TMI Blog2012 (12) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, we have heard Shri Rajiv Saxena, learned counsel for the assessee and Shri Rajesh Kumar, learned Sr. DR. The crux of arguments on behalf of the assessee is that while making the disallowance the learned AO has ignored the conditions enshrined under Rule 8D by further submitting that no noting has been made by the AO regarding correctness/incorrectness of the account, neither any loan was taken nor any interest was paid. The learned counsel relied upon the decision of the Mumbai Bench of the Tribunal (ITA No.3889/Mum./2011, order dated 25th July, 2012). On the other hand, the learned Sr. DR strongly defended the order of the learned CIT(A). Our attention was invited to various pages of the Paper Book and more specifically Pages 38 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Rules and as per Rule 8D(iii), % of the average of the value of investment, which comes to ₹ 3,81,927/- has been made. Finally the amount of ₹ 2,71,690/- has been disallowed under sec. 14A of the Act. Under the circumstances now question arises whether the principle of apportionment, embedded in sec.14A has any application where no expenditure has been claimed to have been incurred in relation to exempt income. Admittedly section 14A is applicable where any expenditure is incurred where taxable and non-taxable income is received but when it is possible to determine the actual expenditure in relation to exempt income or when no expenditure has been incurred in relation to exempt income, then the principle of apportionm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sec. 14A is called for when AO is not satisfied with the claim of the assessee of having incurred no expenditure or some amount of expenditure in relation to exempt income. Such satisfaction can be reached and should be recorded on verification of the claim. We have perused the balance-sheet of the assessee as on 31st March, 2008 (Page 38 of the Paper Book) and profit loss account for the year ending on 31st March, 2008 (Page 39) wherein total expenditure itself have been claimed at ₹ 2,85,795/- which are in respect to administrative expenses, finance expenses, depreciation and preliminarily expenses. The AO has not made any noting regarding correctness or incorrectness of the account. It was also claimed by the assessee that nei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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