TMI Blog2018 (9) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard stand allowed. So far as the expense disallowance - submission of the assessee is that only income yielding investments are to be considered to arrive at disallowance - We direct Ld.AO to recompute expense disallowance u/r 8D(2)(iii) by considering only those investments which have yielded exempt income during the impugned AY. The assessee is directed to provide requisite computations, in this regard. The ground stand partly allowed. - I.T.A. No.4555/Mum/2017 - - - Dated:- 12-9-2018 - SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Anuj Kisnadwala, Ld. AR For The Revenue : Pooja Swaroop, Ld. Sr. DR ORDER Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds in the shape of Share Capital Reserves were much more than the investments made by the assessee. It was further submitted that only income yielding investments were to be considered while arriving at the disallowance. Finally the matter was concluded in the following manner:- 5.3.1 I have considered the facts of the case as well as assessment order passed by the AO and the submissions made by the appellant. It is seen that the AO has made disallowance under rule 8D(2)(ii) amounting to ₹ 19,60,658/- and ₹ 40,47,377/- under rule 8D(2)(iii) of the IT Rule 1962. 5.3.2 Regarding disallowance of interest under rule 8D(2)(ii), the appellant has explained that there were certain expenses which were for the purpose ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not incurred any expenses to earn the dividend income and therefore Rule 8D(iii) is not applicable. HELD by the Tribunal: ( i) The contention that no satisfaction as to be correctness of the claim made u/s 14A read with 8D(iii) has been recorded by the AO as well as the CIT(A) is not acceptable. The AO has complied with the requirement of section 14A of the Act by observing that as to why he is not satisfied with the correctness of claim of the assessee that no expenditure was incurred. The AO has recorded the findings that earning of dividend was not an automatic process and the assessee was required to keep regular control over the investments made; ( ii) The contention that the assessee earned dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered for the purpose of convenience as a deeming provision. When such deeming provision is made on the basis of statutory presumption, the requirement of factual evidence is replaced by statutory presumption and the Assessing Officer has to follow the consequences stated in the statute. From the above judgment, it can be very well concluded that there is always certain expenses in various forms including administrative expense to maintain the investments portfolio. As per the assessment order, the appellant has earned dividend income of ₹ 19,07,777/-. Keeping in view of the facts and circumstances of the case, the judicial pronouncements relied upon by the Ld. AR is distinguishable on facts and the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, interest disallowance was not justified in terms of various judicial pronouncements. Upon perusal of financial statements of impugned AY, as placed on record, we find that there is no change in the figures of investment and the same remain static at ₹ 8094.75 Lacs. This being the position, interest disallowance as made by Ld. AO stand deleted and the grounds raised, in this regard stand allowed. 6. So far as the expense disallowance is concerned, the only submission of the assessee is that only income yielding investments are to be considered to arrive at disallowance in terms of ratio of cited decision of the special bench. The disallowance so computed, as per submissions, comes to ₹ 7 Lacs as extracted on Page-7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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