9911796707
TMI Blog2015 (10) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... raises two grounds, which we shall take up in seriatim: '1. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in directing the AO to compute disallowance u/s.14A in accordance with Rule 8D, when the same is not applicable for the assessment year in appeal. 2. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of Rs. 2,92,200/- on account of finance charges paid to the Bank towards documentation and process expenses for securing finance.' 3. The brief facts in relation to Gd #1 are that the assessee was during the assessment proceedings found to have earned dividend income at Rs. 48,953/-, as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since directed to be excluded by the ld. CIT(A), would work out to only Rs. 11,431/- (PB pg. 3). 4.2 The ld. D.R., on the other hand, relied on the orders of the authorities below, stating that the disallowance under section 14A is a statutory disallowance, so that it would obtain where the assessee is not able to establish the source of funding of its different assets. Rule 8D, though not mandatory for the current year, is only a reasonable method, premised on a proportionate funding (of all assets) where a direct or clear nexus is not, as in the instant case, shown by the assessee, so that there is no infirmity in the same being applied for the current year. The disallowance qua administrative expenses stands reduced to a minimal amount, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich emerges is that the assessee had utilized its own funds for the purpose of making the investments. The fact that the assessee has utilized its own funds in making the investments would not be dispositive of the question as to whether the assessee had incurred expenditure in relation to the earning of such income. Even if the assessee has utilized its own funds for making investments which have resulted in income which does not form part of the total income under the Act, the expenditure which is incurred in the earning of that income would have to be disallowed. That is exactly a matter which the Assessing Officer has to determine. Whether or not any expenditure was incurred by the assessee in relation to the earning of non-taxable inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly other ground raised is in respect of disallowance of Rs. 2,92,200/- on account of documentation and other miscellaneous charges paid for securing bank finance. The same stands disallowed on the basis that the impugned payment falls within the ambit of 'interest', statutorily defined under section 2(28A) of the Act, so that being incurred prior to the date of the acquisition of the asset being financed, the same would stand to be included as a part of the cost of the relevant asset and, accordingly, is disqualified for being allowed under section 36(1)(iii) read with proviso thereto. 7. We have heard the parties, and perused the material on record. The ld. CIT(A) has considered the impugned expenditure, which is primarily (Rs.2,84,720/-) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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