2014 (8) TMI 1129

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..... erred to the balance sheet figures of the assessee. The AO has also not given any findings whether the borrowed funds were also used for making the investments. The AO has also not considered the claim of the assessee that the investments have been made out of own funds. In the interest of justice, in our considered opinion, this issue needs to be readjudicated afresh. We, accordingly set aside this issue to the file of the AO. The AO is directed to show that the assessee has actually incurred certain expenditure for earning the exempt income considering the facts and the figures of the balance sheet of the assessee. The assessee is directed to file necessary details before the AO. This ground of the assessee is allowed for statistical purp .....

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..... loss. The AO was of the opinion that the same has to be disallowed as per Instruction No. 3 of 2010 dt. 23.3.2010. 3.2. The assessee was show caused to explain why the exchange rate fluctuation loss should not be treated as speculation loss. The assessee explained the difference between forward contracts and option contracts. The AO did not accept the detailed submission of the assessee. The AO was of the opinion that the loss arising from revaluation as on 31.3.2009 is a notional loss and cannot be allowed as expenditure u/s. 37(1) of the Act. The AO accordingly disallowed ₹ 2,28,01,707/-. Proceeding further, the AO noticed that the assessee has earned dividend income of ₹ 2,46,69,235/-. The AO was of the opinion that the di .....

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..... with the claim of the assessee that no expenditure has been incurred to earn tax free income. 9. Per contra, the Ld. Departmental Representative strongly supported the findings of the lower authorities. 10. We have carefully perused the orders of the authorities below. We find force in the contention of the Ld. Counsel. The AO has not referred to the balance sheet figures of the assessee. The AO has also not given any findings whether the borrowed funds were also used for making the investments. The AO has also not considered the claim of the assessee that the investments have been made out of own funds. In the interest of justice, in our considered opinion, this issue needs to be readjudicated afresh. We, accordingly set aside this .....

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