TMI Blog2012 (10) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... before the word "determine", which goes to mean the AO has to take into account all relevant facts and surrounding circumstances to determine expenditure incurred in relation to income not forming part of total income. As in the present case the AO has not made any attempt to "determine" the amount of expenditure incurred in relation to the income not forming part of total income - thus set aside the order of the CIT(A) on the issue of 14A and direct the AO to determine reasonable expenses, attributable to exempt income, taking into account all surrounding circumstances - in favour of assessee for statistical purposes. - IT APPEAL NO. 7353 (MUM.) OF 2010 - - - Dated:- 29-8-2012 - R.S. SYAL And VIVEK VARMA, JJ. D.M. Negandhi for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm loans obtained from them for purchase of fixed assets in the earlier years. (6) Sub-section (2) and (3) of section 14A would apply only when sub-section (1) applies to the facts of the case. If the Assessing Officer finds that there is dominant and immediate connection between the expenditure incurred and the income not forming part of the total income then only the provisions of sub-section (2) and (3) would come into play. (7) While calculating the disallowable of interest paid the Assessing Officer should be directed to reduce Rs. 3,97,097/- received by the appellant as interest income. (8) Rule 8D(ii) applies only where it is not possible for the Assessing Officer to determine the borrowings on which interest was paid. (9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that computation of disallowance as per Rule 8D is applicable only from A.Y. 2008-09 onwards and since the instant case is for A.Y. 2007-08, the Rule cannot be made applicable. 7. The AR further submitted that no expenses as such could be attributable under section 14A at all, because the dividend has been received from its subsidiary M/s Veena Casting and Components Pvt. Ltd., housed at the same premises and the entire dividend was received through a single cheque. Besides this fact, investment in shares were made in A.Y. 2002-03 and also there has been no change in its holding pattern ever since in A.Y. 2002-03. Hence no expense could be attributable to the earning of this dividend income. The AR further submitted that the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-. In its submission before the CIT(A) that the assessee had submitted that the assessee and its subsidiary are housed in the same premises and the dividend was received by a single cheque, this fact, has not been controverted by the revenue authorities. It is seen that sub-section (2) of section 14A says, "the Assessing Officer shall determine the amount of expenditure incurred and in relation to such income which does not form part of the total income under this Act .". Thus, the onus is on the Assessing Officer to "determine" the amount of expenditure. This does not mean that expenditure has to be computed and disallowance has to be made in each and every case where there is an element of exempt income. The Legislature has used w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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