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TMI Blog2015 (12) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... nue : Shri A.K. Srivastava ORDER PER N.K. BILLAIYA, AM: These are cross appeals by the assessee and the Revenue against the very same order of the Ld. CIT(A)-6, Mumbai dated 21.10.2013 pertaining to Assessment year 2010-11. Both these appeals were heard together and disposed of by this consolidated order for the sake of convenience. ITA No. 820/M/2014 Assessee s appeal 2. The grievance of the assessee read as under: 1. The appellant submits that on the facts and circumstances of the case, the Ld. CIT(A) erred in disallowing expenses of ₹ 10,35,789/- u/s. 14A of the I.T. Act, 1961 read with Rule 8D of the I.T. Rules, 1961. 2. The appellant submits that on the facts and circumstances of the case, the Ld. CIT(A) erred in disallowing Broken period Interest of ₹ 11,50,42,776/-. 3. Without prejudice to Ground No.2, if the Broken Period interest is not allowed as business expense, then broken period interest should be allowed as cost of acquisition of such securities. Any long term capital gain (LTCG) on sale of such securities should be taxed @ 20% after allowing indexed cost of acquisition (currently profit on sale of such secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in the case of D.H. Securities Ltd. Vs DCIT 41 Taxmann.com 352. The relevant part of the decision of the Tribunal reads as under: We may observe that the issue relating to the disallowance under section 14A in relation to shares held in stock in trade was discussed by the co-ordinate bench of Mumbai Tribunal in the case of D.H. Securities (P) Ltd. vs. DCIT (2014) 41 taxmann.com 352 and the matter was referred to the Third Member. The decision of the Hon ble Karnataka High Court in the case of CCI Ltd. vs. JCIT (2012) 250 CTR (Kar) 291 was referred to and discussed before the Tribunal and it has been held that in view of the decision of the Hon ble jurisdictional High Court of Bombay in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT [2010] 328 ITR 81 (Bom) and the Hon ble Kolkata High Court in the case of Dhanuka sons vs. CIT [2011] 339 ITR 319, section 14A is attracted even in the case of dividend income from shares held as stock in trade. While holding so,it has been observed by the Tribunal that the investment component or element is in built in the expenditure incurred for purchase and sale of shares even held as stock in trade for business purposes. The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidental and further that due to continuous activity of sale and purchase of the shares, the annual turnover would be much higher in case of share trading as compared to the investments made for the purpose of earning of exempt income, even the disallowance @ 20% of the amount calculated under Rule 8D(2)(ii) will be on higher side. We feel that it will be appropriate if the said disallowance is restricted to 5% of the amount so arrived. 5. So far the disallowance under Rule 8D(2)(iii) is concerned, since in the share trading activity, investment is not made for the purpose of earning exempt income, hence, the managerial/administrative expenses in relation to dividend income calculated under Rule 8D(2)(iii) are also required to be scaled down which we think that should be restricted to 10% of the amount so calculated under Rule 8D(2)(iii). In view of our above observations, the disallowance u/s.14A read with Rule 8D is, accordingly, restricted to 5% of the amount arrived at under Rule 8D(2)(ii) and 10% of the amount calculated by the A.O. under Rule 8D(2)(iii). 8. The Tribunal further observed as under: Therefore, the disallowance computed under Rule 8D of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to the decision of the Hon ble High Court of Bombay in the case of HDFC Bank Ltd. 366 ITR 505 wherein question No. B read as under: (B) Whether the Income-tax Appellate Tribunal was correct in law in holding that the broken period interest is allowable as a deduction, in spite of the hon'ble Supreme Court's decision in the case of Vijaya Bank Ltd. v. Addl. CIT [1991] 187 ITR 541(SC) and the Rajasthan High Court's decision in the case of CIT v. Bank of Rajasthan Ltd. [2009] 316 ITR 391? 11.1. The Hon ble High Court answered the question as under: Even as far as question (B) is concerned, we find no infirmity in the orders passed by the Commissioner of Income-tax (Appeals) or the Income-tax Appellate Tribunal. In deciding this issue, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal have merely followed the judgment of this court in the case of American Express International Banking Corporation v. CIT reported in [2002] 258 ITR 601 (Bom). On going through the said judgment, we find that question (B) reproduced above and projected as substantial by Mr. Suresh Kumar is squarely answered by the judgment of this court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the claim of depreciation on leased assets amounting to ₹ 27,09,894/-. 16.1. The AO at para-7.1 of his order has observed as under: The leased assets were purchased and leased during the previous year relevant to A.Y. 1996-97, 1997-98, 1998-99 and 1999-2000. No new assets were purchased for leasing purpose for the instant A.Y. For the detailed reasons given in the assessment orders for A.Ys 1996-97 to 2000-01 depreciation of ₹ 27,09,894/- is disallowed. 17. We find that the matter in the assessment years mentioned hereinabove travelled upto the Tribunal and the Tribunal by a consolidated order mainly in ITA Nos. 3006/M/01 and 4892/M/03 and ITA No. 3620/M/01 alongwith other appeals order dated 20.3.2013 has held at para-34 as under: After having examined all the transactions which have been impugned before us, we are of the opinion that the assessee is entitled for the claim of depreciation under all the three circumstance i.e. Sale lease back, genuineness of transaction and asset having being put to use. We, therefore, allow ground No.1 of the assessee s appeal and dismiss both the grounds of the department s appeals. 11. As the AO has followe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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