2016 (1) TMI 1337

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....u/s 14A of the Income Tax Act, 1961. 2. The Learned CIT(A)-8 has erred in confirming the above addition in the hands of your Petitioner. 3. The order appealed against is bad in law and is against the principle of natural justice. 4. The order appealed against is based on surmises and conjectures. 2. The common issue raised in all the grounds of appeal is against the confirmation of disallowance u/s 14A r.w.r 8D of the Act of Rs. 11,18,976/-. 3. The brief facts of the case are that the assessee filed her return of income on 31.08.2010 declaring as income of Rs. 67,08,440/-. The assessee was a Director of M/s. NVS Brokerage Pvt. Ltd. During year the assessee had earned the tax free dividend of Rs. 14,80,716/- and did not allocate and ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nt as well as stock in trade, both, will form part of investment made for the purposes of tax free exempted income. In the case of Godrej & Boyce Mfg. Co. Ltd. (ITANo.636/2010), the Hon'ble Bombay High Court had held that Rule RULE 8D was applicable only from AY 2008-09. Thus, addition of the amount determined as per rule RULE 8D has to be made from AY 2008-09 onwards as amount of expenditure incurred for earning of exempt income. The recent Special Bench judgement in the case of m/s. Daga Capital Management Pvt. Ltd.(2008) reported in 26 SOT603 supports the view that the Assessing Officer has rightly made the disallowance u/s.14A. The appellant's contention that no expenditure had been incurred to earn exempt income is not acceptable f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....08, the assessee borrowed 2.00 Crores from J.M. Financial Services Ltd and utilized the same for share trading business through the same brokerage company and net profit from the share trading was shown as income from business. During the year the amount of Rs. 5,49,368/- was paid as interest for the said loan and since the loan was exclusively borrowed for share trading through J.M. Financial Products Pvt Ltd and the Income from the said trading business was duly returned as business income and therefore the interest paid to the said company was wrongly disallowed by the AO u/s14A r.w.r. Rule 8 D. The ld. Counsel relied on the decision of the CIT Vs. Gujarat Power Corporation Ltd. 352 ITR 583 (Guj) and CIT Vs. HDFC Bank Ltd. 366 ITR 505 (B....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ial on record. We find that the assessee was engaged in the business of share trading for the purpose of which the assessee borrowed the money from J.M. Financial Products Pvt. Ltd., which was used for the purpose of share trading. Moreover the details as filed by the assessee on paper book at pg. no.13 shows that assessee had capital Rs. 18,40,73,180/- on 31.03.2010 whereas the total value of investment on that date was Rs. 13,93,91,986/- which means that these investments were made by the assessee out of her own funds and not out of the borrowings which were used for the purpose of share trading. We also find that as on 31.03.2010, the closing stock of shares was Rs. 1,07,26,256/-which also proves that the money borrowed was utilized for ....