CIT v India Advantage Securities Ltd (ITA No 1131 OF 2013 dated 13.04.2015) BOMBAY HIGH COURT Background: The assessee had received dividend income of Rs Rs.1,40,859/- which was exempt from tax. The assessee had however, not made any disallowance of expenses relating to exempt income. The A.O. in the course of assessment proceedings therefore, computed the disallowance u/s.14A as per Rule 8D which come to Rs.48,73,483/- consisting of interest expenditure of Rs.39,00,174/- and other expenses of Rs.9,73,309/-. In the first level appellate proceedings, the assessee contended that the interest expenditure had been claimed by the assessee as deduction u/s.36(1)(iii). It was also submitted that the shares had been shown as stock-in-trade in the books of accounts and, therefore, such stock-in-trade could not be taken into account while computing the disallowance under Rule 8D. The CIT(A) was satisfied by the explanation given and agreed that the disallowance under Rule 8D could be made only with respect to investment and not in stock-in-trade.
Monthly Archives: May 2015
CHENNAI PROPERTIES & INVESTMENTS LTD v CIT [CIVIL APPEAL NOS. 4491-4493 OF 2004 dated 09.04.2015] SUPREME COURT Background: The assessee is a company incorporated under the Indian Companies Act. Its main object, as stated in the Memorandum of Association, is to acquire the properties in the city of Madras (now Chennai) and to let out those properties. The assessee had rented out such properties and the rental income received therefrom was shown as income from business in the return filed by the assessee. The Assessing Officer held since that the income was received from letting out of the properties, it was in the nature of rental income and thus it would be treated as income from house property.