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TMI Blog2020 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following grounds of appeal before us :- "1. On the facts and circumstances of the case and in law, the learned CIT(Appeals) has erred in confirming the addition made of Rs. 5,36,662/ - which is on account of disallowance u/s 14A. 2. The learned CIT(Appeals) ought to have appreciated the fact, that the assessee's main business objective is trading in shares and the shares are held as Stock in Trade and not as Investments and gains/losses are declared as Business Income. The Learned CIT(Appeals) ought to have appreciated the fact that Rule 8D applies only when shares are held as Investments and not when they are held as stock in trade therefore provisions of section 14A are not attracted. 3. The Ld. CIT(Appeals) ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 14A were not applicable in its case. However, without prejudice to its aforesaid claim, the assessee worked out the disallowance under Sec. 14A r.w. Rule 8D(2)(iii) at Rs. 5,36,662/-. The A.O was not inclined to accept the claim of the assessee that no disallowance under Sec. 14A was called for in its case. Accordingly, the A.O worked out the disallowance under Sec. 14A r.w. Rule 8D(2)(iii) at Rs. 5,36,662/- and assessed the income of the assessee firm at Rs. 94,67,090/-. 4. Aggrieved, the assessee assailed the assessment order before the CIT(A). Observing, that the issue as to whether dividend income earned on shares held as stock-in-trade by the assessee was to be considered for the purpose of computing the disallowance under Sec.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned by the assessee. Further, it was the contention of the Ld. A.R that the disallowance under Rule 8D(2)(iii) could be made only where the exempt income yielding assets were held by the assessee as investments. Alternatively, it was submitted by the Ld. A.R, that in the case of the present assessee the inventories of the exempt income yielding shares was reduced to nil as on 31.03.2014. On the basis of his aforesaid contentions, it was the claim of Ld. A.R that the disallowance made by the A.O under Sec. 14A r.w. Rule 8D(2)(iii) may be vacated. 6. Per contra, the Learned Departmental Representative (for short 'D.R') relied on the orders of the lower authorities. It was averred by the Ld. D.R, that pursuant to the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 8D was called for in its case. In our considered view, the aforesaid contention of the Ld. A.R is absolutely misconceived and cannot be accepted. On a perusal of judgment of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. Vs. CIT, New Delhi, we find, that the Hon'ble Apex Court had disapproved the dominant purpose test that was pressed into service by the assessee for the purpose of interpreting the scope and gamut of Sec. 14A of the Act. Infact, the Hon'ble Court had subscribed to the theory of the apportionment which was made available by the legislature by inserting Sec. 14A vide the Finance (Amendment) Act, 2001 with retrospective affect from 01.04.1962. In the aforesaid judgment, the Hon'ble Apex Court had inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerges from the order the CIT(A) who after relying on the judgment of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. Vs. CIT, New Delhi (2018) 402 ITR 640(SC), had rightly concluded that the shares which were held by the assessee as stock-intrade were to be considered for the purpose of computing the disallowance under Sec. 14A of the Act. As regards the reliance placed by the Ld. A.R on the order of a coordinate bench of the ITAT, Delhi in the case of Nice Bombay Transport (P) Ltd. Vs. ACIT(OSD), New Delhi (2019) 175 ITD 684 (Del), the same in our considered view, not being consistent with the view taken by the Hon'ble Apex Court in the case of Maxopp Investment Ltd. (supra), would thus not be binding as a judicial prece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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