TMI Blog2016 (1) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses deemed to be incurred for earning such income cannot exceed the exempt income itself. The view taken by the assessee is supported by certain legal decisions. The assessee itself disallowed an amount of ₹ 52,39,420/- in its computation of income as per tax audit report. Without going into so much of technicality, if, it is assumed that the claim of the assessee is wrong, then, no doubt, the claim of the assessee is not to be considered as a case of furnishing of inaccurate particulars or concealment of income. The decision relied upon by the assessee in the case of CIT Vs Reliance Petrochemicals (P) Ltd. (2010 (3) TMI 80 - SUPREME COURT) is applicable in the present case. Thus we are unable to agree with the order of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,150/- on 28-06-2012. During the scrutiny the AO noticed that the assessee has earned dividend income and it has disallowed a sum of ₹ 52,39,420/- u/s 14A and expenses relating to the exempt income of dividends, but the said disallowance was not in accordance with Rule 8D. The assessee contended before the AO that the assessee company derived interest income on loans given by it and capital gains on investments made and the expenses incurred are attributable to earning of both taxable income and exempt income; so the proportionate expenses relating to exempt income were suo moto disallowed. The AO did not accept the working of the assessee and worked out the disallowance u/s 14 read with Rule 8D at ₹ 77,87,712/-. As the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 0.5% of the average investment or actual dividend received whichever is lower. Thus, the assessee had followed the ratio that if no dividend is actually received, no disallowance was computed under Rule 8D (iii) and when the dividend is received, expenses deemed to be incurred for earning such income cannot exceed the exempt income itself. In this regard, the assessee contended that it suo moto made disallowance u/s 14A of the Act as per certificate of the tax auditors given in the audit report and this cannot be treated as furnishing of inaccurate particulars of income attracting penalty u/s 271(1) (c) of the Act and hence, the penalty order in question is not sustainable in the eyes of law. The learned AR for the assessee also placed r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend is received, expenses deemed to be incurred for earning such income cannot exceed the exempt income itself. The view taken by the assessee is supported by certain legal decisions. The assessee itself disallowed an amount of ₹ 52,39,420/- in its computation of income as per tax audit report. Without going into so much of technicality, if, it is assumed that the claim of the assessee is wrong, then, no doubt, the claim of the assessee is not to be considered as a case of furnishing of inaccurate particulars or concealment of income. The decision relied upon by the assessee in the case of CIT Vs Reliance Petrochemicals (P) Ltd. (supra) is applicable in the present case. 6. Moreover, the same issue has been decided by the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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