed an error in accepting the submissions of the assessee that the said amount was allowable as business loss. He, therefore, submitted that the order passed by Ld. CIT(A) should ....
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....llowed as such under section 28 of the Act. All these contentions of the assessee have been recorded in the assessment order in para 3.3. The AO has not brought any material on record to suggest that these contentions of the assessee are either false or incorrect. No material has also been brought on record that these losses are on account of assessee's own trading in shares. If it is so, the loss accrued to the assessee will be governed by the aforementioned decisions of Tribunal where consistent view has been taken that loss occurred to share broker on account of client disowning transaction is business loss and not speculative loss. Therefore, we are of the opinion that Ld. CIT(A) did not commit any error in accepting the claim of the as....
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....ome. Thus, it has been held by Ld. CIT(A) that so far as it relates to component of addition calculated with reference to Rule 8D(2)(iii) no interference in the disallowance was called for. 7. During the course of hearing before us it was submitted by Ld. AR that the basis of disallowance under Rule 8D(2)(iii) by the AO is stated at page 2 of the assessment order in para (ii) where the reason stated is as assessee is maintaining consolidated accounts precluding possibility to establish one to one nexus between expenses and exempt income yielding investment, he is satisfied on an objective basis that the assessee is unable to establish the correctness of its claim. He submitted that it is in this manner the AO has discarded the claim of t....