TMI Blog2015 (8) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. From the details of the expenses, it is clear that most of the expenses are specific in nature and exclusively incurred for the business activity of the assessee. Therefore, the expenses on account of auditor fee, legal and professional fees, profession tax, business support fees cannot be said to have any direct or proximate nexus with the activity of investment or earning the exempt income. Thus the disallowance u/s 14A can be made only to the extent of allocation of these expenses which has direct or proximate nexus with earning of exempt income. From the details of the expenses, we find that the prining and stationary expenses and bank charges & commision are only two items which could have direct or proximate nexus with the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in shares. 2. The Assessing Officer noted that the assessee had shown investment as on 31.3.2010 at ₹ 37.49 crores as compared to ₹ 45.95 crores in the preceding year. The Assessing Officer asked the assessee to furnish the explanation with regard to disallowance as per section 14A r.w.Rule 8D(2)(iii). In response, the assessee submitted that the company has disallowed ₹ 25,000/- on account of administrative expenses in its computation of income as certified by the tax audit report. It was further submitted that the direct expenses of ₹ 76,738/- on account of demant charges are separately disallowed and, therefore, the total disallowance worked out to ₹ 1,01,738/-. Without prejudice, the working as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of his contention he has relied upon the decision of this Tribunal in the case of Garware Wall Ropes Ltd. Vs. ACIT dated 15.01.2014 in ITA No. 5408/Mum/2012 as well as in the case of J.M. Financial Ltd. Vs. JCIT dated 26.03.2014 in ITA No. 4521/Mum/2012. The Ld. Authorized Representative has also placed reliance on the Judgment of Hon ble Delhi High Court in the case of CIT Vs. Oriental Structural Engineers Pvt. Ltd. dated 15.01.2013, wherein the Hon'ble High Court has upheld the order of Delhi Benches of this Tribunal, whereby, the disallowace was restricted to 2% of the dividend income. 5. On the other hand, the Ld. DR has submitted that Rule 8D is applicable for the year under consideration, therefore, the disallowance has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the total expenses debited to the P L Account. From the details of the expenses, it is clear that most of the expenses are specific in nature and exclusively incurred for the business activity of the assessee. Therefore, the expenses on account of auditor fee, legal and professional fees, profession tax, business support fees cannot be said to have any direct or proximate nexus with the activity of investment or earning the exempt income. Thus the disallowance u/s 14A can be made only to the extent of allocation of these expenses which has direct or proximate nexus with earning of exempt income. From the details of the expenses, we find that the prining and stationary expenses and bank charges commision are only two items which could ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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