section 14 A

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Tara (Querist)
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05 November 2009 A co. trade in shares & securities . Co.has some investment also.It earn dividend income on shares treated as inventory.
My Question is -
1. whether sec 14 A is applicable in the case of trader of shares & securities
2. If yes what will be the average value of investment. whether value of inventory also included in investment.

CA.Ramkrishna

CA.Ramkrishna (Expert)
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07 November 2009 Hi Tara,

The Wordings of Sec 14A of the Income Tax is reproduced below for your reference

For the purpose of computing the total Income under this chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.

From the above it is quite evident that it is applicable to trader of share & securities also as the section says" expenditure incurred by the assessee"

Investment will not include the value of inventory.only investment value has to be taken