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TMI Blog2015 (12) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... view is fortified by the decision of Mumbai Bench of the Tribunal in the case of DCIT Vs. M/s. India Advantage Securities Ltd. [2012 (11) TMI 458 - ITAT, MUMBAI]. Also see CCI Ltd. Versus Joint Commissioner of Income-tax [2012 (4) TMI 282 - KARNATAKA HIGH COURT] - Decided in favour of assessee. - ITA No.1903/PN/2013 - - - Dated:- 4-9-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri S.K.Tyagi For The Department : Shri Hitendra Ninave ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 22-05-2013 of the CIT(A)-II, Pune relating to Assessment Year 2010-11. 2. The grounds raised by the Revenue are as under : (1) The Learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, asked the assessee to substantiate as to why provisions of section 14A will not be applicable since the assessee was in receipt of exempt income. It was submitted that the income from dividend is purely incidental to the business of the assessee. The assessee is engaged in the business of trading in shares and has not purchased any shares for the purpose of earning dividend. All the shares are held as stock in trade. No expenditure has been incurred for earning the dividend income. Relying on the decision of Hon ble Karnataka High Court in the case of CCI Ltd. Vs. JCIT reported in 71 DTR 141 it was argued that no disallowance u/s.14A of the I.T. Act is permissible where the income from dividend is incidental to the business of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f trading in shares, therefore, no disallowance u/s.14A is called for. 6. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 7. The Ld. Departmental Representative heavily relied on the order of the AO. He also relied on the decision of the Mumbai Bench of the Tribunal in the case of D.H. Securities Pvt. Ltd. Vs. DCIT reported in 41 taxmann.com 352 according to which disallowance u/s.14A can be made even in cases where dividend income has been earned on shares held as stock in trade. 8. The Ld. Counsel for the assessee on the other hand apart from relying on the order of the CIT(A) referred to the decision of the Pune Bench of the Tribunal in the case of Kunal Polymers Vs. DCIT vide ITA No.1859/PN/2012 orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on shares held as stock in trade which was upheld by the CIT(A). On further appeal by the assessee the Tribunal deleted the addition by observing as under : 10. The fifth ground raised in the appeal by the assessee is with respect to disallowance made u/s. 14A r.w. Rule 8D on shares held as stock-intrade. The assessee has offered dividend income from the shares held as stock-in-trade as business income. The treatment given by the assessee to the dividend income is against the provisions of section 10(23F). The dividend income has been specifically excluded in the Act, thus, it does not form part of total income. The question before us is : Whether disallowance u/s. 14A is to be made on dividend received on shares held as stock in tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Income Tax Appeal No. 1131 of 2013. The Hon'ble High Court dismissed the appeal of the Revenue vide order dated April 13, 2015 thus, confirming the findings of the Tribunal. In view of the fact that the Hon'ble Jurisdictional High Court has upheld the view taken by the Tribunal that provisions of section 14A r.w. Rule 8D would not apply on the shares held as stock-in-trade, the disallowance u/s. 14A in the present case would not sustain. Accordingly, we accept this ground of appeal of the assessee and direct the Assessing Officer to delete disallowance made u/s. 14A of the Act. 11. In view of our decision cited (Supra) we hold that no disallowance u/s.14A r.w. Rule 8D can be made on dividend income from shares held as stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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