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2020 (12) TMI 1112 - AT - Income TaxDisallowance under the provisions of Section 14A read with Rule 8D - AO was of the view that he is not under the obligation to prove the nexus between expenditure incurred viz a viz exempted income but to make the disallowance as per the provisions of Rule 8D - HELD THAT:- Primary onus lies upon the assessee to justify the stand taken based on the material facts or the provisions of law. Assessee has nowhere made any rational submission for adopting the disallowance on estimation basis. Thus, in absence of any material by the assessee, we reject the basis adopted by it (the assessee) in making the disallowance under the provisions of section read with Rule 8D of Income Tax Rules. Whether the AO is under the obligation establish the nexus between the expenditure incurred by the assessee viz a viz the exempted income earned by it? - In the case on hand, the assessee failed to make any submission about the same. As such the onus shifts from the assessee upon the AO when he makes the submission to the AO with the documentary evidence that it has not incurred any expenditure in connection with the exempted income. But, we find that the assessee has not made any submission except disallowing the expenses on estimation basis. As such we find that the AO has derived the satisfaction by recording in the assessment order. ITAT in the own case of the assessee involving identical facts and circumstances has confirmed the disallowance made by the authorities below. Investments were made on the advice of the PMS and for this purpose PMS was compensated by the assessee by way of fees paid to them which has already been disallowed by the assessee. Therefore, further consideration of such investments for the purpose of disallowance of expenses under Section 14A r.w.r. 8D would lead to double disallowance which is unwanted under the provisions of law. Diminution in the value of investments should also be considered while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules. It is because such benefit was extended by the AO in the assessment framed under Section 143(3) of the Act for the Assessment Year 2007-08 vide order dated 10- 12-2009 which was not disputed by the Ld. DR for the assessee. There being no change in the facts and circumstances or the provisions of law, in our considered view the principles of consistency should be followed by the Revenue. Accordingly, we direct the authorities below to extend the benefit of the assessee on account of diminution in the value of investments while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules. Addition under the provisions of Section 94(7) - AO during the assessment proceedings found that the assessee has earned short-term capital gain only which was not disclosed in the Income Tax Return - HELD THAT:- There is no dispute to the fact that the loss claimed by the assessee with respect to the sale purchase of the units were in violation of the provisions of Section 94(7) - Short-term capital loss incurred with respect to the units which were purchased within a period of three months prior to the record date and sold within a period of nine months after such record date, shall be ignored to the extent of such loss, not exceeding the amount of dividend income for computing the income chargeable to tax. In view of the above we find no infirmity in the order of the authorities below. Hence, the ground of appeal of the assessee is dismissed.
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