TMI Blog2016 (3) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... . The manner or the account from which common expenditure, i.e., which could be ascribed to both sets of activities, is incurred or routed, is immaterial, being borne by and claimed by the assessee. Suo motu disallowance by the assessee or its’ claim of no expenditure having been incurred to earn tax exempt income is to be found non-satisfactory by the A.O. before resort to computation (of disallowance) under rule 8D(2) could be made. This, as afore-stated, is the statutory prescription, on which therefore there is no quarrel. Then, it is further stated that sufficiency of interest-free funds would operate to the non invocation of the disallowance u/s. 14A/rw Rule 8D(2). No disallowance on account of interest obtains in the instant case. In fact, the finding of sufficient funds could only be with regard to the assessee’s accounts, with reference to which, as explained, the satisfaction or dissatisfaction of the assessee’s claim is to be made.Under the circumstances and, in view of the foregoing, we find little merit in the assessee’s case and, accordingly, uphold that of the Revenue - Decided against assessee - I.T.A. No. 27/Mum/2012 - - - Dated:- 17-2-2016 - Shri Joginder S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business, as evident from the balance-sheet (as on 31.3.2008) of M/s. Datamatics Financial Software Services Ltd.(PB pgs. 23-32), the expenditure pertains only to the assessee s business. There could be no presumption with regard to the assessee having incurred expenditure in relation to the income not forming part of the total income, i.e., merely because the assessee had earned such income. The A.O. could not proceed mechanically to apply rule 8D, but has to record his dissatisfaction with the correctness of the assessee s claim, giving cogent reason for not accepting the same. This sums up the assessee s case. 4. We have heard the parties, and perused the material on record. 4.1 Section 14A reads as under: Expenditure incurred in relation to income not includible in total income. 14A. (1) For the purposes of computing the total income under this Chapter no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A, it needs to be appreciated, is a statutory disallowance. The issue also has been examined, in the fact situation of the given case by the tribunal in different decisions, and toward which we may advert to its order in AFL P. Ltd. vs. Asst. CIT [2013] 28 ITR (Trib) 263 (Mum), reproducing from its relevant part: 6.3 It is, therefore, clear that the initial onus, even as stated by the ld. CIT(A), to make a claim in respect of the expenditure incurred in relation to the income that does not form part of the total income, is on the assessee. Once the assessee makes such a claim with reference to its accounts, the A.O. is bound to examine the same for the purpose of satisfying himself with regard to its correctness or otherwise, and where not satisfied, determine the same in accordance with the prescribed method. Further, therefore, though there is no specific requirement of recording dissatisfaction, it is incumbent on A.O. to do so, as in its absence it cannot be ascertained if he had actually examined the assessee s claim or proceeded mechanically. Two, his order being appealable, it is only where it bears his reasons, could the validity thereof and, thus, of his action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is being, managed. This would entail making new as well as disposing investments already made. Even the decision to hold an investment requires a periodic review of its performance as well as of the investment environment/scenario. Could this be without any associated cost? Even as much as maintaining and keeping the records, including safe-keeping of the securities (where not dematerialized), entails cost. A meeting of the assessee with his investment consultant or broker in relation to a IPO or any other emerging investment option is to be conducted (say). This would require visit by the consultant to the assessee s premises or vice versa. This explains the appropriation of the expenditure claimed on telephone, electricity, conveyance, etc. The job may itself be assigned - wholly or partly, to some staff, even as a part of his duties, so that the staff cost may also be involved. Even ignoring staff and advertisement cost, leaves a balance expenditure at ₹ 184 lacs. It may be argued that the expenditure incurred and claimed is as per the books of the assessee s business. The argument is to no moment. Firstly, the assessee holds investment (Rs.140.59 lacs) including tax-f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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