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TMI Blog2015 (12) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... t the taxable income. However, in the present case, the assessee had not retained the shares with the intention of earning dividend income. The investment was incidental to his business of sale of shares. Therefore, the ld.CIT(A) was justified in holding that the AO wrongly apportioned the expenditure incurred by the assessee in acquiring the shares to the expenditure of dividend income and making the disallowance u/s 14A of the Act. In the present case, the assessee did not make the fresh investment and even out of the stock-in-trade 75% of the shares were sold during the year which clearly shows that bulk of the shares which were purchased earlier, were sold and the income derived from those shares was offered to tax as ‘Business income’, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,55,00,000/-, but, confirmed the disallowance u/s 14A amounting to ₹ 15,03,031/-. Against the said order of the ld.CIT(A), the assessee preferred an appeal to the ITAT Delhi Bench D in ITA No.5197/Del/2011, wherein, vide order dated 23.3.2012, the order of the ld.CIT(A) was set aside and the matter was restored to the file of AO. Thereafter, the AO framed the assessment at an income of ₹ 2,40,000/- by observing as under:- During the assessment proceedings, assessee has submitted that the provisions of Rule 8D is not applicable for Asst. Year 2007-2008 and applicable from Asst. Year 2008-2009 onwards only for which certain judicial pronouncement were also relied by the assessee. However, it was noticed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as disallowance u/s 14A of the Income Tax Act,1961. Since the assessee has furnished inaccurate particulars of income on this ground, penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 are being initiated separately. In view of above, income of the assessee is recomputed as under:- Income from Salaries Rs,2,40,000/- Add: Disallowance U/s 14 A Rs.13,63,477/- Less: Adjusted from Business Loss Rs.13,63,477/- Nil Taxable Income Rs,2,40,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where assessee had borrowed money for purchasing shares and paid interest thereon. However, Assessing Officer has made disallowance of 50% of the interest paid by the assessee which is unjustified. 11.2 I have also considered the case law cited by the assessee particularly the judgement of Jurisdictional High Court in the case of Maxopp Investment Ltd. Ors vs CIT (2012) 347 ITR 272 (Del) and Karnataka High Court in the case of CCI Ltd. vs the Joint Commissioner of Income Tax (2012) 206 Taxmann 563 as well as judgement of Supreme Court in the case of CIT vs Wallfort Shares Stock Brokers (P) Ltd. (326 ITR 01) on which heavy reliance is placed by the appellant. Assessing Officer has not examined as to whether expenditure incurred by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer is not sustainable and therefore, is deleted. Accordingly, a relief of ₹ 13,63,477/- is allowed to the assessee. 5. Now, the Department is in appeal. 6. The ld. DR strongly supported the order of the AO and, further, submitted that the assessee made the investment and had not bifurcated the investment and stock-in-trade. Therefore, the addition was rightly made by the AO by making the disallowance u/s 14A of the Act. In her rival submissions, the ld. counsel for the assessee reiterated the submissions made before the ld.CIT(A) and, further, submitted that no disallowance had been made in the succeeding year and there was no basis for making the disallowance @ 50% of the interest paid by the assessee. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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