2017 (12) TMI 929

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... only issue raised by the assessee in various grounds of appeal is against the confirmation of disallowance of Rs. 43,00,862/- confirmed by the assessee as made by the AO under section 14A r.w.r 8D of the Rules. 3. Facts of the case are that the assessee filed return of income on 31.9.2010 declaring NIL income which was processed under section 143(1) of the Act. The case of the assessee was selected for scrutiny under CASS and accordingly statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO observed that the assessee has earned dividend income and no corresponding disallowance of expenses was made by the assessee. Accordingly, the AO asked the assessee to fu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... as stock-in-trade also. 6.1 In the case of D. H. Securities Pvt. Ltd. v. DCIT[2014] 146 ITD 1 (Mum.) (TM), the Third Member bench of the Tribunal held that section 14A r.w. Rule BD disallowance can be made in respect of tax-free securities held as stock-in-trade. 6.2 The ITAT Mumbai in case of Doubledot Finance Ltd. Vs. DCIT [2014] 49 taxmann.com 291 has held that Section 14A is attracted even in the case of dividend income from shares held as stock-in-trade. In this decision, it is mentioned that the issue of disallowance under Section 14A in relation to shares held as stock-in-trade was discussed by the co-ordinate bench of Mumbai Tribunal in the case of D.H.Securities (P) Ltd. vs. CIT [2014] 41 taxmann.com 352/146 ITD ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... that the assessee is engaged in the business of trading in shares and derivatives of shares and commodities, sub-broking etc. We find from the orders of authorities below that the earning of the dividend by the assessee from the shares and securities held as stock-in-trade was only ancillary. The ld. AR placed before the Bench, a copies of balance sheet for the financial years 2009-10, 2009-10 and 2010-11 to prove that the assessee is carrying on the business in shares trading and the said securities were held as stock-in-trade. In our opinion, since the assessee is doing the business of trading in shares and securities and was not making any investments in the securities as investor, therefore, section 14A r.w.r 8D cannot be applied to th....