2014 (9) TMI 1018

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....s order in not adjudicating the grounds No.1.2 to 1.6 and Grounds No.2 to 5 that were urged before him. 3. The facts relating to the above said issue are stated in brief. The assessee is engaged in the business of trading in shares and securities. Besides, the Assessee is also carrying on the business of operating yarn looms on job work basis under the name and M/s Shitanshu Fabrics. During the year under consideration, the Assessee earned dividend income of Rs. 13,77,715/- and interest on PPF of Rs. 1,02,293/-. Both the above said incomes were claimed as exempt. The AO noticed that the Assessee did not make any disallowance as required u/s 14A of the Act. After considering the explanations furnished by the Assessee, the AO computed the di....

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....ts needs to be grossed up to ascertain the value of Total assets. Hence, there is a flaw in the said computation made by the AO. 5. Further, in the facts of the instant case, we are of the view that the procedure adopted by the AO to aggregate the value of investments and the stock in trade in order to find out average value of investments does not appear to be proper. There are two components of Shares, viz., one if "Investment" and another one is "Stock in trade". For computing the disallowance under sec. 14A for "investments" component, there may not be any problem, as it may be computed in terms of sec. 14A r.w. Rule 8D by the assessing officer, after having regard to the accounts of the assessee. With regard to the computation of disa....

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....ing in a particular case. In this regard, both the parties may also refer to the order dated 27.8.2014 passed by Mumbai "D" Bench of ITAT in the case of Ramkumar Venugopal Investment Pvt. Ltd. V/s ACIT in ITA No.6324/Mum/2012 relating to Assessment Year 2009-2010. 6. In view of the above, the approach of the assessing officer in computing the disallowance by aggregating the value of investments and stock in trade is not acceptable to us. 7. Further the Ld A.R submitted before us that the actual interest expenditure was Rs. 56.47 lakhs only and the assessing officer has adopted the figure of Rs. 133.93 lakhs. The Ld A.R submitted that the balance amount of Rs. 77.46 lakhs relate to the late payment charges relating to purchase of shares. T....