No Sec.14A disallowance if assessee is dealer of shares and securities

In the judgment of Hon’ble Karnataka High Court rendered in the case of CCI Ltd. (supra) it was held that if the assessee is a dealer of shares and securities then it cannot be said that such purchases of shares and holding of shares were for the purpose of earning of dividend income and hence, expenditure incurred in acquiring these shares cannot be disallowed u/s. 14A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act). In the present case, this is admitted position of fact that assessee is a dealer in shares and securities and this fact is noted by Assessing Officer also in his assessment order and inspite of this contention raised by Ld. AR of the assessee before us, nothing has been brought on record by Ld. CIT-DR of the Revenue to show otherwise. Since assessee is dealing in shares, we hold by following this judgment of Hon’ble Karnataka High Court that disallowance made by AO u/s. 14A of the Act on account of interest expenditure on proportionate basis cannot be sustained. We therefore do not find any reason to interfere in the order of Ld. CIT(A) on this issue. Accordingly, this ground of Revenue’s appeal is rejected.

ITAT AHMEDABAD BENCH “B”

ITA No. 1800/Ahd/2008 – Assessment Year :2004-05

Hina Nitin Parikh V/s.  ACIT

ITA No. 2449/Ahd/2008 – Assessment Year: 2006-07

DCIT  V/s.   Hina Nitin Parikh

C.O. No.190-193/Ahd/2008
(a/o ITA No.2445-2446/Ahd/2008
and ITA No.2448-2449/Ahd/2008)
Assessment Years: 2002-03 to 2003-04 and 2005-06 to 2006-07

Hina Nitin Parikh  V/s.   DCIT, Central Circle-2(1)

ITA No.2450-2451/Ahd/2008 – Assessment Years: 2000-01 to 2001 -02