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TMI Blog2015 (3) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer of making disallowance of Rs. 6,55,913 under Section 14A of the Income tax Act, 1961 (the Act') . 2. The Appellant Company craves leave to add, alter, amend and / or withdraw all or any of the Grounds of Appeal as may be considered necessary either at or before the appeal hearing. ITA/241/Mum/2012-AY. 2007-08: Grounds of appeal for the AY. 2007-08 read as under: 1. On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) - IV, Mumbai ["CIT (A) "] has legally erred in confirming the action of the Assessing Officer of making disallowance of Rs. 6,19,500 under Section 14A of the Income tax Act, 1961 (the Act') . 2. The Appellant Company craves leave to add, alter, amend and / or with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Authority (FAA) .Before him, it was claimed that no expenditure was attributable to dividend income, that no new investment has been made and no expenditure was required for earning of dividend income. In support of its claim the assessee relied on the orders of the FAA for AY. s. 2004-05 and 2005-06. After considering the submissions of the assessee and the assessment order, the FAA held that no disallowance had been made on account of interest and the only disallowance is on account of administrative expenses allocable to dividend income, that the assessee had claimed that no new investments were is made or sold, that in whatever form the investments were maintained it required certain administrative efforts, that every investor always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agarpatta Township Development and Construction Co. Ltd. (46 Taxmann.com 284) with regard to recording of satisfaction. It was also argued that disallowance u/s 14A required a clear finding of incurring of expenditure, that in absence of same no disallowance could be made, that AO had not rebutted the submission of the assessee that no expenditure had been incurred to earn exempt income, that the disallowance made by the AO and confirmed by the FAA was not sustainable. He further relied on the case of Reliance Industries Ltd. (339 ITR 632) delivered by the Hon'ble Bombay High Court. It was also argued that in case of strategic investment no disallowance u/s 14A of the Act could be made. In this regard the AR relied upon the case of J. M. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning tax free income. Incurring of expenditure by an assessee, is the precondition for making disallowance u/s. 14A of the Act. The logic behind introducing the section was that the assessee should not claim or get two deductions-.i. e. offering no tax exempt income on one hand and claiming expenditure on other hand. Incurring of expenditure for earning exempt income has to be proved as a matter of fact. There cannot be any guess work or presumption about incurring of expenditure. If the assessee claims interest expenditure or other expenditure (administrative) for earning exempt income, definitely a disallowance can be made. But, if no claim is made then the AO should not invoke the provisions of section 14A. The assessee must have incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Gopal Purohit (336 ITR 287) has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. Analysis of the above two judgments lay down that the principle of consistency can be ignored only in certain conditions and without pinpointing the difference of facts for a particular year with the facts of earlier year/s consistency should be maintained. Considering the peculiar facts and circumstances of the case, we are reversing the order of the FAA. Effective ground of appeal raised by the assessee for the year under consideration, is allowed in its favour. ITA/850/Mum/2012-AY. 2008-9 6. The facts of the case under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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