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2016 (7) TMI 1128 - ITAT DELHI

2016 (7) TMI 1128 - ITAT DELHI - TMI - Disallowance u/s 14A - Held that:- The assessee has not claimed any expenditure against the investment income. The AO has made the addition on estimate basis which is not prescribed under the law. There is nothing on record to controvert the submissions made on behalf of the assessee. - In view of the aforesaid facts, have no reason to disagree with the claim of the assessee that no further expenditure over and above the expenses already disallowed in t .....

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by the separate assessees against the respective orders of Ld. CIT(A)-XXV both dated 10.9.2014 for the assessment year 2010-11. Since the issue involved in these appeals are common and identical, hence, were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 6205/Del/2014(AY 2010-11). 2. The grounds raised in ITA No. 6205/Del/2014 (AY 2010-11) read as under:- i) That the order passed by the Ld. CIT(A) is against the law, facts and .....

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ITA No. 6204/Del/2014 (AY 2010-11) read as under:- i) That the order passed by the Ld. CIT(A) is against the law, facts and circumstances of the case and must be quashed. ii) That the addition made of ₹ 2,26,813/- u/s. 14A read with Rule 8D of the Income Tax Rules is uncalled for, since the assessee has not claimed any expenditure against the investment income, except minor amount of ₹ 8,880/- and, therefore, the question of disallowance does not arise and be deleted. iii) That the a .....

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stment in mutual funds etc. Notice u/s 148 of the IT Act,1961 was issued on 19.06.2012 after recording the reasons that income has escaped assessment within the meaning of section 147 of the IT act,1961 in the case of the assessee the assessment year 2010-11 and duly served upon the assessee. After providing a reasonable opportunity to the assessee, notice s u/s 142(1)/143(2) of IT Act, 1961 were issued on 2.11.2012, which were duly served upon the assessessee. In compliance to the above referre .....

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ns, assesssee made an appeal before the Ld. CIT(A) who vide impugned order dated 10.9.2014 has partly allowed the appeal of the Assessee, but affirmed the addition made by the AO u/s. 14A of the Income Tax Act, 1961. 6. Against the order of the Ld. CIT(A) assessee is in appeal before the Tribunal. 7. At the outset, Ld. Counsel for the assessee submitted that the assessee has not claimed any expenditure against the investment income, except the minor amount of ₹ 56/- and therefore, the ques .....

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oticed that the disallowance made in the assessment order is based on estimation basis under section 14A of the I.T. Act. In this connection, the legal position with regard to the applicability of Rule 8D of the IT Rules and also the provision of section 14A of the IT Act is now well crystallized by the later decisions of the Supreme Court In the case of Walfort Share & Stock Brokers, which has been followed and applied by the Bombay High Court in the case of Godrej Boyce and the Jurisdictio .....

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isallowance has to be effected. All expenditure incurred in the earning of income which does not form part of the total income has to be disallowed subject to compliance with the test adopted by the Supreme Court in Walfort and it would not be permissible to restrict the provisions of Section 14A by an artificial method of interpretation. …….. Hence, the intention of section 14A is clearly to disallow all expenses relating to the non taxable income, and to curb the practice of clai .....

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in section 14A(1) clearly mean that there must be actual expenditure. Of course, the actual expenditure must be for earning the exempt income. We have already pointed out above, that we do not subscribe to the narrow interpretation sought to given to the words "in relation to" which the learned counsel for the assessees are espousing. Thus, we will have to consider the argument of the asssessees in respect of the expression "expenditure incurred" in the context of the ITA 68 .....

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