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TMI Blog2013 (12) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... at the expenses relatable to above exempt income has not been included back to the total income for taxation. AO noted that assessee had direct expenses as Demat charges for Rs.17,287/- which is added back as per Rule 8D. AO further noted that assessee paid interest for Rs.1,81,47,891/-. Hence, as per point 2 of Rule 8D Rs.48,50,808/- was disallowed. The assessee submitted a calculation on rule 8D for disallowance, however the same did not consider the stock-in-trade in the computation. Hence, AO worked out disallowance as section 14A read with Rule 8D of the I. T. Act as under: Opening value of investment : Rs.500000/- Closing value of investment : Rs.500000/- Average investment : Rs.500000/- ½% of average investment : Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l disallowance of Rs.6,53,488/- is upheld as expediture relating to earning of dividend/exempted income. The appellant has received dividends amounting to Rs.12,22,072/- only and disallowance of Rs.6,53,488/- on the earning of the same is fair and reasonable and that too when the dividend income has been earned from share trading business. Therefore, the addition of Rs.48,50,808/- is deleted out of Rs.55,04,296/-. The net addition on account of disallowance of expenditure relating to exempted diviend income is upheld at Rs.6,53,488/- only." Against the above order revenue is in appeal before us. 5. We have heard both the parties and perused the records. Ld. counsel for the assessee submitted that the issue involved is squarely covered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e yield assets are not held as investments, and that the related assets, i.e. shares, having been held as stock in trade all along, there is no occasion to invoke rule 8 D. There is no infirmity in this approach, nor do revenue authorities stand to lose anything by this approach canvassed by the assessee. Quite to the contrary of what learned Departmental Representative perceives to be advantageous to the Assessing Officer, in case the application of rule 8D was to be upheld, there would have been no disallowance at all since not only that no investments were held by the assessee, admittedly there are no direct expenses are incurred on earning of the dividends and as such in all the three segments of disallowance under rule 8D(2) i.e. 8D (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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