TMI Blog2015 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case, the CIT(A) held that the Assessing Officer has not placed any material on record nor has he made any clear cut finding to prove that any expenditure had been incurred by the assessee and thus disallowance u/s. 14A read with Rule 8D is not warranted instead should have been remanded back the matter to the Assessing Officer to verify the expenditure incurred while earning the dividend income. Thus finding of the CIT(A) that the disallowance of ₹ 16,00,583 against dividend income of ₹ 96,622/- was not proper. In view of the above the matter is remanded back to the Assessing Officer for examining the expenditure incurred against the investment as against the dividend income earned by the assessee. - I.T.A. No. 6652/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sheet entry dated 24/5/2010 as to why the disallowance on investments be not made as envisaged in Section 14A of the Income Tax Act, 1961. In reply to this query, the assessee replied as under: In respect of income not forming part of total income under Section 14A of the Income Tax Act wherein it was specifically provided that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which do not form part of total income under the Act. Hence the income from property of ₹ 48,000/- disclosed in computation of income shall not fall under part of total income of the company. 4. The AO held that as making investments is not the business of the assessee, the proportionate expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,95,26,224 Investment at the close of the year i.e, 31/3/2008 5,34,94,339 Average 4,65,10,281 One-half percent of the above average amount 2,32,551 4 Total amount as per Rule 8D (u/s 14A) 16,00,583 5. The CIT(A) held that the investment at the beginning of the year was ₹ 5,03,41,498/- and at the end of the year it was ₹ 5,34,94,339/-. Thus, there was increase in the investment to the tune of ₹ 31,52,841/-. This increase in investment was stated to be made out of the funds avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning this exempt income. Therefore, the action of the AO in disallowing the same of ₹ 16,00,583/- against the dividend income of ₹ 96,622/- u/s 14A read with Rule 8D is not just and proper as there is no expenditure incurred by the assessee for increase in the investment. Though the Assessing Officer has given the finding that as making investment is not the business of the assessee accordingly the proportionate expenditure on the amounts spent on these investments needs to be disallowed he has not stated any specific satisfaction while applying Section 14A read with Rule 8D in this particular case. The provision of Section 14A of the Act incorporates that the assessing officer shall determine the amount of expenditure incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.Com 390 (Delhi HC). The Hon ble Supreme Court in case of CIT vs. Walfort Share and Stock Brokers (P) Ltd. 326 ITR 1 (SC) wherein it was held that For attracting Section 14A, there has to be proximate cause for disallowance, which is its relationship with the tax exempt income. In case of CIT-II vs. Hero Cycles Ltd. (ITA No. 331/2009 (O M): decided on 04.11.2009) the Punjab and Haryana High Court held that Disallowance under Section 14A requires finding of incurring expenditure where it is found that for earning exempt income no expenditure has been incurred, disallowance under Section 14A cannot stand. 10. Besides that the CIT(A) has given a finding that there was no expenditure incurred by the assessee for increase in investme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
