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2015 (10) TMI 1703 - ITAT DELHI

2015 (10) TMI 1703 - ITAT DELHI - TMI - Disallowance u/s 14A read with Rule 8D - whether no expenditure was incurred in earning of exempt income? - Held that:- On the facts and circumstances of the present case, the Ld. CIT(A) held that investment would have been made out of common/mixed funds, and therefore the ld. AO has worked out the disallowance at ₹ 26,40,830/- on a proportionate basis with reference to investment of ₹ 166.50lacz out of total interest of ₹ 576.40 lacs pai .....

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0, set aside the issue back to the file of A.O to decide the disallowance of expenses u/s.14A r.w. Rule 8 D on the investments of shares in question as per the law, keeping in view the guidelines provided for the same in the case of Maxopp (supra), after affording opportunity of being herd to the assessee. - Decided in favour of assessee for statistical purposes - I.T.A .No. 1333/Del/2012 - Dated:- 1-9-2015 - SHRI T.S. KAPOOR AND SMT. BEENA PILLAI, JJ. For The Appellant : Sh. V.P. Gupta, Adv. Fo .....

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in earning of exempt income. He failed to appreciate that expenditure of ₹ 2 lacs offered by the appellant was reasonable and no further disallowance was called for. 2. That the CIT(A) also erred in making wrong observations that no evidence was produced to the effect that shares were acquired out of own funds and profits of the appellant ignoring the details/documents submitted before him. 3. The appellant company craves leave to alter, amend, vary and/or add any of the grounds of appeal .....

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9,01,250/-, being dividend received the shares of SRF Ltd., during the year. The assessee offered ₹ 2,00,000/- u/s.14A, during the course of the assessment proceedings on the ground that the amount represents 50% of salary of the concerned executive, who looks after the activities relating to investments. The assessee submitted before ld. A.O that since there was no activity during the year and dividend was received only from one company, the disallowance to the extent of ₹ 2 lacs wa .....

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nvestment (Average Value of Investment) ½% of abvoe as per Rule 8D 670.24 X 0.5% 3.3512 Total disallowance [Aggregate of (i), (ii) & (iii)] 26,4083 3. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A) after going through the submissions confirmed the actions of the Ld. A.O. Aggrieved by the Order of Ld. CIT(A), the assessee is in appeal before us now. 4. We have verified the above submissions by both the parties and perused the Stat .....

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. It has been claimed by the appellant before the Ld. CIT(A) that investment in SRF Shares was made in the F.Y. 2005-06 and in the shares of Purearth Infrastructure Ltd. it was made in the F.Y. 2006- 07 out of the cash flow generated by the company from its profits. It is claimed by the appellant that company has declared profit of ₹ 2331.61 lacs in the F.Y. 2005-06 and ₹ 2169.75 lacs in F.Y. 2006-07. It has been claimed by the assessee that company was having share capital and reser .....

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is maintained. The profit generated is also kept in a common hotch potch. It further observed that appellant had taken secured loan of ₹ 5057.62 lacs from Financial Institutions during the F.Y. 2006- 07. This has increased to ₹ 5529.71 lacs during the year. The appellant has availed cash credit and over draft facility from banks of ₹ 1130.53 lacs in F.Y. 2006-07 and ₹ 2138.71 lacs during the year under consideration. The secured loans obtained by the company are coming fr .....

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cts stated above that investment in the shares of SRF Ltd. and Purearth Infrastructure Ltd. was made out of the funds available in common account and there is no evidence that these investments were made from the profit earned by the company. The ld. CIT(A) thus confirmed the addition made by the ld. A.O. 7. We have perused the order passed by the authorities below and the decision of coordinate bench in assessee s own case for assessment year 2009-10 in ITA no. 5033/Del/2012 and 4582/Del/2012, .....

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