TaxTMI 
TaxTMI 
2014 (8) TMI 1014
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....e Ld. CIT(A) has erred upholding the disallowance of Rs. 3163709/- being disallowance u/s. 14A of the I.T. Act. He has failed to appreciate that there was no direct nexus between dividend income and expenses incurred and as such the earning dividend is collateral to the main business of share trading and the interest expenses were not incurred to earn such dividend but for shares trading purpose and consequently no disallowance ought to have been made. 2) On the facts and circumstances of the case as well as in law the Ld. CIT(A) has erred in rejecting the contention of the appellant and concluding that the disallowance made by the AO is justifiable, reasonable and not excessive. 3) Appellant craves to leave to add, alter or/and modif....
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.... "CCI Ltd. vs. JCIT" (2012) 250 CTR (Kar) 291 was referred to and discussed before the Tribunal and it has been held that in view of the decision of the Hon'ble jurisdictional High Court of Bombay in the case of "Godrej & Boyce Mfg. Co. Ltd. vs. DCIT" [2010] 328 ITR 81 (Bom) and the Hon'ble Kolkata High Court in the case of "Dhanuka & sons vs. CIT" [2011] 339 ITR 319, section 14A is attracted even in the case of dividend income from shares held as stock in trade. While holding so,it has been observed by the Tribunal that the investment component or element is in built in the expenditure incurred for purchase and sale of shares even held as stock in trade for business purposes. The expenditure attributable towards earning of exempt income, i....
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....echanical application of Rule 8D(2)(ii) would be wrong. The Tribunal, accordingly, purposed to restrict the disallowance to 20% of the amount in relation to interest disallowance under Rule 8D(2)(ii), i.e., in relation to indirect expenses. The tribunal further held that so far the direct expenses are concerned, no such disallowance u/s.14A was attracted because of the fact that no direct expenditure is incurred by the assessee for earning of dividend income when the purpose of sale and purchase of shares is trading. The almost similar view had been made by the Co-ordinate Bench of the Tribunal in the case of Damani Estates & Finance Pvt. Ltd. (in ITA No. 3029/Mum/2012 dated 17.07.2013). 4. In our view, taking into consideration the fact t....