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TMI Blog2016 (6) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... s at ₹ 2,80,797/- is hereby affirmed. See M/s. India Advantage Securities Ltd [2015 (6) TMI 140 - BOMBAY HIGH COURT ] - ITA No. 6826/MUM/2014 - - - Dated:- 30-10-2015 - Shri G. S. Pannu, Accountant Member For the Appellant : Shri I. P. Rathi For the Respondent : Shri K. Ravi Kiran ORDER Per G. S. Pannu, AM The captioned appeal is preferred by the assessee and is directed against the impugned order dated 28/08/2014 of CIT(A)-8, Mumbai, pertaining to the assessment year 2010-11, which in turn has arisen from an order passed by the Assessing Officer dated 01/03/2013 under section 143(3) of the Income Tax Act, 1961( in short the Act ). 2. In this appeal, although assessee has raised multiple grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, assessee also furnished a working of disallowance under section 14A of the Act in terms of the provisions of Rule- 8D of Rules 1962, which amounted to ₹ 2,80,797/-. The Assessing Officer was not satisfied with the stand of the assessee in as much as according to him determination of disallowance by application of Rule-8D of the Rules was wrongly done by the assessee in as much as assessee did not consider the investment in stock-in-trade of shares and securities. In forming such an opinion, the Assessing Officer relied upon the decision of the Special Bench of the Tribunal in the case of Daga Capital Management Pvt. Ltd., 117 ITD 169. Consequently, the Assessing Officer reworked the disallowance as per Rule 8D of the Rules at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) has since been affirmed by the Hon ble Bombay High Court vide its order in Income Tax Appeal No. 1131 of 2013 dated 13/4/2015, a copy of which was placed on record. 5. As the aforesaid discussion shows, the short point in this appeal relates to the quantification of disallowance under section 14A of the Act on account of expenditure incurred by the assessee in relation to income in the form of dividends, which is exempt from tax. The limited plea of the assessee is that for the purposes of working out the disallowance in terms of Rule 8D of the Rules, the stock-in- trade of shares and securities is not liable to be considered. This controversy has been considered by the Mumbai Bench of the Tribunal in the case of M/s. India Advantage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the shares was business, the High Court had upheld the disallowance u/s.14A of the I.T. Act. The Tribunal also noted that the High Court in that case had only observed that the interest paid on borrowed funds utilised for acquiring shares could be allowed as deduction u/s.36(1)(iii) only if shares were held as stock-in-trade. These observations were only obiter dicta and not the ratio decidendi of the judgment. The ratio decidendi of the judgment was disallowance of interest u/s.14A which had been upheld by the Tribunal. The Tribunal, therefore, did not accept the arguments based on the judgment of Hon ble High Court of Kerala in the case of Smt. Leena Ramachandran (supra) which was not directly on the issue of disallowance of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt also observed that the assessee had not retained the shares with the intention of earning dividend income which was incidental due to his sale of shares which remained unsold by the assessee. The High Court, therefore, did not uphold the order of the Tribunal disallowing the expenditure in relation to the dividend from shares. Thus there being a direct judgment of a Hon ble High Court on this issue, the same has to be followed in preference to the decision of the Special Bench of the Tribunal in the case of M/s. Daga Capital Management P. Ltd. (supra). Infact, we note that the Tribunal in the case of Ganjam Treading Co. Ltd. (supra) has already considered this situation and held that in view of the judgment of Hon ble High Court of Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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