| |
| The Tax Publishers2019 TaxPub(DT) 1396 (Del-Trib) : (2019) 198 TTJ 0325 INCOME TAX ACT, 1961
Section 14A
Though dominant purpose of acquiring shares is not relevant for the purpose of invoking section 14A, however, shares held as stock-in-trade stood on a diferent pedestal as assessee's main purpose was to liquidate those shares when ever the share price went up in order to earn profits. It was only by a quirk of fate that when investee company declared dividend, those shares were held by the assessee, though assessee had to ultimately trade those shares by selling them to earn profits. Therefore, no disallowance in case of assessee under section 14A was warranted.
|
Disallowance under section 14A - Expenditure against exempt income - Investments having yielded tax freed income being held as stock-in-trade -
Assessee earned tax free dividend income on investments held as stock-in-trade. AO invoked section 14A and worked out disallowance.Held: Though dominant purpose of acquiring shares is not relevant for the purpose of invoking section 14A, however, shares held as stock-in-trade stood on a diferent pedestal as assessee's main purpose was to liquidate those shares whenever the share price went up in order to earn profits. It was only by a quirk of fate that when investee company declared dividend, those shares were held by the assessee, though assessee had to ultimately trade those shares by selling them to earn profits. Therefore, no disallowance in case of assessee under section 14A was warranted.
Followed:Maxopp investment Ltd. v. CIT (2018) 402 ITR 640 (SC) : 2018 TaxPub(DT) 1403 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2006-07 to 2010-11
INCOME TAX ACT, 1961
Section 28
 SUBSCRIBE FOR FULL CONTENT
|