|CORAM:||R. K. Panda (AM), Vikas Awasthy (JM)|
|SECTION(S):||14A, Rule 8D|
|CATCH WORDS:||Disallowance u/s 14A & Rule 8D, strictures|
|COUNSEL:||S. K. Tyagi|
|DATE:||March 18, 2016 (Date of pronouncement)|
|DATE:||April 13, 2016 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 14A/ Rule 8D: No disallowance can be made on shares held as stock-in-trade|
Assessee, engaged in the business of share trading earned Rs. 12.04 lacs as exempt dividend income. The AO made a disallowance of Rs. 46,89,748/- u/s 14A r.w Rule 8D. Before the CIT (A), the assessee stated that the Tribunal in assessee’s own case for AY 2010-11 has held that no disallowance u/s 14A r.w. Rule 8D can be made on dividend income from shares held as stock-in-trade. However, the CIT (A), disregarding the order of Tribunal passed in assessee’s own case, followed the decision of Mumbai Bench of the Tribunal in the case of HDFC Bank Ltd. v. DCIT in ITA No. 374/Mum/2012 decided on 23-09-2015 and rejected the appeal.
Before the Tribunal, submitted that the order of the Tribunal in the case of HDFC Bank Ltd. (supra) on which the CIT had placed reliance had been reversed by the Hon’ble Bombay High Court in Writ Petition No. 1753 of 2016 decided on 25-02-2016. Held, CIT (A) erred in not following the order of Tribunal in asessee’s own case. The Bombay High Court in the case of CIT Vs. India Advantage Securities Ltd. (supra) has confirmed the order of Tribunal wherein it was held that no disallowance u/s. 14A r.w. Rule 8D can be made on shares held as stock-in-trade. The Tribunal further observed that the CIT (A) should have maintained ‘Judicial Propriety’ in following the order of Appellate Authority. However, it restrained from commenting on the judicial indiscipline committed by the CIT (A) and expected that the CIT (A) concerned shall be more careful in future in honouring the orders of the higher Appellate Authorities.