The assessee received Rs. 59 lakhs as tax-free dividend. It claimed
that no disallowance u/s 14A could be made as it was a dealer in shares
and the shares were held as stock-in-trade. The AO & CIT(A) relied
on
Daga Capital Management Services
119 TTJ (SB) 289 (Mum) where it was held that s. 14A applied also to
shares held as stock-in-trade and made a disallowance of Rs. 37 lakhs.
On appeal by the assessee to the Tribunal, HELD allowing the appeal:
As the assessee is engaged in the business of dealing in
shares and the shares were held as stock-in-trade, the intention of the
assessee was not to earn dividend income. As the dividend received was
incidental to the business of sale of shares, no notional expenditure
could be disallowed by invoking s. 14A (CCI Ltd 71 DTR 141 (Kar) & Apoorva Patni (ITAT Pune) (included in file) followed
See also
India Advantage Securities (ITAT Mum) where the same view was taken after considering the contrary view in
American Express Bank (ITAT Mum) &
Daga Capital 119 TTJ (SB) 289 (Mum)
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