TaxTMI 
TaxTMI 
2016 (5) TMI 531
X X X X Extracts X X X X
X X X X Extracts X X X X
....A) assessee had to move urgently to his native place in Uttar Pradesh due to ill health of his mother and other family problems. Last date for filing the appeal was 29.11.2012 whereas assessee returned from his native place on 3rd week of January, 2012 due to which this delay occurred and ld. AR also placed on record an affidavit signed by the person on behalf of the assessee. 3. After considering the submissions of ld. AR and going through the affidavit placed on record, we are of the view that assessee was prevented by sufficient reason from filing the appeal in the statutory time limit and, therefore, we condone the delay of 62 days and admit the appeal for hearing. 4. Briefly stated facts as culled out from the records are that the assessee is a private limited company engaged in the business of trading gold, silver and shares & securities. It filed its return of income on 29.9.2008 declaring total income of Rs. 7,08,732/-. Case was selected for scrutiny assessment and notice u/s 143(2) dated 4.8.2009 was issued and served upon the assessee on 10.8.2008. The case along with various details was discussed before ld. Assessing Officer. During the year under appeal assessee h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... investment resulting in exempt income made by the assessing officer is confirmed, As regards interest, appellant had borrowed funds on which -interest was paid. While making investments, both borrowed funds as well as own funds were used hence one cannot say that borrowed funds were used only for business purpose and owned capital was only used for investment. Admittedly no separate accounts are maintained for business and investment activities therefore appellant's claim is not justified that borrowed funds were not used in making investment.' Therefore In the absence of clear cut details of utilization of funds, the formula given in rule 8D which is mandatory from this year onward is to be applied. The decisions relied upon by the appellant are not applicable in view of the fact that dividend receivable on even trading stock is exempt and disallowance of expenses are to be made. Since assessing officer worked out interest disallowance as per rule 8D, the interest disallowance is confirmed. These grounds are accordingly dismissed. 6. Aggrieved, assessee is now in appeal before the Tribunal. 7. Ld. AR submitted that ld. Assessing Officer has made di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the AO against dividend income of Rs. 58,963/-. Nothing contrary has been brought to the fact that assessee is a dealer in shares and profit in share business has been shown by the assessee under the head "income from business". A.O. has not made any specific finding to support the disallowance made by him. Further in case of Zaveri Virjibhai Mandalia vs. ACIT in ITA No.469/Ahd/2007 for AY 2004-05, the co-ordinate Bench held where the assessee is a dealer in share and profit in share business is taxed as business income section 14A of the Act does not apply. The relevant portion of the decision is reproduced below - "12. In the present case before us it is seen that the assessee is in the business of purchase and sale of shares, the income from which is also assessed under the head income from business and profession". The assessee had borrowed funds from Kotak Mahindra Investment Ltd. for the purpose of purchase of units and shares which in fact have been utilized for purchase of units and shares. The assessee has paid interest on the amount borrowed from Kotak Mahindra Investment Ltd. These facts have not been controverted by Revenue. The assessee has incurred interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- and the investments at the end of the year was at Rs. 1,26,00,538/- only. Therefore, in view of the decision of the Hon'ble Gujarat High Court in the case of Hitachi Home and Life Solutions (I) Ltd. (supra) and Torrent Power Ltd. (Supra), no disallowance towards interest expenditure incurred for earning exempt income can be made. Regarding the disallowance of administrative expenses of Rs. 12,750/-, we find that the Chandigarh Bench of the Tribunal in the case of A.C.I.T. Vs. Punjab State Coop & Marketing Fed. Ltd. in ITA No. ITA No.548/Chd/2011 for AY 2007- 08 has held that disallowance u/s. 14A read with Rule 8D cannot exceed the exempt dividend income. Therefore, we restrict the disallowance of administrative expenses to Rs. 900/- only, being the exempt dividend income earned by the assessee. Thus, this ground of appeal of the assessee is partly allowed." 8. The facts of the case of assessee are well covered by the above referred judicial pronouncements of the Co-ordinate Benches. So much so that it is undoubted that assessee is a dealer in shares, trading of shares has been shown as income from business, stock in trade in shares is at Rs. 41,16,992 investment in shar....