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TMI Blog2017 (1) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... res are held as stock in trade or the assessee had not claimed any expenditure against the exempt income. In the case before us, the AO/FAA has not proved that stocks were held by the assessee as investment or that it had claimed by any expenditure for earning the tax free income. Therefore, reversing the order of the FAA, we decide the first ground of appeal in favour of the assessee. Disallowance of depreciation - AO held that assessee was not the owner of the assets, that it had not produced any documentary evidence to prove the payment was made by it, that it was not eligible for claiming depreciation - Held that:- We find that the group concern of the assessee had purchased computers/computer related accessories in Hong Kong, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year. He directed the assessee to file details of MTM losses and to explain as to why the same should not be disallowed being notional loss. In its reply dated 25/02/2013, the assessee contended that it followed mercantile system of accounting and had anticipated losses at the year end with respect to equity index/stock future in accordance with the provisions of the Act and the Accounting Standards, that loss suffered by the assessee could not be termed as notional/contingent loss. Referring to the case of Woodward Governor India (P) Ltd. , the AO held that mark to market transactions had to be given peculiar treatment, that as per the accounting policy, followed by the assessee in respect of the derivative transaction, it was debiting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (DR) supported the order of the AO. The Authorised Representative (AR) relied upon the cases of Centrum Broking Ltd. (70 SOT 389) Kotak Mahindra Investment Ltd. (59 SOT 4). 5. We find that the issue stands decided in favour of the assessee by the Tribunal in the matters relied upon by the AR. It is found that in the of the Kotak Mahindra Investment Ltd. (supra), the Tribunal has held that M T M losses have be allowed. We do not find any infirmity in the order of the FAA. So, respectfully, following the orders of the Tribunal, we decide issue against the AO. ITA 1323/MUM/2015 6. First ground of appeal is about confirming the disallowance of ₹ 6. 43 lakhs, made by the AO, under section 14A of the Act. During the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the submissions of the assessee and the assessment order, the FAA held that disallowance made by the AO was in order for the reasons mentioned in the assessment order. 8. During the course of hearing before us, the AR relied upon the case of HDFC Bank Ltd. (67 Taxmann. com42 of the Hon ble Bombay High Court). The DR left the issue to the discretion of the Bench. We have heard the rival submissions and perused the material before us. We find the Judicial Forums have, on more than one occasions, held that no disallowance u/s. 14A could be made if the shares are held as stock in trade or the assessee had not claimed any expenditure against the exempt income. In the case before us, the AO/FAA has not proved that stocks were held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not eligible for claiming depreciation for the said assets. Finally, he made the disallow - ance of ₹ 10, 63, 266/-. 10. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, it was argued that assets were initially purchased by the Hong Kong group of company, that same were shipped to India subsequently, that the assessee has added them to the fixed assets in the books of account and had claimed depreciation. After considering the submissions of the assessee and the assessment order, the FAA held that the assessee had not substantiated its basic claim regarding ownership of the assets, that the AO had rightly disallowed claim. 11. During the course of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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