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Pradeep Khanna Versus ACIT, Circle-23 (1) , New Delhi

Disallowance u/s 14A - Held that:- We find from bare reading of the assessment order that AO has clearly recorded his satisfaction that the assessee’s stand that no expenditure had been incurred in earning exempt income was incorrect and such arguments were completely misconceived. The observations have specifically been made in para 7.1 of the assessment order. He clearly observed that though there were no direct expenses shown by the assessee in his books of account exclusively for earning suc .....

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this count - Decided against assessee - ITA no. 6643/Del/2013 - Dated:- 5-11-2015 - SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE: JUDICIAL MEMBER For The Appellant : Shri Rajesh Mahana Adv. and Shri Manu K. Giri Adv. For The Respondent : Shri T. Vasanthan Sr. DR ORDER PER S.V. MEHROTRA, A.M..: This appeal, preferred by the assessee, is directed against the order dated 30-10-2013, passed by the ld. CIT(A)-XI, New Delhi in appeal no. 202/10/11/(232/13-14), relating to A.Y. 2008- .....

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d to tax u/s 111A of the Income-tax Act. He further noticed that assessee had credited in the P&L A/c a sum of ₹ 10,87,898/- on account of dividend received. Besides, long term capital gain on sale of listed securities amounting to ₹ 11,36,768/- had also been shown. The dividend and long term capital gain had been claimed exempt u/s 10. The AO noticed that in the P&L A/c the assessee had claimed administrative and establishment expenses of ₹ 65,78,808/-. The AO required .....

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not applicable in the case of assessee. Copy of account statement of mutual fund is being enclosed. 3. The AO did not agree with the assessee s reply and observed as under: I have considered the submission made by Ld. Counsel but do not agree with the same that no expenditure relating to investment activities have been debited in P&L Ale. The details of investment of assessee was called for and according to that. the investment in shares and mutual funds as on 01.04.2007 was ₹ 2,42,50 .....

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uring the year has made investment of ₹ 1,28,33,890/- in mutual fund. It is not the quantum of exempt income which is material. What important is that whether or not expenditure has been incurred on earning exempt income. 4. He referred to Rule 8D and pointed out that in cases where assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the amount of expenditure in relation to such income is to be worked out in accordance with .....

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ment as on first day of the previous year: ₹ 2,42,50,827/- (b) Value of investment on the first day of the previous year: ₹ 2,44,71,202/- (c) Total of the above: ₹ 4,87,22,029/- (d) Average value of investment ₹ 2,43,61,014/- (e) One half percent of the average value of investment: ₹ 1,21,805/- 5. Ld. CIT(A) dismissed the assessee s appeal, inter alia, observing I para 7.2 as under: 7.2. The appellant has also argued that the AO has not recorded his satisfaction bef .....

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erred in law and on facts in making of disallowance of expenditure under Section 14A of Income Tax Act, 1961 of ₹ 1,21,805/- without recording any satisfaction or relying on the evidence of expenditure so incurred on the scrutiny of the accounts. (b) Further the CIT (A) has further failed to appreciate that the assessee has not incurred any expenditure against the earning of exempted income and the expenditure cannot be presumed. 6. That the CIT (A) and AO both have failed to appreciate th .....

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