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TMI Blog2013 (6) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,49,211/- u/s.14A of the I.T. Act r.w.Rule 8D of the I.T. Rules. Your appellant submits that it has not incurred any expenditure to earn dividend income, hence the ACIT shall be directed to delete disallowance made u/s. 14A of the I.T.Act. (b) In the alternative & without prejudice to above ground, dividend earned by appellant is only Rs.2,001/- and hence disallowance shall be restricted to the extent of dividend received." 2. The assessee has earned tax free dividend income of Rs.2001/-.Applying provisions of section 14A Income Tax Act, 1961 (the Act) r.w. Rule 8D. The A.O has computed the disallowance at Rs.4,49,211/-. Ld. CIT(A) sustained the disallowance. The assessee is aggrieved, hence, has filed aforementioned appeal. 3. It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atik Finvest Pvt Ltd) out of its capital & internal accrual, details of which are as under :- Particulars As on 31 Mar 08 As on 31 Mar 07 Net Worth (Share Capital + Reserve & Surplus)(A) 7,22,22,922 6,56,37,410 Less: Investments1) in Subsidiary Company 1,70,00,000 1,70,00,000 2) in Listed Companies 28,06,223 27,74,603 3) in Unlisted Companies (Closely Held) 4,75.23,000 3,83,30,500 (B) 6,73,29,223 5,81,05,103Excess of net worth over investments (A)-(B) 48,93,699 75,32,307 From the above It is clearly evident that the investment were made by the assessee company out of its own fund (i.e. networth of the assessee company). In support of the above, we rely on the judgment in the case of Reliance Utilities and Power Ltd. f313 ITR 340(Bom) whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT (328 ITR 81), where at page 120 of the report their Lordships have observed that the application of prescribed method arises in a situation where the claim made by the assessee in respect of expenditure which is relatable to the earning of income which does not form part of the total income under the Act found to be incorrect. He submitted that before making disallowance the AO has to record a specific finding that the claim of the assessee that no expenditure has been incurred by the assessee to earn dividend income has to be found to be incorrect. He submitted that no such finding has been recorded by A.O despite the fact that it was submitted to him that no such expenditure has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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