Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (12) TMI 27 - AT - Income TaxExpenditure towards exempted dividend income disallowed u/s 14A r.w. section 8D – Held that:- The assessee had declared dividend income from mutual funds which it claimed as exempt - no borrowed fund has been utilised towards investment in the mutual funds, the income of which has been claimed as exempt - the AO disallowed an amount of ₹ 3,03,823/- being expenditure incurred for earning the dividend income u/s. 14A r.w. Rule 8D which has been upheld by the CIT(A) - the AO has not recorded any satisfaction with reference to accounts of assessee nor rejected the claim that no expenditure was incurred – following the decision in Raj Shipping Agencies Ltd. Versus Additional Commissioner of Income-tax [2013 (12) TMI 995 - ITAT MUMBAI] - The AO has to examine the accounts of the assessee first - If he is not satisfied with the correctness of the claim, then only he can invoke rule 8D - No such examination was made or satisfaction was recorded by the Assessing Officer - The AO has not considered the claim of the assessee at all and he has straightway embarked upon computing disallowance under rule 8D - The disallowance u/s 14A required finding of incurring of expenditure. Assessee has offered most of the income under the tonnage tax scheme - the disallowance need not be made on entire expenditure made as the assessee's income from shipping related activity was assessed under section 115VA on presumptive basis – When the income of the assessee from the business of operating ships is computed as per the special provisions contained in Chapter XII-G, only the expenses incurred by the assessee for earning income of the said business are deemed to be allowed and nothing else - The income of the assessee from the business of operating ships having been computed in accordance with the provisions of Chapter XII-G, only the expenses incurred for the said business are deemed to have been allowed and no addition to such income can be made by way of disallowance u/s 14A on account of any expenditure incurred in relation to earning of exempt dividend income – thus, the order of the CIT(A) is set aside and the AO is directed to delete the addition – Decided in favour of assessee.
|