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TMI Blog2015 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of long term investments in the form of shares, stock, mutual fund and bonds. The assessee filed its return of income declaring income of Rs. 32,83,850/-. The assessing officer noticed that during the year assessee had earned dividend income of Rs. 2,64,79,639/-. The assessing officer required the assessee to file details of expenditure, incurred for earning the dividend income and also to explain as to why no disallowance be made u/s 14A as per Rule 8D. The assessee submitted that it had not incurred any expenditure for earning dividend income since it was a passive activity. Assessee also objected to the proposed invocation of section 14A and applicability of Rule 8D of the IT Rules. The assessee objected as under: (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further pointed out that discussion about the apportionment of direct or indirect expenditure towards taxable and exempt income has become academic in view of rule 8D which prescribes mechanism for working out the disallowance u/s 14A. He, accordingly, computed the disallowance u/s 14A at Rs. 55,35,655/-. 2.3. Before ld. CIT(A) it was submitted that assessee had filed return declaring income at Rs. 32,83,850/- after making disallowance of Rs. 2,36,911/- u/s 14A on account of exempt income at Rs. 2,71,67,888/-. The assessee submitted that assessing officer did not consider the disallowance made by the assessee and solely relied on the decision of Special Bench in the case of Durga Capital Management Pvt. Ltd. and Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ITAT Delhi Bench 'G' in assessee's own case in ITA no. 3271/Del/2011 for A.Y. 2008-09. Ld. CIT(A) while partly allowing the assessee's appeal, restricted the disallowance to Rs. 6,21,826/-, which was over and above Rs. 2,36,911/-, already disallowed by the assessee in its computation of income. 2.5. Being aggrieved with the order of ld. CIT(A), both the assessee and the department are in appeal before us. Assessee's appeal (ITA no. 3765/Del/12): 3. Assessee has raised following grounds of appeal: "1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in disallowing Rs. 6,21,826/- in addition to the disallowance of Rs. 2,36,911/- made by the assessee u/s 14A of the Income Tax Act, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A could not exceed beyond Rs. 8,58,737/-. Out of this, assessee himself had made a disallowance of Rs. 2,36,911/- as detailed earlier and, therefore, the short issue, before us, is that though applicability of Rule 8D is not disputed, but, whether the quantum of disallowance could exceed even when the expenditure was not claimed by the assessee, or not. We find that in A.Y. 2008-09 the ITAT has observed as under: "4. Ld. A.R. relying upon the orders of the authorities below contended that the record would show that the assessee had returned a taxable income of Rs. 1,69,93,970/- and exempt income of Rs. 4,05,57,728/-. The assessee had shown in regard to the taxable income ;and expenditure of Rs. 10,91,629/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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