DCIT v Gulshan Investment Co Ltd. (I.T.A. No.: 666/ Kol. / 2012 dtd March 11, 2013) (Kolkata ITAT) The assessee is engaged in the business of share trading. During the course of assessment proceedings, the AO noticed that while the assesse has earned dividend income of Rs 18,91,556, the assessee has not made any disallowance under section 14A in respect of “expenses relatable to the above exempt income”. The AO also noticed that the assessee had paid interest of Rs 10,34,315. The assessee contended that disallowance under section 14A of the Income Tax Act, read with rule 8D of the Income Tax Rules, is not applicable in the case of the assessee since the shares were kept as stock in trade. However, the AO did not accept the contentions of the assessee and computed the disallowance under Rule 8D by applying 0.5% of the average stock-in-trade.