Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1270 - AT - Income TaxDisallowance of expenditure u/s.14A - Held that:- In the present case the only investment that yielded tax exempt income was investiment in UTI mutual fund. As on 31.3.2007 the investment in UTI mutual fund was ₹ 56,33,712.76 Ps. which increased to ₹ 1,05,99,750/- as on 31.3.2008. Therefore during the previous year there was an increase in investment in UTI mutual fund of ₹ 49.66 Lacs. From the submissions made by the Assessee before CIT(A), it has been claimed by the Assessee that the availability of own funds of the Assessee was ₹ 68.19 lacs. This has not been rebutted on a proper basis by the CIT(A). Therefore it can safely be concluded that there was sufficient availability of own funds from and out which investments in UTI mutual funds were made by the Assessee and therefore disallowance of interest expenses by applying Rule 8D(2)(ii) of the rules of ₹ 2,95,677/- is deleted. Also of the view that the argument that interest income is more than the interest expenses debited in the profit and loss account and therefore no interest expenses can be disallowed, does not require any adjudication, in view of the above conclusion. As far as disallowance of other expenses u/r 8D(2)(iii) of the rules is concerned, shows expenditure on account of staff and office expenses. The claim of the Assessee that no other expenses were incurred to earn the tax free income cannot be accepted. There is no other basis on which the disallowance can be quantified. Having regard to the books of accounts of the Assessee, the disallowance as worked out above of ₹ 40,583.66 Ps., in my view would be just and appropriate, in the facts and circumstances of the present case. Thus accordingly, restrict the disallowance u/s.14A of the Act to a sum of ₹ 40,583.66 Ps. - Decided in favour of assessee in part. There can be no disallowance of expenses u/s.14A of the Act for AY 2009-10, as the Assessee has not earned any tax free income in the said AY.
|