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2020 (6) TMI 75 - ITAT DELHICharacterisation of Income - capital gain or business income - activity of purchase on sale of the shares - HELD THAT:- In view of the consistent finding of the Tribunal since assessment year 2008-09, respectfully following the finding of the Tribunal for assessment year 2008-09 to 2012-13 [2018 (3) TMI 1409 - ITAT DELHI] we set aside the order of the lower authorities and hold the activity of purchase and sale of shares in question as investment activity to be assessed under the head capital gain. Disallowance under section 14A read with rule 8D - expenses on account of the income on which no activity was done in the previous year, was not accepted by the Assessing Officer and the explanation of the assessee that no expenses were incurred toward earning of dividend income shares of Dabur India Ltd, which was a strategic investment, was also rejected - First contention of the assessee that no expenses were been disallowed corresponding to the strategic investment made in the shares of the Dabur India Ltd as promoter.\ - HELD THAT:- In this regard, the Hon’ble Supreme Court in the case of Maxopp Investment Ltd Vs CIT [2018 (3) TMI 805 - SUPREME COURT] where shares are held as investment in the investee company, may be for the purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by the assessees to have controlling interest in the investee companies have to fail and are, therefore, dismissed - contention of the assessee investment made for acquiring controlling interest in Dabur India Ltd should not be subject to disallowance under section 14A is rejected. Whether no dissatisfaction was recorded by the AO on the claim of the assessee of expenses toward earning exempt income? - We agree with the finding of the Ld. CIT(A), that when the assessee itself as computed the disallowance in terms of rule 8D and thereafter reducing the expenses corresponding to earning dividend income from shares of M/s Dabur India Ltd. was not justified. The Assessing Officer in para 4.3 to 4.5 of the assessment order has duly rejected the action of the assessee of reducing the expenses related to earning of the dividend income from the shares of M/s. Dabur India Ltd. Accordingly, we reject the contention of the assessee and upheld the finding of the Learned CIT(A) on the issue in dispute. The ground No. 2 of the appeal of the assessee is accordingly dismissed. Disallowance of business expenditure - HELD THAT:- It is undisputed that 10 percentile disallowance was agreed by the Authorized Representative of the assessee before the AO and therefore the AO did not identify the individual expenditure not related to the business purpose. In view of the admission of the Authorized Representative of the assessee for disallowance of 10% of the expenses as incurred for non-business purpose, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground No.3 of the appeal of the assessee is accordingly dismissed.
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