TMI Blog2012 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of interest u/s 14A in respect of dividend income – Held that:- The assessee has earned dividend which is not includible in the total income of the assessee as it is exempt as per sec 10(34/35). To earn the said dividend from the investment, it is a fact that assessee must have incurred some administrative cost to maintain portfolio. Therefore issue remand back to AO for making a reasonable disallowance u/s.14A. - ITA No.5604/Mum/2011 - - - Dated:- 20-7-2012 - SHRI B.R.MITTAL AND SHRI RAJENDRA, JJ. Appellant by : Shri D.P.Bapat Respondent by: Shri P.C.Maurya ORDER Per B.R.Mittal, JM: The assessee has filed this appeal against order dated 19.5.2011 of ld CIT(A)- 5, Mumbai for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and stated that income arising from SEZ will not be includible in the total income of the assessee as activities of SEZ are exempt from tax. Therefore, non inclusion of SEZ investment within the definition of investment as per Rule 8D will lead to allowance of expenditure related to exempt investment and will result in loss of revenue. It is in violation of provisions of Income tax Act. The AO calculated vide para 3.3 of the assessment order the disallowance under section 14A r.w. Rule 8D at Rs.87,77,656. Being aggrieved, assessee filed appeal before ld CIT(A). 5. Ld CIT(A) stated that assessee did not make any written submissions before him. He has stated that similar issue was decided by him in assessee s case for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee for its business purposes. Ld A.R. submitted that if the investment is made in SEZ unit, whose income is qualified for deduction, the expenditure, if any, incurred for making the investment, no disallowance u/s.14A could be made. Ld A.R. referred to the decision of ITAT in assessee s own case for assessment year 2007-08(I.T.A. No.6835/M/2010) order dated 8.6.2012 and submitted that the Tribunal held that the investment or expenses incurred to earn income from SEZ do not merit reckoning in computing disallowance u/s 14A. He submitted that in the said assessment year also, AO made disallowance u/s.14A r.w. Rule 8D as the investment was made in SEZ unit whose income qualified for deduction under the provisions of the Act. The AO con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the earning of exempt income before making any disallowance u/s.14A of the Act. He submitted that Delhi Tribunal also held in the case of Maruti Udyog vs. DCIT, 92 ITD 119 (Del) that before making any disallowance under section 14A of the Act, onus to establish the nexus of the same with the exempt income, is on the revenue. He submitted that the assessee has not used any borrowed finds for making any investment whose income is exempt from income tax and, therefore, no disallowance is justified under section 14A of the Act. 7. On the other hand, ld D.R. in his submission supported the orders of authorities below. He submitted that section 14A does not make any distinction of exemption or deduction. He submitted that section 14A sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made investment in SEZ unit and whose income is exempt from tax as the said income is not includible in the total income. We observe that similar issue has a been considered by the Tribunal in assessee s own case for assessment year 2007-08 vide order dated 8.6.2012 (supra), wherein, it was held that the investment or expenses incurred to earn income from SEZ do not merit reckoning in computing disallowance u/s 14A. Therefore, we find merit in the contention of ld A.R. that the authorities below were not justified to consider the investment made in SEZ unit for making the disallowance under section 14A of the Act in view of the decision of co-ordinate bench in assessee s own case (supra). Further, ld CIT(A) has merely followed his order f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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