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TMI Blog2017 (2) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... his case. We also do not find the Revenue had urged that the expenditure being disallowed was in relation to exempt income not arising in the previous year for application of the said circular to be considered. The Assessing Officer had accepted the correctness of the disallowable expenditure offered by the assessee on its claim of ₹ 25,68,04,353/- as long term capital gain. He did not allow the claim itself treating the said amount as business income to thereafter disallow the offered expenditure. In view of the clear finding of fact regarding the exempt income claimed treated to be business income and the shares held by the assessee having been treated as stock in trade, we do not find the case involves a substantial question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 37, 28, 966/- Rs.8,46,20,989/- Rs.2,53,86,296/- She then relied on a decision of this court in the case of Dhanuka Sons vs. CIT reported in (2011) 12 taxmann.com 227 (Cal) in particular to paragraphs 6 to 9 as are reproduced below: 6. Mr. Sarkar, the learned advocate appearing on behalf of the revenue, has, on the other hand, supported the order passed by the Tribunal and has contended that the assessee itself having failed to produce material in support of its contention, the Assessing Officer rightly assessed the deductible income on proportionate basis. Mr. sarkar submits that the same is in conform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition of those old shares and, therefore, the authorities below erred in law in giving benefit of proportionate deduction. 9. In our opinion, the mere fact that those shares were old ones and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven where taxpayer in a particular year has not earned any exempt income. The questions suggested by the Revenue are as follows:- i) Whether on the facts and in the circumstances of the case the Learned Tribunal erred in law and was not justified in allowing the appeal filed by assessee in deleting the disallowance under Section 14A computed in accordance with Rule 8D of the Income Tax Act, 1961. ii) Whether on the facts and in the circumstances of the case the Learned Tribunal erred in law and was not justified in law in holding investments as shares stock in trade? iii) Whether on the facts and in the circumstances of the case the Learned Tribunal erred on facts as well as in law in holding that disallowance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly incidental to the assessee holding on to the shares. He relied on an unreported judgment dated 28th February, 2012 of the High Court of Karnataka in the case of CCI Ltd. vs. JCIT in which the substantial question of law that arose was whether the provisions of Section 14A of the Act are applicable to expenses incurred by the assessee in the course of its business merely because the assessee is also having dividend income when there was no material brought to show that the assessee had incurred expenditure for earning dividend income which is exempted from taxation. The said substantial question of law was answered in favour of the assessee and against the Revenue. Nevertheless, he submitted, the assessee in this case had not disputed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business income, no such exemption is allowed. The Tribunal in the impugned order had found that the assessee does not have any investment and all the shares are held as stock in trade as is evident from the orders of the lower authorities. On those facts the Tribuanl held:- Once, the assessee has kept the shares as stock in trade, the rule 8D of the Rules will not apply. In Dhanuka Sons (supra) it was found there was no dispute that part of the income of the assessee from its business was from dividend whereas the assessee was unable to produce any material before the authority below showing the source from which such shares were acquired. That decision is distinguishable on facts as not applicable to this case. We als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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