2014 (7) TMI 215

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....009-10, on the following grounds:- "1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the order of the Assessing Officer in disallowing the expenditure to the extent of Rs. 3,58,661 under section 14A r/w rule 8D without appreciating the facts of the case and dealing with the various grounds raised before him. 2. Without prejudice to the above on the facts and in the circumstances of the case and in law the learned CIT(A) failed to appreciate that the appellant in his proprietary concern carried on the business of trading in shares and the said shares were held as stock in trade and as such the expenditure was incurred for the purpose of business and not for the purpose of earning ex....

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....on, firstly on account of disallowance of interest on the ground that the loans taken by the assessee were entirely utilised for the business purpose and the investments which were, made were out of own funds. It was submitted that the exempt income consisted of maturity proceeds of LIC at Rs. 6,59,904, dividend of Rs. 1,22,894 & interest from tax free bonds and no borrowed funds were utilised for making any kind of investments. Regarding expenditures also, the assessee submitted that it has incurred expenditure of Rs. 3,12,304, which has been debited in the books of account and none of these expenses can be said to be attributable to earning of exempt income. The learned Commissioner (Appeals) accepted the assessee's contention on the acco....

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....ovisions of rule 8D, which prescribes a certain formula for disallowing the administrative expenditure. 7. After hearing the rival contentions and on a perusal of the Profit & Loss Account and the Trading Account, it is evident that the assessee is having income from sale of shares, interest accrued from saving bonds and other interests, which are on account of finance business. Before us, the disallowance under section 14A only pertains to the administrative expenses which have been disallowed by the Assessing Officer after applying the provisions of rule 8D and the same has been confirmed by the learned Commissioner (Appeals). On a perusal of the nature of expenditure, it is evident that most of the expenditures are directly related to....