TaxTMI 
TaxTMI 
2015 (8) TMI 1143
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....on 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 March the outstanding interest Swap contract....
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....tion 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. CIT(A) also confirmed the disallowance treating th....
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....eing 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 in the light of judicial decisions, we set aside the fin....