Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (12) TMI 293 - AT - Income TaxDisallowance u/s 14A r.w. rule 8D - interest allocated on surmises and conjectures by treating even Public provident fund deposits as investments for earning tax exempt income - HELD THAT:- AO recorded the finding that the assessee cannot earn dividend without management of the investment. There are numerous precedents which support the view that even if the assessee claims that he has not incurred any expenditure in earning dividend income, the provisions of section 14A of the Act r.w. Rule 8D of the Rules would still apply, if the AO having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee. Both the Ld. AO as also the Ld. CIT(A), having regard to the accounts of the assessee reached the conclusion that the claim of the assessee that he did not incur any expenditure in relation to income which does not form part of the total income is not sustainable in the eye of law. If that be so, in our opinion, the Ld. CIT(A) was perfectly justified in holding that the provisions of section 14A r.w. Rule 8D of the Rules are attracted to the case of the assessee. We, therefore reject the ground No. 1 of the assessee. Disallowance of interest under rule 8D(iii) r.w.s. 14A ignoring that the assessee has capital and interest free fund far in excess of investments - As regards the alternate ground No. 2, it does not survive as the Ld. CIT(A) has already set aside the matter and restored it to the file of the Ld. AO with direction to him to decide afresh the quantum of disallowance in Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT]. We, however observe that the assessee has not made any suo-moto disallowance, therefore there will not be any occasion to limit the disallowance at a minimum as stated by the Ld. CIT(A) in the last sentence of his direction extracted above. In this view of the matter, the alternate ground No. 2 is also rejected.
|