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TMI Blog2012 (10) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... any kind of expenditure for earning of dividend income. Moreover, looking to the fact that assessee has itself disallowed 1% of the dividend income as an expenditure. Hence, no further disallowance is called for. Deduction of Short Term Capital Loss on sale of shares of M/s BILT - acquired vide transfer from holding company at book value (Rs 128.02 per share) as per the provisions of section 49(1)(iii)(e), when market value was ₹ 73.3 per share - dis-allowance - Held that:- It is seen firstly, that transaction is between parent company and subsidiary company which cannot be treated as transfer as it is undisputed fact that assessee is a 100% subsidiary of its parent company; secondly, the shares have been transferred as per the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Limited', which is a Public Limited company and its shares are listed in Stock Exchange. The assessee is mainly engaged in the business of leasing of plant and machinery, equipments, vehicles etc and bill discounting. 5. The first issue relates to disallowance of expenditure u/s 14A for sums aggregating to Rs. 1,44,156/-. During the course of assessment proceedings, Assessing Officer noted that assessee has received dividend income of Rs. 15,28,314/- which was claimed as exempt u/s 10(33). Since, the assessee has not debited any expenditure attributable to earn the exempt dividend income, the AO required the assessee as to why the provisions of sec. 14A may not be applied. In response, the assessee submitted that no expenditure was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Co. (P.) Ltd. ( supra ) cannot be followed as the same has been overruled by the Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81/194 Taxman 203 and, therefore, disallowance under Rule-8D cannot be made in the present assessment year. Secondly, the dividend income which has been received mainly from shares which has been acquired through amalgamation and neither any borrowed funds nor any surplus funds of the assessee were invested for purchasing of shares. She also drew our attention to Annexure-A filed along with the grounds of appeal, showing the details of expenditure debited to the Profit Loss Account and submitted that none of the expenses were either remotely or directly related to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts relevant for the issue are that the assessee had shown in the return of income short term capital loss of Rs. 4,72,49,239/- on sale of shares of M/s. Ballarpur Industries Ltd. which are quoted shares. It was observed by the Assessing Officer that the assessee had acquired 11,102 shares of M/s. Carnation Investment Ltd. on amalgamation, at the cost of Rs. 1,10,200/- and further 8,08,924 shares were transferred from its holding company 'M/s. Greaves Cotton Ltd.' on 23.10.2003 at the cost of Rs. 10,35,57,350/-. Further, it has been noted by the AO that on the date of transaction/transfer of shares from M/s. Greaves Cotton Ltd. to the assessee, the market trading rate and quotation in BSE and NSE was around Rs. 73.30 per shares whereas th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. However, the Ld CIT(A) completely agreed with the findings of the Assessing Officer and dismissed the assessee's ground after upholding the reasoning and the finding given by the AO. 13. Ld Sr. Counsel appearing on behalf of the assessee submitted that there cannot be any doubt in this case that the shares were acquired at book value which is evident from page 65 and 104 of the paper book, which is a part of balance sheet of Greaves Cotton Company and Carnation Investment Ltd wherein shares have been transferred on the book value. He strongly contended that AO as well as CIT(A) has not considered this vital plea of the assessee that these transactions were wholly covered by sec. 49(1)(iii)(e) r.w.s 47 (iv). She submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that capital gain is chargeable to tax on any profit and loss arising from transfer of capital asset. Section 47 provides various instances where transactions are not regarded as transfer within the meaning of section 45. Clause-(iv) of section 47 provides that any transfer of capital asset by a company to its subsidiary company, will not be regarded as transfer within the meaning of section 45. Further, section 49 provides for the cost with reference to certain modes of acquisition. Sub-clause-(e) of clause-(3) of sub-section (1) of section 49, provides that where the capital asset has become the property of the assessee under any such transfer as is referred to in clause-(iv) of section 47 (which is relevant in the case of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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