SUBHAKAM VENTURES (I) P. LTD,MUMBAI vs. ACIT CIR 2(3), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) "" केकेकेके अनुसार अनुसार अनुसार PER RAJENDRA, AM- अनुसार राजे"" "" "" लेखा सद"य सद"य राजे लेखा लेखा लेखा सद"य सद"य राजे राजे Challenging the order,dated 14/02/2013 of the CIT (A)-6,Mumbai, the Assessing Officer(AO)and the assessee have filed the cross-appeals for the year under consi - deration.Assessee-company,engaged in the business of investments and trading in shares and securities,filed its return of income on 29/09/2009,declaring total loss of Rs.16.12 lakhs.The AO completed the assessment, u/s.143 (3)of the Act,on 27/12/ 2011,determining the income of the assessee at Rs.1,20,45,370/-.

ITA/3376/Mum/2013: 2.The effective ground of appeal

,raised by the AO,is about holding that shares held by the assessee as stock in trade did not form part of average value of investment for making computation under Rule 8D (2) (ii) and Rule8D (2) (iii) of the Income Tax Rule,1962 (Rules)read with section 14A of the Act.During the assessment proceedings, the AO found that the assessee had under exempt income of Rs. 83.40 2954 & 3376/M/13 Subhkam VenturesIPL lakhs,that it had disallowed Rs.4.15 lakhs u/s.14A of the Act.He directed the assessee to explain as to how the disallowance was worked out.Vide its letter,dated 18/11/2011,the assessee submitted the revised working of disallowance at Rs. 24. 18 lakhs.However,the AO did not accept the explanation of the assessee and recomputed the disallowance.He made a disallowance of Rs.1.04 crores, invoking the provisions of section 14. A read with rule 8D of the Rules.

3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him,it was argued that stock in trade should be excluded from average value of investment.The FAA referred to the cases of CCL Ltd.(250 CTR 291),Yatish Trading Company Private Ltd.(129 ITD 237) and held that stock in trade should not be considered as investment for the purpose of average value of the investment for computing disallowance under Rule 8D of the Rules.

4.During the course of hearing before us, the Departmental Representative(DR) left the issue to the discretion of the bench.The Authorised Representative(AR) relied upon the cases of India Advantage Securities Ltd.(380 ITR 471), HDFC Bank Ltd.(383ITR 529) and Yes Bank Ltd. (46 ITR-TRIB-317). We find that in in all the above referred cases it has been held that the shares held as stock in trade cannot be considered for making disallowance u/s.14A of the Act.Respectfully, following the above judgements,we decide effective ground of appeal against the AO. ITA/2954/Mum/2013: 5.The effective ground of appeal,raised by the assessee,also deals with the disallow -ance made by the AO u/s. 14. A of the Act. During the course of hearing before us, the AR contended that during the appellate proceedings,the assessee had made 2 2954 & 3376/M/13 Subhkam VenturesIPL elaborate submissions, that the FAA had not dealt with any of the issues raised by it, that the order passed by the FAA was cryptic.The DR left the issue to the discretion of the bench.