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2014 (1) TMI 287 - ITAT MUMBAIDisallowance in respect of Training expenses – Held that:- For the preceding years also, the matter is restored to the AO – Thus, for this year also the same is remitted to the AO for fresh adjudication - This will ensure consistency of approach by the Department, as well as enable the assessee to plead its case along the same lines for this year as well. Disallowance u/s 14A of the Act r.w. Rule 8D of Income Tax Rules – Held that:- 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 - the volume of borrowed funds is a mere fraction of the assessee'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 incurred, there was no infirmity in the estimation of following the dictate of rule 8D – Relying upon CIT vs. Hero Cycles Ltd. [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] and CIT v. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] – 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 – Thus, the order of disallowance u/s 14A upheld – the matter restored to the AO for limited purpose of quantifying the correct amount of disallowance under Rule 8D – Decided partly in favour of Assessee.
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