TMI Blog2013 (10) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bill 2006 states that this amendment would take effect from 01.04.2007. The courts further held that even in the absence of sub-section(2) and (3) of Section 14 A and Rule 8D, the Assessig Officer was not precluded from making apportionment on account of expenditure relatable to earning of exempt income. No merit in the content ion of the assessee that no expenditure is attributable to the earning of the dividend income - Upheld the order of the CIT(A) in restricting the disallowance of Rs. 2 lacs being the expenditure attributable to the earning of tax free income. The provisions of Rule 8D are applicable w.e.f. assessment year 2008-09 and consequently have no application to the year under appeal. Accordingly, the estimates made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring assessment proceedings the AO noticed that the assessee has made investment to the tune of Rs. 4,24 crores in the shares. Therefore, Section 14A r.w. Rule 8D was invoked and disallowance of interest and expenditure amounting to Rs. 9,42,619/- was made. This disallowance was worked out vide para 5.,3 of the assessment order which reads as under: 5.3 Accordingly, disallowance under section 14A is computed as under:- A) Total interest expenditure Rs. 9,71,00,000/- B) Average value of investment Rs. 4,24,00,000/- C) Average value of assets As on 31.03.07 As on 31.03.08 = 4,93,25,00,000 +6,33,75,00,000 = Rs. 5,63,50,00,000/- A x B / C = Rs. 9,71,00,000 x 4,24,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide his order dated 17/09/2010. The issue had been dealt by the worthy CIT(A)-I, Ludhiana by making the following observations:- "As per provisions of section 14A any expenditure incurred in relation to income no includible in total income shall not be allowed as deduct ion. The aforesaid sect ion was introduced by the Finance Act 2001 with retrospective effect from 1.4.1962. Though in the original provisions of section 14A there was no method prescribed for computing the amount of expenditure incurred in relation to such income not includible in total income and such method was brought on the statute by an amendment made by Finance Act 2006 w.e.f. 1.4.2007 the f act remains that even before such method was prescribed by way of amendment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 2 Lac is sustained out of tot al addition of Rs. 9,42,619/- and remaining addition of Rs. 7,42,619/- is deleted. " 5. Further the or der of the CIT(A) was upheld by the Hon'ble ITAT Chandigarh Bench 'A' by making the following observations:- We have heard the rival contentions and perused records. The constitutional validity of Section 14A( 2) (3) of I.T.Act and Rule 8D of the Income Tax Rules was challenged before the Hon'ble Bombay High Court in Godrej Boyce Mfg. Co. Ltd., 234 CTR 1. The court held that the provisions of Rule 8D were not ultra virus the provisions of sect ion 14A and it was also held that the same do not offend article 14 of the constitution. It was further held that the provision of Rule 8D was to be appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the disallowance made by the Assessing Officer is restricted to Rs. 2 Lacs. " The above clearly shows that the ld. CIT(A) has basically followed the order of the Tribunal and therefore, we find nothing wrong in the order of the ld. CIT(A) and confirm the same. 8 Ground No. 2 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee had incurred a sum of Rs. 36,66,284/- towards Director's Foreign Traveling. When the details were called for, it was submitted that a sum of Rs. 15,37,586/- was incurred on Air Tickets /Air Fare and visa fee. The Assessing Officer observed that out of the balance expenditure, the assessee has incurred some personal expenses and therefore, a sum of Rs. 2,12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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