TaxTMI 
TaxTMI 
2014 (12) TMI 1384
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....med exemption u/s 10(34) of the Act. 2.1. The assessee has suo moto disallowed Rs. 7,84,976/- u/s 14A of the Act read with Rule 8D in its return of income. The AO computed disallowance under Rule 8D in the following manner. "Income as declared : Nil 1. Disallowance u/s 14A of the Act read with Rule 8D of IT Rules, 1962 as discussed Rs. 71,40,115/- 2. Addition of Rs. 4,18,50,000/- as discussed above - Rs. 4,18,50,000/- 3. Addition of Rs. 3,89,256/- as discussed above - Rs. 3,89,256/- Total taxable income Rs. 4,93,79,371/-." 2.2. Aggrieved the assessee carried the issue in appeal. 2.3. The assessee also debited Rs. 4,18,50,000/- under the head 'loss due to forfeiture of warrants' and claimed the same as short term capital loss. ....
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....CIT (A) while confirming the disallowance u/s 14A of the Income tax Act, 1961 at Rs. 54,48,957/- has failed to appreciate that the appellant company in the return of income had already disallowed a sum of Rs. 7,84,976/- u/s 14A by proportionately dividing the total expenses claimed in the ratio of turnover of exempt income to turnover of total income which is a scientific and logical method for computing disallowance u/s 14A However, the Ld. AO has made the disallowance u/s 14A by applying the provisions of Rule 80 without recording his satisfaction that why the method adopted by the appellant company is wrong and therefore the disallowance made by the Ld AO. and confirmed by Ld CIT (A) is incorrect as per the ratio laid down by the decisio....
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....re of share warrant in accordance with law. b) The Ld. CIT-(A) has erred in concluding that subscription to the convertible warrant by the appellant company in warrants of Monnet Ispat & Energy Ltd is not a capital asset u/s 2(14) of the Income Tax Act, 1961 when in fact it is extinguishment of rights therein and covered u/s 2(47)(ii) of the Income Tax Act, 1961. c). The Ld CIT(A) has concluded that forfeiture of share warrant is not a genuine and bonafide transaction but is a colorable transaction entered with a motive to create loss in one company without getting it taxed in another group company. The Ld CIT(A) has grossly erred in making the aforesaid conclusion as the forfeiture of share warrant is a genuine and bonafide transaction....
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....attention of the Bench to page 36 of the paper book, which is a Profit and Loss a/c for the year ended 31st March,2009 for the purpose of demonstrating the composition of income which is as follows. Income from operations Rs. 3,32,41,508.86 Agricultural income Rs. 10,130.00 Rs. 3,32,51,638.86 Schedule XII gives income from operations which is as follows: Interest (TDS Rs. 644141/-) Rs. 43,50,139.00 Dividend Rs. 2,76.64,985.84 Rent received Rs. 1,08,000.00 Profit on sale of investments Rs. 10,11,584.02 Profit in share transaction 0.00 Profit in speculation transactions Rs. 6,400.00 Brokerage/Commission received Rs. 1,00,400.00 Rs. 3,32,41,508.86 6.2. Thereafter he drew the attention of the Bench to the i....
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.... incurred for earning dividend income. 6.4. On a careful consideration of the submissions we find that the composition of the income of the assessee demonstrates that it earned Rs. 2.76 crores dividend income, which is claimed as exempt out of total income of Rs. 3.32 crores. The expenditure incurred is Rs. 62,33,964/-. The assessee claims that the expenditure on interest, is incurred for the purpose of earning interest income of Rs. 43.5 lakhs. No evidence is lead by the assessee to prove this claim. Similarly on the issue of other expenses amounting to Rs. 11,60,904.58, no evidence is lead to demonstrate that a particular expense cannot be said to have been incurred in relation to earning the income, which is not part of total income. Un....
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....in the meaning of s.2(47) of the said Act has now been made clear by the Supreme Court in the case of Mrs.Grace Collis (2001) 248 ITR 323 as also by the Karnataka High Court in BPL Sanyo Finance Ltd. (2009) 312 ITR 63. We agree with the interpretation given by the Karnataka High Court in BPL Sanyo Finance Ltd. (supra) and we see no reason to take a different view. The restrictive meaning given to the word transfer by the Supreme Court decision in Vania Silk Mills P.Ltd. (1991) 191 ITR 647 has been over ruled by the larger Bench of the Supreme Court in the case of Mrs.Grace Collis (2001) 248 ITR 323. In the present case, we find that the forfeiture of the convertible warrant has resulted in extinguishment of the right of the assessee to ob....