9911796707
TMI Blog2021 (6) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... e - HELD THAT:- Aggrieved with the above order, revenue is in appeal before us raising the ground that there is violation of rule 46 of Income Tax Rules. We notice that the assessee has substantiated the claim of the expenditure by filing Ledger accounts of this expenditure. From the Ledger copy, Ld CIT(A) observed that the assessee has actually incurred the expenditure for the purpose of business. Again the above said Ledger was not filed before Ld CIT(A) as additional evidence but substantiated for the expenditure incurred. CIT(A) accepted the above evidences. There is no violation of rule 46 in this case. Accordingly the ground raised by the revenue is dismissed. Addition u/s 14A - Assessee has earned exempt income from dividend income and share of profit from partnership firm respectively - HELD THAT:- AO calculated the 14A disallowance as per rule 8D. While calculating average investment in earning the exempt income he calculated average investment in equity, average investment in closing stock of shares and average investment in partnership firm. AO included as average investment in the firm. While adjudicating this issue, CIT(A) observed that credit balances with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allowed for statistical purpose. Addition u/s 43(5)(d) for trading in derivatives and not for trading in shares - HELD THAT:- We notice that assessee has declared loss from its share trading business in the consolidated format which included loss from speculative transactions as well as cash transaction involving actual delivery of shares. From the record we notice that AO disallowed the loss of speculative transactions based on the financial statement without actually calling for the details. Assessee has submitted detailed submission on the loss incurred by the assessee from both segments based on delivery and non-delivery of the securities. The loss incurred by the assessee based on delivery can never be part of speculative transactions as per the provisions of section 43(5)(d). - ITA no.4402/Mum./2019 - - - Dated:- 8-6-2021 - Shri Mahavir Singh, Vice President And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri Mitesh Joshi For the Revenue : Shri Kailash Kanojiya ORDER PER S. RIFAUR RAHMAN, A.M. The revenue is in appeal before us against the order of Commissioner of Income Tax (appeals) 21, Mumbai and filed following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is allowable as business expenditure under section 37(1) of the Act. After considering the submissions of the assessee, learned CIT(A) observed that assessee is an individual and is engaged in the business of share trading and derivative trading. He observed that the assessee derives income mainly from remuneration and share of profit from partnership firm trading in cash segment, derivative of futures and options and commodities. He observed that the AO disallowed the said expenses of brokerage on the ground that the loans were not incurred for the purposes of business and the expenses paid to the brokers are capital in nature. He also observed that assessee has submitted a detailed chart mentioning detailed bifurcations of brokerage paid to different brokers with their names, PAN No. and TDS deducted on various dates et cetera. He observed that based on the record the assessee is engaged in the business of share trading and derivative trading, which was not disputed by the AO. He observed that assessee had raised unsecured loans of ₹ 78,62,96,030/ through brokers and paid them the commission for arranging the loans. The documents produced on record clearly suggest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice that the assessee has substantiated the claim of the expenditure by filing Ledger accounts of this expenditure. From the Ledger copy, Ld CIT(A) observed that the assessee has actually incurred the expenditure for the purpose of business. Again the above said Ledger was not filed before Ld CIT(A) as additional evidence but substantiated for the expenditure incurred. The Ld CIT(A) accepted the above evidences. Therefore in our considered view there is no violation of rule 46 in this case. Accordingly the ground raised by the revenue is dismissed. 5. With regard to ground No. 3, the relevant facts are, the assessee has earned exempt income of ₹ 13,77,530/ and ₹ 53,15,209/ from dividend income and share of profit from partnership firm respectively. The assessing officer noticed that assessee has incurred direct expenses amounting to ₹ 9,30,454/ , debited interest income amounting to ₹ 8,93,93,053/ and bank interest of ₹ 1,08,033/ . The assessing officer reworked the disallowance under section 14A read with rule 8(2)(iii) aggregating to ₹ 3,21,55,578/ . 6. While calculating average investments for disallowance under section 14A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee has earned exempt income through partnership firm. The portion of investment made by the assessee in the partnership firm should also be part of investment in earning the exempt income. Since no financial statements were submitted before us, we are not in a position to appreciate the findings of Ld CIT(A). However, in our view, partnership firm is separate entity and the investment made by the assessee in the firm should be part of the assets of the statement of affairs of the assessee. In the given case, Ld CIT(A) observed that the credit balances disclosed by the assessee in the liability side is liability to the assessee. We are in agreement with the findings but it is also fact that assessee must have invested capital in the partnership firm or the assessee should submit the document before the tax authorities that assessee has not invested anything in the firm but sharing only share of profit without investment. Partnership firm is separate entity, the balance sheet of the firm should be evaluated to determine the actual investment in the firm. Therefore, in our considered view, we are remitting this issue back to the file of AO to determine the actual investme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
