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2013 (11) TMI 1637 - AT - Income TaxDisallowance made u/s. 14A applying Rule 8D - Disallowance u/s.14A computed by the A.O. in relation to the stock-in-trade deleted as the disallowance of interest in relation to the dividend received from trading shares cannot be made.
Issues Involved:
1. Disallowance under section 14A of the Income Tax Act by applying Rule 8D of I.T. Rules, 1962. Analysis: The judgment by the Appellate Tribunal ITAT Mumbai pertains to an appeal by the assessee against the order of the Ld. CIT(A)-33, Mumbai for the assessment year 2008-09. The primary issue raised in the appeal was the disallowance made under section 14A of the Act by applying Rule 8D of the Income Tax Rules, 1962. The assessee, a trader in shares and securities, had claimed dividend income as exempt. The Assessing Officer, relying on relevant legal precedents, computed the disallowance under section 14A r.w. Rule 8D. The Ld. CIT(A) upheld the disallowance, stating that the assessee failed to demonstrate the absence of expenses directly linked to the dividend income earned. The assessee contended that the Tribunal had previously ruled in favor of the assessee in a similar case, citing the decision of the Hon'ble Karnataka High Court in support. The Ld. Departmental Representative, however, supported the lower authorities' orders. Upon careful consideration, the Tribunal found merit in the assessee's argument, noting that a previous decision favored the assessee based on similar facts and legal interpretations. The Tribunal highlighted the findings of the previous case and concluded that the disallowance under section 14A should be deleted in the present case as well. In conclusion, the Tribunal allowed the appeal filed by the assessee, reversing the findings of the Ld. CIT(A) and directing the Assessing Officer to delete the additions made under section 14A of the Act. The Tribunal held that as ground No. 1 was decided in favor of the assessee, the alternative plea raised in ground No. 2 was rendered moot. The appeal was allowed in favor of the assessee, and the order was pronounced in open court on 20th November 2013.
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