TMI Blog2014 (1) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's capital - Rule 8D, only seeks estimation of the disallowance in respect of the expenditure incurred, separately qua its various parts, by prescribing a uniform method for the same - until and unless the assessee is able to factually establish that no part of the borrowed funds has been utilized for investment in tax-free securities, disallowance qua the interest expenditure incurred would follow, given the mandate of r. 8D(2)(ii). The services of a portfolio manager would have been availed, while in others the investment may be managed by the assessee's own staff, which may include finance professionals, who would advise it in the matter - The assessee having failed to exhibit its stand of no such expenditure having been incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall take up in seriatim. The first issue is in respect of the confirmation of disallowance in respect of training expenses, claimed in the sum of Rs. 10,00,550/- by the assessee-company, in respect of its director, Ms. Protima Wagh, who is also the daughter of the Chairman/promoter- director, Sri S.M. Wagh, for pursuing a study course leading to the degree of Bachelor of Science and Master of Science (in Biotechnology), in USA. 3.1 Opening the arguments for and on behalf of assessee, it was submitted by the learned AR, its counsel, that this is a subsisting issue in the assessee's case; the educational course under the reference being for a period of five years, i.e., from 2004 to 2009. The same came before the Tribunal in the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o plead its case along the same lines for this year as well. We decide accordingly. 5. The second and only other issue is the disallowance in the sum of Rs. 3,16,056/- u/s. 14A read with rule 8D, having been since confirmed by the first appellate authority. This issue, again, it was submitted by the ld. AR, was present in the assessee's case for AY 2007-08, and stood restored by the tribunal to the file of the assessing authority for fresh adjudication. Accordingly, he would press for a like course being adopted by it for the current year as well. The ld. DR, on the other hand, would bring to our notice that rule 8D is mandatory for the current year, so that there is no infirmity in the orders of the authorities below, and no useful purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a disallowance with reference to the same, in a reasonable proportion, could be made by the tribunal itself. 6. We have heard the parties, and perused the material on record. 6.1 As regards the legal issue; the assessee claiming non-compliance of the condition of Section 14A (2), so that no disallowance u/s.14A(1) could be made, no doubt the same is a prerequisite where the assessing authority proceeds to determine the expenditure incurred by the assessee in relation to income which does not form part of its total income. So, however, the initial onus is on the assessee to exhibit, with reference to its accounts, that it has not incurred any expenditure, as being claimed by it in the instant case, with the assessee, rather, having made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method for the same. As such, until and unless the assessee is able to factually establish that no part of the borrowed funds has been utilized for investment in tax-free securities, disallowance qua the interest expenditure incurred would follow, given the mandate of r. 8D(2)(ii). As regards incurring of indirect expenditure, again, the initial onus is on the assessee, which has not been discharged in the instant case. The said expenditure may assume many forms, with, in fact, the decision making in respect thereof (investment) being located at the higher echelons of the management, and which can only be upon expending time and resources. In a given case, the services of a portfolio manager would have been availed, while in others the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC), that the expenditure incurred may not have any one to one correspondence with the income, so that basing the disallowance of the expenditure with reference to the tax-exempt income is essentially flawed. The disallowance u/s. 14A is qua expenditure, the purpose of incurring which is for earning income, which does no form part of total income, and may not lead to the same (income), or even in a fixed ratio. As such, the proposition advanced by the ld. AR during hearing in restricting the disallowance with reference to the dividend income is not sustainable in the eyes of law. Under the circumstances, we, therefore, find no infirmity in the impugned order, confirming the disallowance u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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