TMI Blog2016 (2) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... Sandeep Gosain, JM Assessee by: Shri Vijay Mehta Shri Anuj Kisnadwala, Shri Apurv Gandhi Revenue by:Shri B.Satyanarayan Raju ORDER Sandeep Gosain, The appeal filed by the assessee is directed against the order dated 24-12-2013, passed by the CIT(A)-8, Mumbai, for the assessment year 2010-2011. 2. The only grievance of the assessee is with regard to inaction on the part of the CIT(A) in confirming the disallowance so made by the AO u/s.14A on account of expenses attributable to earning of the exempt income. 3. Facts in brief are that the assessee is a member of the National Stock Exchange of India ltd. and Bombay Stock Exchange Ltd., and is engaged in the business of share broking, trading in future opti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of suo-moto disallowance made by the assessee company calculated the disallowance at ₹ 35,59,550 (₹ 43,66,222 - 8,06,672) u/s sec. 14A of the Income Tax Act, 1961. While computing the said disallowance, the AO considered the total investments held by the assessee company as against the quoted investments and invoked provisions of Rule 8D (ii) (iii). However, the AO has not pointed out any nexus between the said sum disallowed and the earning of the exempt income on an actual basis. The contention of ld. AR before us was that the assessee's own funds are sufficient to cover up the value of investments and hence no interest disallowance is required to be made u/s 14A of the Act. The details of own funds and investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implicit the notion of apportionment in the cases where the expenditure is incurred for composite/indivisible activities in which taxable and non taxable income is received but when no expenditure has been incurred in relation to the exempt income then principle of apportionment embedded in section 14A has no application. The object of section 14A is not allowing to reduce tax payable on the non exempt income by deducting the expenditure incurred to earn the exempt income. In the case in hand it is not the case of the revenue that the assessee has incurred any direct expenditure or any interest expenditure for earning the exempt income or keeping the investment in question. If there is expenditure directly or indirectly incurred in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than the investment in question. An identical issue has been considered by this Tribunal in no. of cases as relied upon by the assessee and mentioned above. In the case of Paresh K. Shah Vs. DCIT (supra), the Tribunal has decided an identical issue in para 5 to 5.2 as under:- 5 Having considered the rival submissions as well as the relevant material on record, we find that the assessee s own funds comprising share capitals reserves and surplus is ₹ 4,48,47,798/-, which is equivalent to the cost of investment in the shares. Further, there is no fresh investments during the year under consideration and all these investments were made in the earlier year; therefore, there is no question of utilization of the borrowed funds during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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