2013 (1) TMI 1015 - AT - Income Tax

Summary

Issues Involved: Disallowance of expenses under section 14A of the Income tax Act, 1961 in relation to exempt income.

Dispute Raised by AO: The AO disallowed expenses under section 14A for exempt income earned by the assessee from personal investment and trading shares.

Assessee's Submission: The assessee maintained separate accounts for personal investments and trading activities, arguing that no expenses were incurred for personal investments and that trading shares' dividend income was incidental.

CIT(A) Decision: CIT(A) upheld the disallowance for trading shares but deleted the disallowance for personal investments, citing no expenses incurred and separate accounts maintained.

Assessee's Appeal: The assessee contended that no disallowance should be made for trading shares' dividend income as per section 14A.

Legal References: The assessee cited the judgment of the Hon'ble High Court of Karnataka in CCI vs. JCIT and a Tribunal decision in DCIT vs. M/s. India Advantage Securities Ltd.

Tribunal Decision: The Tribunal found that no disallowance could be made for expenses related to dividend income from trading shares, following the High Court's judgment.

Conclusion: The Tribunal allowed the assessee's appeal, deleting the disallowance for trading shares and upholding the deletion of disallowance for personal investments. The revenue's appeal was dismissed.