TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 628
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.... assessee had claimed Rs. 25,68,04,353/- as long term capital gain being exempt income. Applying Rule 8D the Assessing Officer had computed disallowance under Section 14A the Income Tax Act, 1961 but the Tribunal had erred in law in deleting this disallowance. She handed up a calculation sheet detailing the manner in which calculation is made of disallowable expenditure by application of Rule 8D (i), (ii) and (iii). The sheet also contains such calculation made in respect of the assessee. That portion of the calculation is reproduced below: "Re - G K K Capital Markets (P) Limited Assessment Year 2008-09 LTCG claimed; treated as business income - Rs. 25,80,33,811/- Rs. 7,74,10,143/- Tax -30% 14A by Assessee assessee's offer u/s 8D (i....
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....on 14A of the Act is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income. 8. In the case before us, there is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired,. Mr. Khaitan strenuously contended before us that for the last few years before the relevant previous year, no new share has been acquired and thus, the loan that was taken and for which the interest is payable by the assessee was not for acquisition of those old shares and, therefore, the authorities below erre....
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....ch indicates that it is not necessary that exempt income should necessarily be included in a particular year's income, for disallowance to be triggered. Also, section 14A of the Act does not use the word "income of the year" but "income under the Act". This also indictes that for invoking disallowance under Section 14A, it is not material that assessee should have earned such exempt income during the financial year under consideration. 6. Thus, in light of above, Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby clarifies that Rule 8D read with section 14A of the Act provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income." The que....
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....hat the Assessing Officer had treated the claim of long term capital gain as business income. The assessee did not object to that. In such situation there could be no application of Section 14A for disallowance of expenditure incurred to earn exempt income. He submitted the assessee is engaged in the business of share trading. Money was borrowed for the purpose of purchasing shares. The expenditure of interest on borrowings was relatable to the share trading business. The shares had been taken as stock in trade of the assessee which yielded dividend income. There was no expenditure incurred in earning the dividend income which is only incidental to the assessee holding on to the shares. He relied on an unreported judgment dated 28th Februa....
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....essing Officer for invoking the provisions of Section 14A read with Rule 8D. The Tribunal had said so in the case of CIT V. REI Agro Ltd. and this court by its order dated 23rd December, 2013 dismissed the appeal preferred therefrom by the Revenue. He submitted further, the said circular relied upon by the Revenue also had no application to the facts of this case. We find from the assessment order the Assessing Officer said, inter alia, as follows:- "In the computation of total income, the assessee has claimed LTCG of Rs. 25,58,04,353/- as exempt. Since Long Term Capital Gain of Rs. 25,80,33,811/- is treated as business income, no such exemption is allowed." The Tribunal in the impugned order had found that the assessee does not have a....