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TMI Blog2015 (1) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... nt submits the following grounds of appeal for Your Honours sympathetic consideration :- 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in directing Assessing Officer to recomputed disallowance u/s.14A. He ought to have allowed the entire expenditure of Rs. 22,12,093/- disallowed by the Assessing Officer u/s.14A. 2. On the facts and in the circumstances of the case, the learned CIT(A) further erred in confirming treatment of redemption of debentures (OFCD) of Rs. 80,01,043/- as "Income From Other Sources" as against "Long Term Capital Gains". 2. We have heard the rival contentions and found from record that the AO has disallowed Rs. 22,12,093/- under Section 14A. The AO observed that assessee has earned di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of total income 32.81 Total disallowance is aggregate of (i) + (ii) + (iii) = 252.79 4.3 The assessee in the computation of total income has disallowed an amount of Rs. 2,30,66,907/- on interest disallowed u/s.14A of the Act. In view of the above, an amount of Rs. 22,12,093/- (Rs.2,52,79,000 - Rs. 2,30,66,907) is treated as expenditure incurred for earning the dividend income and the same is disallowed u/s.14A of the Act." 3. By the impugned order, the CIT(A) observed that in view of decision of Hon'ble Bombay High Court in case of Godrej Boyce Mfg. Ltd., 328 ITR 81, rule 8D has no application to the facts of the case. He further observed that assessee had not made any app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out mistake in the disallowance proposed by the assessee amounting to Rs. 230 lakhs. However, he has applied Rule 14A. The year under consideration is assessment year 2007-08, whereas Rule 14A was made applicable from Assessment Year 2008-09 as held by Hon'ble jurisdictional High Court in the case of Godrej Boyce Mfg. Ltd., 328 ITR 81. However, the Hon'ble High Court has further stated that even in earlier years reasonable disallowance is required to be made. Thus, there is no reason to compute disallowance as per Rule 8D during the relevant assessment year 2008-09 under consideration. Keeping in view the other taxable income earned by assessee, we direct the AO to disallow 50% of total expenditure of Rs. 4.65 lakhs as incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X-0629-MP, wherein it was held that excess amount received on redemption bonds was in the nature of capital receipt, therefore, liable to be taxed as capital gains. Action of the AO for treating the same as business income of assessee was held to be not justified. 9. Reliance was also placed on the decision of the coordinate bench in the case of Mrs. Perviz Wang Chuk Basi Vs. JCIT, reported in 2006-(102)-ITD-0123-T-BOM, wherein it was observed that the word, "relinquishment" would mean that asset is existing and assessee on his own relinquishes its right in favour of transferee. The relinquishment takes place when owner withdraws himself from the property and parts his right thereon. By referring to the decision of Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than on account of transfer. To so read the expression is to render it ineffective and its use meaningless. As we read it, therefore, the expression does include the extinguishment of rights in a capital asset independent of and otherwise than on account of transfer." From the record we found that the AO has not treated the amount received on redemption as capital receipt on the plea that there was no transfer within the meaning of Section 2(47). Applying the proposition of law as discussed above, we hold that redemption of debenture amount to transfer within the meaning of Section 2(47), therefore, the lower authorities were not justified in not treating redemption on debenture as capital gain. Accordingly, the AO is directed to tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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