| COURT: | ITAT Kolkata |
| CORAM: | Mahavir Singh (JM), Shamim Yahya (AM) |
| SECTION(S): | 14A, Rule 8D |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Disallowance u/s 14 & Rule 8D, exempt income |
| COUNSEL: | A. K. Tibrewal |
| DATE: | October 14, 2015 (Date of pronouncement) |
| DATE: | October 20, 2015 (Date of publication) |
| AY: | 2008-09 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 14A Rule 8D does not apply to shares held as stock-in-trade. AO cannot apply Rule 8D to make a disallowance without showing how the assessee's disallowance is wrong | |
(i) The AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D of the Rules. While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½% of the total value. Even otherwise, on merits also the assessee had made disallowance itself for an amount of Rs.37,28,966/- and filed computation of disallowance as per rule 8D of the Rules. The AO could not find any fault in the computation of disallowance made by assessee (CIT Vs. R.E.I. Agro Ltd. in GA 3022 of 2013, ITAT 161 of 2013 dated 23.12.2013, wherein the order of Tribunal in DCIT Vs. R.E.I. Agro Ltd. of ITA No. 1811/Kol/2012 for AY 2009-10 dated 14.05.2013 was confirmed followed);
(ii) The assessee does not have any investment and all the shares are held as stock in trade. Once, the assessee has kept the shares as stock in trade, the rule 8D of the Rules will not apply.
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