2015 (10) TMI 65

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....24.12.2010. 2. The sole issue in this appeal of revenue is against the order of CIT(A) deleting the disallowance made u/s. 14A of the Act. For this, revenue has raised following ground no.1:              "1. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in deleting the disallowance of Rs. 8,46,20,989/- made u/s. 14A of the Income Tax Act and the order of the CIT(A) should be set aside and the order of the Assessing Officer should be restored on this issue." 3. Briefly stated facts are that the assessee is in the business of share trading. The assessee declared short term capital gains arising from shares as business income but declared the profit....

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....--- (B)   Average Value of assets Rs.133,17,09,652/- --- (C)   (Interest Rs. 15,11,01,646/- --- (A) 1) A x B = 15,11,01,646 x C 74,57,93,255 = Rs. 8,46,20,989/-     133,17,09,652   2) ½% of average value of investments Rs. 74,57,93,255/- comes to Rs. 37,28,966/-   Therefore total amount (1+2) inadmissible u/s. 14A read with Rule 8D incomes to Rs. 8,83,49,955/- i.e. Rs. (8,46,20,989 + 37,28,966)." 4. Aggrieved against the disallowance made by AO, the assessee preferred appeal before CIT(A), who deleted the disallowance by observing as under:              "8. I have carefully ....

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....bed when the dividend income is earned from investments. The appellant has submitted that a proportionate amount of the assessee's business expenditure may be held related to the earning of dividend income and we offer for disallowance the amount calculated in terms of clause (iii) of Rule 8D only amounting to Rs. 37,28,966/-.              10. The disallowance made by the appellant amounting to Rs. 37,28,960/- is upheld to be fair and reasonable u/s. 14A. Therefore, this ground of appeal is partly allowed. The disallowance u/s. 14A is restricted to Rs. 37,28,966/- and the addition of Rs. 8,46,20,989/- made as per Rule 8D2(ii) and Rule 8D2(iii) is hereby deleted." Aggrieve....