2016 (12) TMI 47

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....ry grievance of assessee is with regard to disallowance of Rs. 31,68,225/- made by the income-tax authorities by invoking Sec. 14A of the Act. 3. Briefly put, the relevant facts are that appellant is a company incorporated under the provisions of Companies Act, 1956 and is, inter-alia, engaged in the business of share and stock broking. During the year under consideration, assessee had earned dividend income of Rs. 15,68,512/-, which was claimed as exempt. In the return of income, assessee had made a suo motu disallowance of Rs. 50,000/- on account of expenses incurred in relation to earning of such exempt income. The Assessing Officer, however, applied the formula contained in Rule 8D of the Income Tax Rules, 1962 to compute the disallo....

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....n deleted on the ground that own funds of the assessee are more than the amount of investments. It was pointed out on the basis of the balance-sheet for the year under consideration that the fact-situation continues to be same as that considered by the Tribunal in the earlier years. 5. On the other hand, the ld. DR appearing for the Revenue has relied upon the orders of lower authorities in support of the case of Revenue. 6. We have carefully considered the rival submissions. In the present case, the dispute revolves around the action of Assessing Officer in computing disallowance u/s 14A of the Act by applying the formula contained in Rule 8D of the Rules. In terms of first limb of the disallowance, interest of Rs. Rs. 28,42,790 has ....

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....10.2015 read with Corrigendum dated 16.11.2015, the expenses were disallowed @ 5% of such exempt income. It is also pointed out that so far as the shares held as stock-in-trade are concerned, the same are excludible for the purpose of disallowance u/s 14A of the Act. The said proposition asserted before us has been affirmed by our coordinate Bench in the case of Devkant Synthetics (India) Pvt. Ltd. (supra). In coming to the said decision, the Tribunal referring to the judgment of Hon'ble Karnataka High Court in the case of CCI Ltd. vs. JCIT (2012) 250 CTR 291, as also the judgment of Hon'ble Bombay High Court in the case of CIT vs. India Advantage Securities Ltd. (ITA No. 1131 of 2013 dated 17.3.2015). In our considered opinion, the Ass....