TMI Blog2012 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance @ 0.5% of total of average investment as per Rule 8D is not justified as a very small amount of new investment has been made during the year. Moreover, Rule 8D is not applicable for the year under consideration and assessee has not incurred any interest expenditure for earning of the exempt income. Hence, no disallowance of expenditure u/s 14A can be made in the present case - Decided in favor of assessee. - I.T.A. No.1577/Del/2012 - - - Dated:- 20-7-2012 - SHRI I.C. SUDHIR, AND SHRI T.S. KAPOOR, JJ. Appellant by: Shri V.K. Bajaj. Respondent by: Shri Vikas Kumnar Suryavanshi, CIT-DR ORDER PER TS KAPOOR, AM: This is an appeal filed by the assessee against the order of Ld CIT(A) dated 2.2.2012. The grounds r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the Assessing Officer noted that assessee was earning income from salary, income from house property, capital gains on sale of shares income from other sources and business income. The Assessing Officer further noted that assessee had earned dividend income on shares/mutual funds and interest on bonds to the extent of Rs.29,75,609/- which was claimed as exempt u/s 10 of the Act. The assessee was asked as to why expenses relevant to earning of dividend should not be disallowed u/s 14 of the Income Tax Act, 1961. 3. The Ld AR submitted that since no expenses has been incurred for earning exempted income. Therefore, no disallowance can be made u/s 14A of the Act. The Assessing Officer did not accept the arguments of the assessee as in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax free bonds UTI ARS was made out of non-interest bearing funds i.e. from assessee s own personal funds as no borrowed funds have been used for making these investments. v) That in assessee s own case in an earlier year and in the case of his wife Smt. Jyotsana Suri it has been held that question of disallowance of any expenses does not arise where the income on the investments accrued automatically and investment was made out of non-interest bearing funds. It was held in these judgments that Rule 8D is not retrospective and applies from assessment year 2008-09 only. Reliance was also placed on the following judgments:- 1. Rajive Suri I.T.A. No.3502/Del/2010, ITAT Delhi Bench F . 2. Jyotsana Suri I.T.A.No. 3640 3641/Del/2010 ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided the matter in favour of assessee s wife. In this respect he took us to page 68 73 of the paper book where relevant portion of ITAT order for the assessment year 2003-04 in respect of assessee and for assessment year 2005-06 2006-07 in respect of assessee s wife Smt. Jyotsana Suri were placed. Ld AR also took us to page 13,14 15 of paper book wherein the breakup of investment from where the exempt income was generated was placed. The Ld AR brought to our notice that most of the investments are old and major share of income has been derived from investment in tax free bonds which required incurring of no expenditure. 8. The Ld DR relied upon the order of Assessing Officer and Ld CIT(A). 9. We have heard the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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