9911796707
TMI Blog2012 (4) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... aying the outstanding amount of Rs. 8/- per share, which worked out to Rs. 5,27,97,016/-. To pay for the conversion cost, the assessee has entered into agreement with M/s. Kitchen Appliances Pvt. Ltd., to avail interest free loan of Rs. 14/- crores and had paid Rs. 28/- lakhs to one Sri. A.S. Krishna Iyer for brokering this loan. The Assessing Officer held that this expenditure was directly attributable to the earning of the dividend income and disallowed the same. He further considered the business expenditure claimed by the assessee and estimated the expenditure incurred by the assessee on earning of the dividend income at Rs. 27,24,330/- under Rule 8D or the Income Tax Rules and disallowed the same as relatable to earning of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for consideration in this appeal is: Whether the provisions of Section 14A of the Act are applicable to the expenses incurred by the assessee in the course of its business merely because the assessee is also having dividend income when there was no material brought to show that the assessee had incurred expenditure for earning dividend income which is exempted from taxation? 3. The learned Counsel for the assessee assailing the impugned order of the authorities contended that the assessee has incurred expenditure for purchasing shares. 63% of the shares so purchased are sold and the income derived therefrom is offered to tax as business income. The remaining 37% of the shares remained unsold. Those shares yielded dividend. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is incurred in earning the said income, the said expenditure also cannot be deducted. But in this case, when the assessee has not retained shares with the intention of earning dividend income and the dividend income is incidental to his business of sale of shares, which remained unsold by the assessee, it cannot be said that the expenditure incurred in acquiring the shares has to be apportioned to the extent of dividend income and that should be disallowed from deductions. In that view of the matter, the approach of the authorities is not in conformity with the statutory provisions contained under the Act. Therefore, the impugned orders are not sustainable and require to be set aside. Accordingly, we pass the following: ORDER (i) Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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