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2015 (7) TMI 976 - AT - Income TaxDisallowance u/s 14A r.w. Rule 8D - Held that:- Every economic activity, particularly in today’s extremely competitive environment, entails some degree of cerebral activity. There is, however, no corresponding expenditure, or claim in its respect, while the issue at hand is the apportionment of such expenditure. Income, which may or may not arise on incurring expenditure, and again with no certainty as to its quantum, cannot by itself form the basis of either incurring or allocation of expenditure. - Revenue’s reading of r. 8D as equally misplaced. The estimate per r. 8D(2) is only qua expenditure relatable to tax exempt income/s. The expenditure claimed stands debited in the assessee’s accounts, which could be inquired in to as to their purpose. For all we know, the assessee may be managing his investments in instruments yielding tax exempt incomes, which are at a healthy sum of ₹ 21.71 cr., i.e., on an average for the year, on his own, or could also be assisted by personnel, who stand remunerated. No inquiry in this regard stands made, while the assessee has maintained proper accounts, duly audited and, further, bases his claim of having incurred a lower expenditure than that per the statutory prescription of r. 8D, thereon. - The ingredients of s. 14A(2) r/w r. 8D(1) are clearly not satisfied in the instant case. We, accordingly find no infirmity in the assessee’s claim of disallowance u/s. 14A(1) at ₹ 1,00,000 - Decided against assessee.
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