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2014 (10) TMI 655 - AT - Income TaxDisallowance u/s 14A(1) – Applicability of Rule 8D - Held that:- CIT(A) has very appropriately, considered and dealt with the assessee’s objection - The assessee’s revenue streams are from trading operations, sale of investments, dividend and interest - It is maintaining composite accounts for its indivisible business, or qua its business segments, determination of any expenditure attributable to exempt income becomes relevant in view of section 14A as explained in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The volume of the expenditure incurred in relation to a particular activity or income there-from, is a matter of fact, so that its estimation is again a factual matter – If with no prescribed rule or basis, and without even discussing the merits of the method chosen, a method is adopted to resolve an issue, which is essentially one of quantification, and which is accepted by either party or even both, if only to give a quietus to the matter, the same is not reflective of its merits, much less of it being held out as a precedent - Rule 8D becomes effective, and mandatorily so, w.e.f. the current year – there was no scope for either non-application of, or even scaling down of the amount workable with reference, to r. 8D(2)(iii) where the shares, on which the exempt income is received, are held as stock-in-trade, for the disallowance of interest u/r.8D(2)(ii). The disallowance under r. 8D has to be in any case restricted to the amount of the relevant expenditure actually claimed per the return of income – thus, the matter is to be remitted back to the AO to allow the assessee an opportunity to present its case before him with reference to the expenditure claimed as also including expenditure which is in fact not relatable to the income not forming part of the total income - assessee is also in the business of share trading, so that the direct expenditure in respect thereof would also stand debited in its accounts and, accordingly, claimed - The onus to establish its case would only be on the assessee, which the AO shall decide by issuing definite finding/s of fact/s, limiting the disallowance under r.8D(2)(iii) to the amount of expenditure as so determined by him – Decided partly in favour of revenue.
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