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TMI Blog2011 (4) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... done by the assessee is not proper and thereafter reject the book results relating to the same and determine the expenditure referable to the earning of non-taxable income as per Rule 8D. No such attempt has been made while framing the assessment." 2. The assessee is a company engaged in the business of clearing and forwarding services. The assessee earned dividend income of Rs. 35,507/-. The dividend income did not found part of the total income of the assessee. In view of the provisions of section 14A of the Income Tax Act, 1961 (the Act) the AO was of the view that any expenditure incurred in earning income which does not form part of the total income under the Act should be disallowed while computing the total income of an assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in the case of Daga Capital Management Pvt.Ltd. 117 ITD 169 (mum) (SB) and has laid down the following proposition: i) Dividend income and income from mutual funds falling within the ambit of Section 10(33) of the Income Tax Act 1961, as was applicable for Assessment Year 2002-03 is not includible in computing the total income of the assessee. Consequently, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income under the Act, by virtue of the provisions of Section 1 4A( 1); ii) The payment by a domestic company under Section 115O(1) of additional income tax on profits declared, distributed or paid is a charge on a componen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to place all germane material on the record; vii) The proceedings for Assessment Year 2002-03 shall stand remanded back to the Assessing Officer. The Assessing Officer shall determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income / income from mutual funds which does not form part of the total income as contemplated under Section 14A. The Assessing Officer can adopt a reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer shall provide a reasonable opportunity to the assessee of producing its accounts and relevant or germane material having a bearing on the facts and circumstances of the case. 5. In view of the aforesaid de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by an assessee the payment made without deduction of tax at source which is claimed as expenditure while computing total income is liable to be disallowed. According to the AO the payment of maintenance charges to the society by the assessee was in the nature of payment to contractor for carrying out any work attracting the provisions of section 194C of the Act. Since tax was not deducted at source while making payment, the AO invoked the provisions section 40(a)(ia) of the Act and added a sum of Rs. 1,72,455/- to the total income of the assessee. 8. On appeal by the assessee the CIT (A) confirmed the order of the AO, hence, ground No.2 by the assessee before the Tribunal. 9. We have considered the rival submissions. The payment of mai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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