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TMI Blog2015 (8) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (herein after 'the Rules). 3. Brief facts as recorded by the ld CIT(A) is that the assessee company belongs to Thapar group and is engaged in the mining business besides having made investments in group companies for control purposes. During the year, the Thapar group companies were reorganized into smaller groups whereby the shares held by the individuals or group companies handled by the family members were transferred to another company in the manner that control thereof comes to the family member who is to control the company post re-organization. The re-organization was handled by professionals and no person from the companies or on behalf of the individuals was invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest and financial expenditure of Rs. 2,03,68,251/- incurred on unsecured/ secured loans, Rs. 24,71,495/- towards Legal and Professional Charges and Rs. 19,22,510/- towards office and other expenses. Therefore, the provisions of section 14A of the Act read with rule 8D is clearly attracted in this case." 5. Aggrieved by said order of the AO the assessee preferred an appeal before ld CIT(A), who was pleased to delete the addition made by the AO and he held as follows:- "4.2 Now adverting to the case of the appellant company, it is seen that the appellant company itself has made the disallowance of expenditure u/s 14A r.w.r. 8D of Rs. 2,32,27,892/-. The claim of disallowance made by the appellant company was examined by the AO during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f expenditure u/s 14A made by the appellant. On merits also it is observed that the difference of disallowance of Rs. 6,45,557/- on account of legal and professional charges between the AO and the appellant are due to expenses which were made for the payment of consultants engaged in the mining operations which cannot be attributable by stretch imagination for the investments. Similarly, disallowance of Rs. 10,00,000/- on account of donation has been made twice by the AO, So far as the financial charges are concerned the difference of Rs. 14 ,313/- is on account of interest paid on late deposit of FBT. The same cannot be attributable as expenses for the investment of the appellant company. On these facts and circumstances of the case the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture cannot embark upon a determination of the amount of expenditure in accordance with prescribed method, as mentioned in sub-section (2) of sec. 14A of the Act. It is only if the AO is not satisfied with the correctness of the claim of the assessee, that the AO gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the Act in accordance with the prescribed method stipulated in Rule 8D of the Rules. While rejecting the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income, the AO would have to indicate cogent reasons for the same. It is, therefore, clear that determination of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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