TMI Blog2014 (9) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend income of ₹ 10,245/- which has been directly credited to the bank through ECS. The interest of ₹ 69,901/- received on PPF, for which a journal entry was passed on 31-3-09 and similarly interest of ₹ 66,02,652/- on tax free bonds is credited by journal entries passed on 31-3-09. Thus, no expenditure has been incurred for earning exempt income. From the records, we also find that the expenditure mentioned by the A.O. was in relation to the professional income earned by the assessee which is taxable under the Income Tax Act, there is no reason to disallow the expenses incurred for earning the taxable income. The findings so recorded by the ld. CIT(A)has not been controverted by the Department by bringing any posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee is a film artist by profession. Assessee was in receipt of tax free income. During the course of assessment, the A.O. asked the assessee to explain as to why section 14-A read with Rule 8-D of the Income Tax Rules, 1962 is not applicable to him, in reply it was submitted that exempt income comprised of PPF, interest, equity dividend, interest on R.B.I. Relief Bonds which were either credited through ECS or recovered by passing a journal entry. As such, there was no expenditure referable to such exempt income within the meaning of section 14A of the Act and hence no disallowance is called for. However, the A.O. did not agree with the assessee's contention and disallowed an amount of ₹ 13,58,751/- by observing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed on 3 1-3-09. Thus, no expenditure has been earned for earning exempt income. Therefore, there is no proximate cause for disallowance in relationship with exempt income as held in CIT v Walfort Shares Stock Brokers Pvt. Ltd. 326 ITRJ (SC) and Godrej Boyce Manufacturing Co. Ltd v DCIT (2010) 328 ITR 81 (Bom)for attracting the provisions of section 14A. The Honble TAT has confirmed the last year's order in ITA No.6110/Mum/2011 (AY.2008-09) dated 8.8.2012. In view of these facts and following the decision of jurisdictional ITAT in assessee's own case, the disallowance of ₹ 13,58,751/- is deleted. The Ground Nos. 1 to 3 are allowed. 4. We have considered the rival contentions and found that exempt income of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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