TaxTMI 
TaxTMI 
2015 (8) TMI 1143
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....d disallowance is in respect of non-deduction of tax at source on payment made to Bombay Stock Exchange amounting to Rs. 94,01,055/- and the third disallowance is made under section 14A of the Income Tax Act, 1961 (the Act) amounting to Rs. 1,00,76,221/-. 2. The assessee is engaged in the business of investment, share broking and Government securities and it is a member of Bombay Stock Exchange as well as National Stock Exchange. The return for the year was selected for scrutiny assessment. While scrutinizing the return of income the AO noticed that an amount of Rs. 18,29,87,255/- has been debited to loss on Swaps being mark to market loss as on 31/3/2008. The assessee was asked to justify the same. The assessee explained that as on 31st....
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....has not disallowed proportionate expenses in relation to such exempt income in view of section 14A of the Act. The assessee was asked to justify its claim. The assessee submitted its computation of expenditure at Rs. 99,89,517/-. The AO proceeded by invoking the formula given under Rule 8D and computed disallowance at Rs. 1,00,76,221/-. Aggrieved by these three disallowances/ additions the assessee carried the matter before Ld. CIT(A). 3. In so far as the addition on account of mark to market loss the Ld. CIT(A) after considering the facts and the submissions relied upon the decision of the Hon'ble Bombay High Court in the case of Bharat Ruia in ITA No.1539 of 2010, treated the loss as speculation loss and confirmed the disallowance. Ld.....
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....ing Accounting Standard, AS-11 of the ICAI. Such losses being treated as mark to market the losses have been allowed by the Tribunal in series of cases following Special Bench decision in the case of Bank of Bahrain & Kuwait (supra). The Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd.(supra) has considered such losses as allowable and not of contingent in nature. We find that the observations of the AO that the assessee has never accounted for the gains on such transactions is totally misplaced and against the facts of the case. As we find in the P&L Account at page 49 of the paper book when the assessee had gains of Rs. 25.57 lacs the assessee has included the same in its income. Considering the facts in totality and....
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....ision of the Hon'ble was pronounced on 21/10/2011. Thus, the assessee had already filed the return of income and the time period for deducting tax at source was also lapsed. Considering these peculiar facts, in our considered opinion no disallowance on this account should be made for the year under consideration. Ground No.2 is accordingly allowed. 8. Ground No.3 relates to the disallowance made under section 14A of the Act. Before us Ld. Counsel for the assessee stated that even if section 14A r.w. Rule 8D is applicable the AO has worked out the disallowance not in consonance with the spirit of section 14A r.w. Rule 8D. It is the say of the Ld. Counsel that the AO erred in including in average investment even then investment income from....