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2016 (3) TMI 50 - AT - Income TaxDisallowance u/s. 14A toward indirect administrative expenditure - Held that:- A meeting of the ‘assessee’ with his investment consultant or broker in relation to a IPO or any other emerging investment option is to be conducted (say). This would require visit by the consultant to the assessee’s premises or vice versa. This explains the appropriation of the expenditure claimed on telephone, electricity, conveyance, etc. The job may itself be assigned - wholly or partly, to some staff, even as a part of his duties, so that the staff cost may also be involved. Even ignoring staff and advertisement cost, leaves a balance expenditure at ₹ 184 lacs. It may be argued that the expenditure incurred and claimed is as per the books of the assessee’s business. The argument is to no moment. Firstly, the assessee holds investment (Rs.140.59 lacs) including tax-free investments, in its business. Two, and more importantly, the assessee is one entity, undertaking both, business – yielding taxable income, and investments – yielding both taxable and tax-free incomes. The manner or the account from which common expenditure, i.e., which could be ascribed to both sets of activities, is incurred or routed, is immaterial, being borne by and claimed by the assessee. Suo motu disallowance by the assessee or its’ claim of no expenditure having been incurred to earn tax exempt income is to be found non-satisfactory by the A.O. before resort to computation (of disallowance) under rule 8D(2) could be made. This, as afore-stated, is the statutory prescription, on which therefore there is no quarrel. Then, it is further stated that sufficiency of interest-free funds would operate to the non invocation of the disallowance u/s. 14A/rw Rule 8D(2). No disallowance on account of interest obtains in the instant case. In fact, the finding of sufficient funds could only be with regard to the assessee’s accounts, with reference to which, as explained, the satisfaction or dissatisfaction of the assessee’s claim is to be made.Under the circumstances and, in view of the foregoing, we find little merit in the assessee’s case and, accordingly, uphold that of the Revenue - Decided against assessee
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