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TMI Blog2015 (10) TMI 2511X X X X Extracts X X X X X X X X Extracts X X X X ..... l of revenue is against the order of CIT(A) deleting the expenditure on account of consultancy fee of Rs. 46.10 lacs as not disallowable u/s. 14A of the Act. For this, revenue has raised following two grounds: "1. That, on the facts and in circumstances of the case and in law, the CIT(A) erred in allowing relief to the assessee company in holding that expenditure of consultancy fee of Rs. 46,10,000/- was in respect of earning the taxable income and it cannot be subjected to disallowance u/s. 14A of the Income Tax Act, 1961 without giving a finding that such consultancy fee was incurred for earning taxable income. 2. That on the facts and circumstances of the case, and in law, the Ld. CIT(A) has erred in directing the Assessing Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veremphasized to say that investment decisions are very complex in nature. The investment requires availability of funds and consequential blocking of funds, besides, investment decisions are generally taken by the management personnel or other professional experts employed for the purpose for which administrative, managerial and establishment expenses are incurred. It is, therefore, not correct to say that no or nominal expenses were incurred in managing such huge investments giving rise to tax exempt dividend income. In the instant case, the assessee has not maintained any separate details or accounts in order to account of expenditure incurred in respect of such volume of investment activity and for that matter, in relation to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to earn the income which does not form part of the total income. However, I do not agree with the contention of the A/R that 1 % of the exempt dividend income can reasonably be considered as disallowable expenses u/s. 14A as has been held by the Hon'ble ITAT, Kolkata as because the judgements referred to are related to the AYs prior to the AY 2008-09 when the provisions of Rule 8D was not applicable. At the same time, I am of the view that the disallowable expenses cannot exceed the total expenses claimed by an assessee during a year as has been held by the Hon'ble Delhi High Court and other High Courts of India. In the light of the above discussion & observation, perusing the entire facts of the case, the AO is directed firstly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... figures calculated considering the total expenses incurred during the year and reducing the expenses directly related to the earning of the taxable income. In support its contention, the appellant furnished the details of such expenses and working of the disallowable expenditure arrived at Rs. 2,60,221/- as above. It is observed that the assessee had considerable business income from management consultancy to the extent of Rs. 73,50,000/- during the relevant year and majority of expenses were incurred by the company for earning such business income. Before us it was explained that for earning the management consultancy fees of Rs. 73,50,000/-, the assessee has to incur direct expenses of Rs. 46,10,000/- as Consultant Fees. Therefore, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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