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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 ..... and treatment of transaction of shares as speculative income instead of business income as claimed by the assessee. 3. At the very outset, the Ld Sr. Counsel had not pressed the third ground captioned as ground no. C relating to income being treated as speculative profit. Thus, this ground is dismissed as not pressed. 4. The assessee is a company in which public are substantially interested and is a 100% subsidiary of 'M/s. Greaves Cotton 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT (Special Bench) in the case of ITO v. Daga Capital Management Co. (P.) Ltd. [2008] 26 SOT 603/[2009] 117 ITD 169 (Mum.) (SB) held that provisions of Rule-8D are retrospective in nature and disallowance has to be made in accordance with Rule 8D. Accordingly, he directed the AO to make the disallowance under the said Rule. 8. Before us, Ld Sr. Counsel submitted that first of all the decision of Daga Capital Management 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for earning of dividend income. Moreover, looking to the fact that assessee has itself disallowed 1% of the dividend income i.e. Rs. 15,283/- as an expenditure. Hence, no further disallowance is called for. In the result, this issue is decided in favour of the assessee and the ground taken by the assessee stands allowed. 11. The second issue is with regard to deduction of Short Term Capital Loss. The 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res at the time of acquisition was at Rs. 73.30 per share which was the value of the share in the stock exchange on the date in which the said BILT shares were acquired by the assessee. Resultantly the short term capital loss on the sale of BILT shares were brought down at Rs. 29,86,018/- as against assessee's claim of Rs. 4,72,49,239/-. 12. In the first appeal, the assessee reiterated the same 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions and perused the material on record. In this case, the transaction is between parent company and its 100% subsidiary company. The shares have been transferred on the book value as have been shown in the books of parent company. It is also not denying fact that the parent company has transferred shares at Rs. 128/- to the assessee company as per its book value. Section 45 provides 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 trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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