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| The Tax Publishers2020 TaxPub(DT) 1478 (Ind-Trib) : (2020) 181 ITD 0355 INCOME TAX ACT, 1961
Section 14A Rule 8D
Where CIT(A) had not considered submissions of the assessee that assessee was maintaining separate books of account and the expenditure related to the exempt income was not claimed in P&L account and exempt income was earned incidental to business income, the issue was, therefore, remanded to CIT(A) to decide after considering the submissions of the assessee and verify from the books of account that the assessee was maintaining separate accounts.
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Disallowance under section 14A - Applicability of provisions of section 14A - Dividend earned on stock-in-trade - Dealing in shares and securities--Separate books claimed to be maintained by assessee
Assessee's business was trading in shares and securities and for which the assessee maintained separate set of books of account and the same was duly supported by balance sheet, Trading, Profit and Loss A/c and subject to Tax Audit under section 44AB. Assessee earned dividend income which was incidental, unintentional/by product to the main business activity of dealing in shares and securities. The assessee had made no extra efforts and had no intention to earn dividend income which was incidentally exempt under section 10(34). Share were held as stock-in-trade and not as an investment. No expenditure was incurred for earning the dividend income which was incidental to the trading activity. No disallowance can be made under section 14A since expenditure would not have any connection with tax-free income. Invoking section 14A AO disallowed the expenditure earned on exempt dividend which was confirmed by CIT(A). The assessee contended that provisions of section 14A are not attributable to the case of the assessee as she was doing the business of trading of shares and securities.Held: CIT(A) had not considered the submissions of the assessee that the assessee was maintaining separate books of accounts and the expenditure related to the exempt income was not claimed in P&L account. It was further contended that the earning of dividend income was incidental to the business income of the assessee. Since the CIT(A) had not decided these submissions of the assessee, these issues were restored file of the CIT(A) to decide after considering the submissions of the assessee and verify from the books of account that the assessee was maintaining separate account.
REFERRED :
FAVOUR : In assesse's favour. (Partly)/Matter remanded.
A.Y. : 2006-07
IN THE ITAT, INDORE BENCH
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