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M/s. Yew Investment Pvt. Ltd. Versus ACIT-10 (2) Mumbai

2016 (4) TMI 309 - ITAT MUMBAI

Disallowance u/s 14 A - Held that:- We find that the assessee had earned dividend income of ₹ 1. 08 lacs, that it had made a disallowance of ₹ 17, 503/- on its own as per the provisions of Sec. 14A of the Act, that the AO had made a dsisallowance of ₹ 2. 02 lakhs, that the AO had not mentioned as to how much expenditure was incurred by the assessee for earning exempt income, that submission made by the assessee was not considered properly by the AO. We are of the opinion that d .....

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essee in its computation of income had made the said disallowance. In these circumstances, we are of the opinion that order of the FAA was not justified. Reversing his order, we decide first Ground in favour of the assessee .

Addition on notional interest - Held that:- We find that the AO had added a sum of ₹ 34, 038/- to the income of the assessee on notional basis. In our opinion, if the income has not accrued/received by the assessee it cannot be added to its income, unless p .....

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rni -(DR) For the Respondent : Shri Ajay Singh-(AR) ORDER Per Rajendra A. M. Challenging the order dated 12/06/2014 of the CIT (A)-22, Mumbai, the assessee has raised two grounds in its appeal. Assessee-company engaged in the business of investment in shares, filed its return of income on 28/07/2010, declaring total income of ₹ 12. 63 Lacs. The Assessing officer(AO) completed the assessment, under section 143(3) of the Act, on 19/10/ 2012, determining the income of the assessee at ₹ .....

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8D of the income tax rules, 1962 (Rules), that no interest-bearing funds were incurred by the assessee for making investments, that no other administrative expenses could be attributable to the earning of the dividend. However, the AO held that assessee had not advanced any concrete evidence to show that no expenses could be attributable to the earning of the dividend. Finally, he disallowed ₹ 2. 02 lakhs, invoking the provisions of section 14 A r. w. Rule 8D of the rules. 3. Aggrieved by .....

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he assessment order, the FAA held that assessee was deriving income from business of lending and financing, that the surplus one was invested in shares of listed companies and other investments, it had incurred admitted expenses of ₹ 12. 30 Lacs. Referring to the provisions of section 14 A of the Act and Rule 8D of the Rules, he held that the AO was duty bound to determine the expenditure incurred in relation to income which did not form part of the total income under the Act, that the AO .....

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l Representative (DR) supported the order of the FAA. 5. We have heard the rival submissions and perused the material on record. We find that the assessee had earned dividend income of ₹ 1. 08 lacs, that it had made a disallowance of ₹ 17, 503/- on its own as per the provisions of Sec. 14A of the Act, that the AO had made a dsisallowance of ₹ 2. 02 lakhs, that the AO had not mentioned as to how much expenditure was incurred by the assessee for earning exempt income, that submis .....

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nd that was the only item which could have been disallowed. The AO himself had mentioned that assessee in its computation of income had made the said disallowance. In these circumstances, we are of the opinion that order of the FAA was not justified. Reversing his order, we decide first Ground in favour of the assessee . 6. Second Ground is about notional interest of ₹ 34, 038/-. During the assessment proceeding the AO found that the assessee had advanced sum of ₹ 5 lakhs to its brok .....

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st rate was hovering to an average of 6-7% approximately. Loan advanced to its broker was received back by the assessee in the year under consideration, that it had advanced loan to other parties after taking into consideration availability of funds, that the different lending rates at different times were just and rational to carry out the business. However, the AO was not satisfied with the reply of the assessee and added ₹ 34, 038/- (difference between the lending rates) to the total in .....

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