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2014 (1) TMI 1622 - ITAT MUMBAIDisallowance of expenses section 14A read with rule 8D(2) - Exemption on income from dividend long-term capital gains on equity shares and equity oriented funds - Held that:- expenses incurred at Abu Road, where the manufacturing facilities of the assessee were located, were directly related to marble and granite manufacturing activities of the assessee. However no investment activities were carried out therefrom. As these expenses were not at all related to investment activities of the assessee, they are outside the purview of section 14A - salary of ₹ 1,50,000 paid to the accountant can be termed as indirectly related to exempted income. Other administrative expenses consisted of director's remuneration, paid to Shri Rakesh Agarwal and Shri Rajesh Agarwal who were looking after local sales of marble and granites. Therefore, salary paid to the directors were related to marble and granite manufacturing activities. Motor car expenses incurred by the assessee were directly related to marble and granite manufacturing activities. Out of the telephone expenses of ₹ 3,46,117, ₹ 20,051 related to telephone expenses of Shri Rajesh Agarwal, which could be termed as indirectly related to the exempted income. The assessee has also incurred expenditure on payment of rent relating to director's residence and godown for storing marble and granites. In the assessee's case, all the expenses debited to its profit and loss account have been analysed threadbare - we modify the orders of the lower authorities and direct the Assessing Officer to restrict disallowance under section 14A - Decided partly in favour of assessee.
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