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2015 (1) TMI 731 - AT - Income TaxDisallowance u/s 14A - dividend of ₹ 80,45,298/- from the domestic companies and ₹ 13,85,100/- from tax free US 64 Bonds of UTI - expenditure incurred for earning tax-free income - Held that:- For the assessment year under consideration rule 8D is applicable and the working of disallowance has to be as per formula provided under rule 8D and there is no scope of any estimation of disallowance under section 14A. For the purpose of computing disallowance as per rule 8D the investment in subsidiaries including Excel Crop Care Limited as well as the investment which does not yield tax free income as in the case of Saraswat Co-op. Bank shall be excluded from the average investment.As we have already directed the AO that the investment in the subsidiary and not yielding taxable income shall be excluded from the average investment therefore, the disallowance on account of administrative expenses shall be computed accordingly. It is made clear that disallowance computed under rule 8D shall not be more than the actual expenditure attributable for earning the tax free income and debited in the profit and loss account. The AO to ear mark the expenses which can be attributable for earning taxable as well as tax free income. The expenditure incurred exclusively for business activity cannot be included in such attributable expenses for the purpose of disallowance u/s.14A. - Decided partly in favour of assessee for statistical purposes. Taxability of advance licence/duty free replenishment certificate benefit as well as taxability of pass book benefit receivable - CIT(A) deleted the addition - Held that:- An identical issue has been decided by the Hon’ble Supreme Court in case of the assessee for the assessment year 2001- 02 in CIT Versus M/s Excel Industries Ltd. and Mafatlal Industries P. Ltd. [2013 (10) TMI 324 - SUPREME COURT] that it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. - Decided against revenue.
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