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2016 (5) TMI 282 - ITAT DELHI

2016 (5) TMI 282 - ITAT DELHI - TMI - Disallowance u/s 14A r.w.r.8D - Held that:- Ratio of the judgment in case of Joint Investment Pvt. Ltd. (2015 (3) TMI 155 - DELHI HIGH COURT ) is applicable to the facts and circumstances of the case because, in the instant case also, the AO by computing the disallowance exceeded the amount of income earned by the assessee; that no objective satisfaction has been recorded to reject the computation made by the assessee who has voluntarily made the disallowanc .....

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g into the merit.

We, therefore, restrict the disallowance of ₹ 7,01,194/-, particularly when the assessee has not proved on record as to how his figure of ₹ 54,217/- was worked out. - Decided in favour of assessee partly - ITA No. 2358/Del./2013 - Dated:- 29-4-2016 - Shri N. K. Saini, Accountant Member And Shri Kuldip Singh, Judicial Member For the Petitioner : Shri Ved Jain, Advocate For the Respondent : Shri K.K. Jaiswal, DR ORDER Per Kuldip Singh, Judicial Member Appel .....

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during the year by invoking section 14A r.w.r. 8D of Income Tax Act, 1961 without considering the facts and circumstances of the case. 2. The appellant craves leave to add, amend or alter and substitute any of the above mentioned grounds of appeal before or at the time of hearing of appeal. 2. Briefly Stated, the facts of this case are : during the scrutiny proceedings, the assessee shown to have earned exempt income in the form of dividend under section 10(34) of the Income-tax Act, 1961 (herei .....

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with Rule 8D of the act and assessed the total income at ₹ 20,25,146/- 3. Assessee has carried the matter before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. T .....

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hat the AO has applied the provisions of Rule 8D of the Rules without recording its satisfaction and made disallowance of ₹ 71,44,183/-; that the disallowance cannot be more than exempt income earned during the year as has been done by the AO/CIT(A) in this case. However, on the other hand, the ld. DR for the revenue relied on the orders passed by the AO/CIT(A). 6. Undisputedly, assessee earned exempt income by way of dividend to the tune of ₹ 7,01,194/- (inclusive of ₹ 55,000/ .....

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1,35,45,453 x 3,45,71,230 / 6,71,72,713 = 69,71,327/- (iii) ½% of Avg Investment = ½% of 34571230 = 172856 Total Disallowance 69,71,327 + 1,72,856 = 71,44,183 In view of the above a sum of ₹ 71,44,183/- is disallowed towards expenses relatable to earning of exempt income u/s 14A (r/w Rule 8D) of the Income Tax Act. 8. Perusal of the order passed by the AO as well as ld. CIT (A) apparently goes to prove that they have computed the disallowance without recording their satisfac .....

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concerned, it is settled principle of law that the disallowance cannot exceed in any case the exempt income earned during the year by the assessee. In the instant case, assessee has undisputedly earned the exempt income of ₹ 7,01,194/- whereas the AO has computed the disallowance at ₹ 71,44,183/- which exceeds exempt income. This issue has been dealt with by the Hon ble jurisdictional High Court in judgment cited as Joint Investments Pvt. Ltd. vs. CIT - (2015) 372 ITR 694 (Del.). 10. .....

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#39;s claim for attributing ₹ 2,97,440/- as a disallowance under Section 14A had to be rejected. In Taikisha [2014 (12) TMI 482 - DELHI HIGH COURT] says that the jurisdiction to proceed further and determine amounts is derived after examination of the accounts and rejection if any of the assessee's claim or explanation. The second aspect is there appears to have been no scrutiny of the accounts by the AO - an aspect which is completely unnoticed by the CIT (A) and the ITAT. The third, .....

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