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TMI Blog2012 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... s been challenged. 2. Facts indicate that Assessing Officer has completed the assessment on 13.12.2010 at an income of Rs.53,25,87,649/- as against returned income of Rs.53,09,97,550/- after making the disallowance of Rs.15,90,103/- (1690103-1,00,000) already disallowed by the assessee u/s 14A read with Rule 8D of the I.T. Rules. Assessing Officer in this case has observed that invocation of section 14A of the Act is automatic and comes into operation without any exception as soon as dividend income is claimed exempt. 3. Aggrieved by the action of the Assessing Officer, assessee filed appeal before first appellate authority and submitted that Assessing Officer has erred in enhancing the disallowance to Rs.16,90,103/- u/s 14A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses the services of such investment advisors and banks etc. In some instances the mutual funds charge entry and exit loads, which is in the nature of a fee for the services rendered by them. The investment advisors etc., however do not charge any fee from its clients, as they get their fees form the issuing entities. It is a fact in record that the company has over a large number of years, invested the surplus funds from its after tax profits and internal accruals in income yielding investments. Thus, it has not utilized any borrowed funds for such investments. The department has accepted this fact in a number of earlier years. The Assessing Officer has ignored the fact that the earning of dividend income is a passive/dormant activity and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ld.DR has further contended that latest Delhi High Court decision in the case of Maxopp Investment Ltd., is fully applicable to the facts of this case and in any case, matter requires to be reversed. It was urged for setting aside the order of the CIT(A) and restoring that of the Assessing Officer. 8.1 Ld.Counsel for the assessee while relying upon the CIT(A) order, has reiterated that the first appellate authority has taken a just and appropriate view because no further disallowance could be made, therefore, relying upon the CIT(A) order, it was pleaded for confirmation of the same. 9. We have heard both the sides, considered the material on record and the precedents relied upon by rival sides and find that since latest decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s - Whether, however, fact that sub-sections (2) and (3) of section 14A and rule 8D would operate prospectively (and, not retrospectively) does not mean that prior to that period Assessing Officer is not to satisfy himself with correctness of claim of assessee with regard to such expenditure - Held, yes - Whether even for per-rule 8D period, whenever issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain correctness of claim of assessee in respect of expenditure incurred in relation to income which does not form part of total income under Act and if he is satisfied on an objective analysis and for cogent reason that amount of such expenditure as claimed by assessee is not correct, he required to determin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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