TMI Blog2014 (1) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Pundole Exports must relate to the exempt income of the assessee - the disallowance made by the AO is reasonable and in accordance with the provisions of section 14A of the Act read with Rule-8D of the Act – the claim of the assessee ie no expenditure is incurred and assessee, has not been demonstrated conclusively and logically - the onus is on the assessee to demonstrate when a claim of exemption and deduction of income or expenditure is made - Thus, the assessee has not discharged his onus satisfactorily - the order of the CIT(A) upheld – Decided against Assessee. - I.T.A. No.423/M/2012 - - - Dated:- 3-7-2013 - Shri D. Manmohan And Shri D. Karunakara Rao, AM,JJ. For the Appellant : Shri M. M. Golvala For the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee reasoned that he is assessed in individual status and for the purpose of section 14A, he should be treated differently from that of other business concerns. Further, Ld Counsel mentioned that objection raised with regard to the satisfaction of the AO referred to in section 14A(2) of the Act with regard to the 'correctness of the claim of the assessee' was not met by recording in writing. Therefore, assessee's claim that nothing is incurring out of the administrative expenditure cannot be rejected and AO should not invoke the provisions of the said Rule-8D of the I T Rules,1962. Relevant facts relating to the issue are narrated. 4. The assessee is an art dealer / service provider. Assessee filed the return of income declaring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / firm houses. He argued that the assessee, being an individual, made investment without any expenditure on the personnel and no personal expenditure is booked to the P L Account and therefore, no disallowance is called for by the AO. As per the assessee, the dividend is received by way of ECS methods and credited to the Bank account directly without any human intervention. Alternatively, assessee submitted that at the maximum the disallowance u/s 14A should not exceed Rs.10,000/- to Rs. 15,000/-, if a reasonable approach is considered. CIT (A) considered the above submissions of the assessee and discussed the judgment of the Hon'ble jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd (328 ITR 81) and finally, held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 14A of the Act. Further, Ld Counsel filed number of decisions to support his arguments. He relied on the submissions made by the assessee before the lower authorities which form part of the paper book. Apart from other decisions, Ld Counsel specially relied on the decision of the Coordinate Bench of ITAT, Mumbai in the case of JK Investors (Bombay) Ltd vs. ACIT vide ITA No. 7858/Mum/2011 and others for the proposition that no disallowance is called for u/s 14A read with Rule-8D of IT Rules 1962. 7. On the other hand, Ld DR relied on the orders of the AO as well as CIT (A). Bringing our attention to the assessee's paper book page no.14, Ld DR mentioned that assessee debited various expenses to the P L Account of Pundole Exports, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no expenditure is incurred for investment in shares as well as earning of the dividend income. He also mentioned that some of the decisions are relevant to the period prior to the AY 2008-2009, therefore, in substance, they are distinguishable. Thus, Ld DR concluded stating that order of the CIT (A) does not call for any interference. 8. We have heard both the parties and perused the orders of the Revenue Authorities. We have also perused the para 2.3 of the impugned order, which contains discussion relating to the sustenance of the addition of Rs. 1,78,460/-. For the sake of completeness, the said para 2.3 is reproduced here under: "2.3. ...... The Bombay High Court in its judgment dated 12.8.2010 in Godrej Boyce vs. DCIT in IT Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, and such expenses accordingly apportioned towards earning of tax free income (dividend in the present case), which is disallowable under section 14A. In terms of the decision in Godrej Boyce, disallowance under section 14A is to be computed in accordance with Rule 8D w.e.f 2008-2009. It is only prior to AY 2008-2009 that it could be said that a reasonable disallowance is required to be made and Rule 8D was not applicable retrospectively. AO has thus rightly computed disallowance in terms of Rule-8D. The ground nos. 1 2 are accordingly dismissed." 8.1. It is the case of the CIT (A) that the relatable expenditure to the exempt income has to be disallowed u/s 14A of the Act if the composite expenditure includes the indirectly rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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