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TMI Blog2014 (8) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... thout furnishing any basis and without appreciating the fact that disallowance u/s. 14A has to be determined strictly as per method prescribed under Rule 8D. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,00,00,000/- made on account of unsubstantiated purchase price, unsubstantiated sale value of shares as well as the value of investments in shares as on 31.3.2008, being share transaction not supported by any documentary evidence without appreciating the facts that no documentary evidences are produced by the assessee during the course of scrutiny proceedings in support of the share transaction. 3. The assessee is a Private Limited Company trading in shares. Return f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The AO further observed that even the basis for arriving at the purchase and sale value has not been furnished in respect of unquoted shares. The assessee in one of its reply stated that "purchase and sale price of the unquoted shares are decided by the Management of the company after adequate due diligence. The assessee after analyzing the business expediencies and commercial practices and trends of the function ability and modus operandi of the business decide the rate at which to purchase/sell the shares in the assessment year under consideration." 3.3. It was further explained that decision to sell the shares at a particular price was dictated solely for business consideration. It was strongly contended that there can hardly be any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,086/- is disallowed, it would be injustice to the assessee who is having a normal trading business turnover of about Rs. 15 crores. The Ld. CIT(A) went on to restrict the disallowance to the exempt income at Rs. 1,49,800/- and gave relief to the assessee at Rs. 74,286/-. 5. Aggrieved by this, the Revenue is before us. 6. The Ld. Departmental Representative strongly submitted that once the disallowance is to be computed u/s. 14A r.w. Rule 8D, there is no provision for restricting the disallowance to the exempt income. 7. Per contra, the Ld. Counsel for the assessee stated that the AO has taken the shares held as stock-in-trade for computing the average investments during the year, therefore, the computation under Rule 8D(iii) is in itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Limited Co. one which: (a) has a minimum paid-up shares capital of Rs. 1 Lakh or such higher capital as may be prescribed; and (b) by its Articles Association: (1) restricts the right of transfer of its share (2) limits the number of its members to 50 which will not include A. members who are employees of the company; and B. members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees; 3. prohibits any invitation to the public to subscribe for any shares or debentures of the company; and 4. Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives. This means that the major ownershi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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