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Income Tax Appellate Tribunal, “E ” BENCH, MUMBAI
Before: SHRI RAJENDRA & SHRI C.N. PRASAD
आदेश / O R D E R PER C.N. PRASAD, JM:
This appeal is filed by the assessee against the order of the Ld. CIT(A)-8, Mumbai dated 11.10.2013 pertaining to assessment year 2010-11.
The only issue in the appeal of the assessee is that the Ld. CIT(A) erred in confirming the order of the Assessing Officer in respect of disallowance u/s. 14A r.w.r 8D on account of stock in trade in calculation of average investments as per Rule 8Dof I.T. Rules.
The main contention of the assessee in this appeal is that for the purpose of computing the disallowance u/s. 14A r.w. Rule 8D, the stock in trade should be excluded for the purpose of computing average investments and for this proposition the Ld. Counsel for the assessee placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs India Advantage Securities Ltd (380 ITR 471).
The Ld. Departmental Representative supported the orders of the authorities below.
We have heard the rival submissions, perused the orders of the authorities below and the case law relied on. The issue in appeal has been decided in favour of the assessee by the Co-ordinate bench in various decisions. In the case of M/s. Fiduciary Euromax Global Markets Ltd., Vs DCIT in & 95/M/14 dated 29.6.2016, the Co-ordinate Bench considering the decision of the Bombay High Court in the case of India Advantage Securities Ltd., (supra) held that the investments held in stock in trade should be excluded for the purpose of computing disallowance under Rule 8D r.w. Section 14A of the Act observing as under:
So far as the next contention that while calculating the disallowance under section 14A, the amount used for the purchase of the shares which are held as stock in trade is required to be excluded from the purview of disallowance u/s 14A of the Act is concerned, the Ld. A.R., in this respect, has relied upon the decision of the Hon'ble Bombay High Court in the case of "CIT vs. India Advantage Securities Ltd." in of 2013 vide order dated 17.03.2015 wherein the Hon'ble Bombay High Court has upheld the finding of the Tribunal holding that while making the disallowance under rule 8D, the shares held as stock in trade should not be considered; only the shares taken as investment in the account be considered for computation of disallowance of expenditure under rule 8D. The Ld. A.R. has submitted that the dividend earned in respect of shares held in stock in trade is incidental to the business of the assessee and the investment in the shares held as stock in trade was not made for earning of exempt income.
We have examined the above contentions of the Ld. AR. We find that the Tribunal in the case of "DCIT vs. India Advantage Securities Ltd." in vide order dated 14.09.2012 while relying upon the decision of the Hon'ble Kerala High Court in the case of "CIT vs. Smt. Leena M/s. Fiduciary Euromax Global Markets Ltd. Ramachandran (339 ITR 296) and further on the decision of the Hon'ble High Court of Karnataka in the case of "CCI Ltd. vs. JCIT" 250 CTR 291 has held that disallowance under section 14A in relation to dividend received from trading shares cannot be made. The said finding of the Tribunal has been upheld by the Hon'ble Jurisdictional Bombay High Court in the case of "CIT vs. India Advantage Securities Ltd." in ITA No.1131 of 2013 vide order dated 17.03.2015 (supra). The said decision holds binding precedent upon this Tribunal. Moreover the assessee has already offered the dividend income earned on the shares held as stock in trade as business income of the assessee.
Respectfully following the above referred to decisions of the higher courts, this issue is accordingly decided in favour of the assessee and the disallowance made by the AO in the case of the assessee under section 14A of the Act is hereby ordered to be deleted”.
Respectfully following the said decision, we allow the ground of appeal of the assessee on this issue.
In the result, the appeal filed by the assessee is allowed.