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2019 (7) TMI 293

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....m Other Sources' are eligible for set off against the 'Income from business & profession'; hence the AO shall be directed to allow the set off of losses under 'Income from Other Sources' against income under the head 'Income from business & profession'. The grounds raised by the revenue reads as under: - 1. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was justified in deleting the addition of Rs. 23.17 crore made by the AO on account of acquisition of quoted shares through off-market, below the market price? 2. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was justified in deleting the addition of Rs. 23.17 crore made by the AO on account of acquisition of quoted shares through off-market, below the market price though the same was resulted in accrual of benefit to the assessee taxable u/s. 28(iv) of the I. T. Act, 1961? 3. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was justified in deleting disallowance made by the AO u/s. 14A of the Act read with Rule 8D of the Income-tax Rules in relation to investment made by the assessee in listed equity shares of Net....

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....t that it was noted that the assessee debited ROC fees of Rs. 25,000/- each on 14/09/2012 & 06/11/2012. The said sums were stated to be paid to SEBI for submission of post issue report u/r 10 of Takeover Code for investment in Right issue of TV18 Broadcast Ltd. and Network18 Media & Investment Ltd. Since the assessee had investments in its Balance Sheet, the same called for disallowance u/s 14A. The assessee defended the same by submitting that no exempt income was received during the year and no expenditure was incurred towards the investment. However, not convinced, Ld. AO, applying Rule 8D, computed aggregate disallowance of Rs. 96.18 Lacs, which comprised-off of aforesaid direct expenditure of Rs. 50,000/- u/r 8D(2)(i) and indirect expenditure disallowance u/r 8D(2)(iii) for Rs. 95.68 Lacs, being 0.5% of average investment. 3.1 Aggrieved, the assessee agitated the same before Ld. CIT(A) vide impugned order dated 14/07/2017. Regarding addition u/s 69B, it was submitted that the additions were made on mere presumption, surmises and conjectures. The attention was drawn to the fact that 82,78,180 shares were purchased from 4 parties which were the assessee's promoters or promoter....

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....ere must be something more than bare suspicion to support the assessment under s. 23(3)-ITO and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion The ratio followed in jurisdictional High Court decision in the case of CIT-7 vs M/s. Rupee Finance & Management (P) Ltd. IT Appeal No. 1208 of 2008 and CIT-20 vs Devesh Agarwal, IT Appeal No. 1637 of 2014 with Appeal no. 1727 of 2014 is squarely applicable to the fact of the case of the appellant that mere purchase of shares, as an investment, with a lock in period of holding, for a consideration which is less than the market value, cannot be brought to tax and also following the Hon'ble Supreme Court decision in the case of Dhakeswari Cotton Mills Ltd vs. Commissioner of Income tax [26 ITR 775 SC] wherein ITO cannot act on pure guess and suspicion, so I am of the considered opinion that the addition made by the AO on account of the difference in market value and the face value of the share is not a justifiable one and accordingly I direct the AO to delete the above addition. 3.3 The disallowance u/s 14A was deleted in view of the fact that the assessee did ....

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....proposition is squarely covered by the decision of Hon'ble Bombay High Court rendered in CIT V/s Devesh Agarwal [81 Taxmann.com 257], which Ld. CIT(A) has already considered. The case law of Hon'ble Rajasthan High Court rendered in CIT V/s Mantri Share Brokers Pvt. Ltd. [96 Taxmann.com 279] as confirmed by Hon'ble Apex Court by way of dismissal of revenue's SLP [96 Taxmann.com 280], the decision of Hon'ble Delhi High Court rendered in CIT V/s Puneet Sabharwal [338 ITR 485] also supports the same view. 5.4 So far as the submissions made by Ld. CIT-DR is concerned, we find that, firstly the aforesaid provisions of Section 56(2)(viia) has not been invoked by Ld.AO and secondly, these provisions do not apply in case of receipts of shares for inadequate consideration by the assessee, of a company not being a company in which the public are substantially interested [as defined in Section 2(18)]. However, we find that shares being transacted by the assessee are not of a private company but of a public listed company which is evident from the fact that Ld. AO proceeded to tax the difference of listed price and the acquisition price u/s 69B. Therefore, the said provisions, in our opinion, ....

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....13/07/2011. The moneys were borrowed @15% whereas interest on debenture was earned @10%. Accordingly, the assessee earned interest income of Rs. 265.75 Lacs and paid interest expenditure of Rs. 425.86 Lacs. It was the differential of the two, which Ld. AO had disallowed u/s 36(1)(iii). The assessee pleaded that since interest income was offered under the head Income from other sources and the borrowed funds had direct nexus with investment, full deduction of the interest expenditure was allowable u/s 57(iii). The attention was drawn to the computation of income to submit that the assessee has ignored the loss under the head Income from other sources except to the extent of setting-off of business income of Rs. 6,48,911/-. The Ld. CIT(A), convinced with the claim of the assessee u/s 57(iii) concluded the matter in the following manner: - So as per the provisions of Section 57(iii), the appellant company has rightly claimed the deduction u/s 57(iii) and further the net effect is only Rs. 6,48,911/- the appellant company gets benefit so even if the AO has any reservation, Rs. 6,48,911/- can be treated as an income and not to set off the interest loss as the appellant company already....