TMI Blog2015 (10) TMI 1488X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of appeal of the assessee is thus partly allowed. Disallowance out of motor car expenses and depreciation at the rate of 33.3% as against the claim of the assessee that the same be restricted to 25% - Held that:- The disallowance at the rate of 25% of the motor car expenses and also out of the claim of depreciation is a reasonable disallowance which assessee herself has offered. We accordingly restrict the disallowance in relation to motor car expenses and depreciation to the extent of 25% instead of 33.3% made by the lower authorities. - Decided in favour of assessee in part. - ITA No. 7771/M/2011 - - - Dated:- 8-4-2015 - R. C. Sharma, AM And Sanjay Garg, JM,JJ. For the Petitioner : Shri Sameer G Dalal, AR For the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society Limited aggregating total exempt income of ₹ 32,04,703/-. He, therefore, observed that disallowance of expenditure in relation to earning of the above exempt income was required to be made. The AO observed that no interest expenditure had been incurred by the assessee for making the investments. He, however, worked out the disallowance under Rule 8D2(iii) of the Income Tax Rules, 1962, i.e. at the rate of 0.5% of the average value of investment at ₹ 2,85,860/-. 5. In appeal, the Ld. CIT(A) observed that the claim of the assessee that she had not incurred any expenditure in relation to earning of exempt income could not be said to be correct. He also observed that as per the decision of the Hon'ble Bombay High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's method is not satisfactory. It has been further held that Rule 8D is not retrospective and applies from A.Y. 2008-09. For the years for which Rule 8D is not applicable and in the event of that the AO is not satisfied with the explanation/working given by the assessee, disallowance under section 14A has to be made on a reasonable basis. Almost similar view has been expressed by Hon'ble Delhi High Court in the case of 'Maxopp Investment Ltd. Others' vs. CIT (247 ITR 162). It may be further observed that it is not a case where no exempt income was received by the assessee despite making investments for earning exempt income. It is also not the case of the Revenue that the exempt income earned by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being 75% of the motor car expenses and depreciation on motor car. The AO noted that the assessee in the earlier assessment years had suo moto disallowed 1/3rd of the motor car expenses. The AO, therefore, disallowed 1/3rd of the motor car expenses and depreciation on motor car for this year also which was worked out at ₹ 13,814/- and ₹ 1,19,590/- respectively. The Ld. CIT(A) upheld the finding of the AO. 9. Before us, the Ld. A.R. of the assessee has submitted that the assessee is engaged in the business of hoarding contractor and is a film artist. That owing to the nature of the business and profession of the assessee, the disallowance at the rate of 33.3% was on higher side. He has further submitted that having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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