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TMI Blog2016 (10) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... rry on the business of arranging, organizing, executing all kind of financial services and he has also referred to clause 16 of the incidental objects of memorandum of association, as noted earlier. In the backdrop of these factual findings, it cannot be said that assessee was not primarily in the business of granting of loans and advances. As the assessee’s case was covered by the second exception to the Explanation to section 73 and consequently the addition made by the AO by treating the loss incurred by the assessee company as speculative loss was deleted. Therefore, do not find any reason to interfere with the finding of ld. CIT(A). - Decided in favour of assessee Addition u/s 14A - Held that:- As total dividend income received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Ld. CIT(A) while partly allowing the asessee s appeal, deleted the aforementioned disallowances. Being aggrieved, the department is in appeal before the Tribunal and has taken following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the principal business of the assessee is granting of loan and advance and therefore explanation to section 73 does not apply, despite the fact that the assessee is admittedly not a NBFC. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 57,9191- made by AO in accordance with the provisions of lib-rule 8D r.w.S. 14A of the Income Tax Act, 1961. 3. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where indicated that the main business of the company was banking or granting of loans and advances. Further, the assessee company was not registered as NBFC and mainly dealt in trading of shares. He, therefore, held that deeming provisions of section 73 were clearly attracted. Accordingly, he treated the loss as speculative business loss and made the addition of ₹ 40,01,814/-. 6. Ld. CIT(A) deleted the addition, inter alia, observing that it is not the requirement of law that company is to be registered as a NBFC to be covered under the second exception. He further pointed out that as per item 5 of the memorandum of association, one of the main objects was to carry on the business of arranging, organizing, executing all kind of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- which increased to ₹ 16,12,93,451/- during the year. Similarly, interest income on loans and advances was disclosed at ₹ 66,20,236/- in the last year and at ₹ 64,05,268/- in the current year. Even from the angle of capital deployment, it is observed from the Balance sheet highest funds are deployed in the business of granting of loans and advances . 8.1. On the basis of aforementioned facts, ld. CIT(A) has concluded that the main business of the assessee was of granting of loans and advances. When 99% of assessee s income was derived from interest on loans and advances, therefore, merely because it was not registered as a NBFC, it could not be concluded that the principal business of the assessee was not of grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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