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TMI Blog2017 (11) TMI 1854X X X X Extracts X X X X X X X X Extracts X X X X ..... stock in trade the dividend accrued to the assessee and it is settled law that provisions of section 14A rule 8D are not applicable to such case. In the latest CIRCULAR NO. 18/2015, F.N 0.2 79/Misc./140/20 IS/IT J, Government of India, Ministry of Finance, Directorate of Income-tax Legal Research, New Delhi, 2nd November, 2015, vide para 3 it has been provided that the income arising from such investments is attributable to the business of banking falling under the head Profits and Gains of Business and Profession . T/he AO is directed to delete the disallowance u/s 14A of the Act - appeal of assessee allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... rein an identical issue has been decided by holding that the dividend income that arises out of security which are held as stock-in- trade is from the business activity and therefore no expenditure should have been disallowed in respect of the dividend income from the said tax free securities. 3. The ld.DR on the other hand relied upon the order of authorities below and submitted that it is mandatory from the assessment year 2008-09to apply the provisions of section 14A r.w.ru 8D of the rules and were rightly applied and upheld by the CIT(A) and prayed that the order of CIT(A) deserved to be affirmed. 4. We have heard the rival contentions and perused the material placed before us including the impugned orders and case law relied upon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. The question then is whether the assessee can be said to have incurred any expenditure at all or any part of the said expenditure in respect of the exempt income viz. dividend and interest that arose out of the securities that constituted the assessee's stock-in-trade. The answer must be in the negative. The purpose of the purchase of the said securities was not to earn income arising therefrom, namely, For Subsequent orders see ITA277-2016 16 of 21 ITA-244-2016 - 17 - dividend and interest, but to earn profits from trading in i.e. purchasing and selling the same. It is axiomatic, therefore, that the entire expenditure including administrative costs was incurred for the purchase and sale of the stock-in-trade and, therefore, towa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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