INCOME TAX ACT, 1961
--Disallowance under section 14A--Expenditure against exempt income Applicability of rule 8D --Assessee-company engaged in share trading earned dividend income in respect of which no disallowance was claimed under section 14A. However, assessing officer computed disallowance under section 14A read with rule 8D. On appeal, Commissioner (Appeals) observed that rule 8D was not applicable since there were no investments and all the shares were kept as stock-in-trade only and further no interest expenses had been incurred for investments. However, section 14A is still applicable where it provides that no deduction in respect of expenditure incurred by the assessee in relation to exempted income will be allowed. The dividend income may not involve direct expenses but indirect expenses are there in purchasing those shares and other administrative expenses in the earning of income. Therefore, in the facts and circumstances of the case, the expenditure was estimated to be @10% of the dividend earned, as fair and reasonable estimation. Feeling aggrieved Revenue filed appeal before Tribunal. Held: Tribunal confirmed the order of Commissioner (Appeals) considering the facts and material on record.
Income Tax Act, 1961 Section 14A r/w rule 8D
In The Itat, Kolkata B Bench
Pramod Kumar, A.m. & Mahavir Singh, J.M.
Dy. CIT v. Gulshan Investment Co. Ltd.
ITA No. 666 (Kol) of 2012
A.Y. 2008-09
11 March, 2013
Appellant by : L. K. S. Dahiya and K.N. Jana
Respondent by : Girish Sharma
Pramod Kumar, A.M.
By way of this appeal, the assessing officer has challenged correctness of learned Commissioner (Appeals)'s order dated 21-1-2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment year 2008-09, on the following ground:
That on the facts and circumstances of the case, learned Commissioner (Appeals) erred in law in holding that the disallowance under section 14 A of the Income Tax Act, read with rule 8D of the Income Tax Rules, is not applicable in the case of the assessee since the shares were kept as stock in trade. The Commissioner (Appeals) should have upheld the disallowance made by the assessing officer.