TMI Blog2016 (8) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... see has made investment of ₹ 2,04,527/- in M/s. Kirloskar Oil Engines Ltd. and other group concerns. The assessee has earned dividend of ₹ 3,56,000/-. The contention of the ld. AR of the assessee is that the assessee has not incurred any administrative expenditure on earning tax free income. It is not the case of the Revenue that the assessee has made investment from the interest bearing funds. We are of the considered view that the disallowance of ₹ 3,04,830/- made by the Commissioner of Income Tax (Appeals) is very much on the higher side. To meet the ends of justice disallowance of 5% of the exempt income earned would be fair and justified - ITA No. 1449/PN/2014 - - - Dated:- 17-6-2016 - SHRI R.K. PANDA, AM AND SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport M/s. Kirloskar Oil Engines Ltd. has provided required machinery free of cost and has provided space at a nominal rent. The assessee company is engaged in the business of manufacturing of bearings, bushes and thrust washers required for the engines manufactured by M/s. Kirloskar Oil Engines Ltd. The assessee filed its return of income for the impugned assessment year on 31-10-2007 declaring total income as Nil. The case of the assessee was selected for scrutiny under CASS and accordingly, notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was issued to the assessee on 17-09-2008. During the course of scrutiny assessment proceedings, the Assessing Officer made certain disallowances which inter alia inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Engines Ltd., therefore, the electricity bill is in the name of M/s. Kirloskar Oil Engines Ltd. The authorities below while making disallowance has observed that there are no connection between the consumption of electricity and the turnover of the assessee. The relation drawn by the authorities below in respect of turnover and electricity consumption is of no relevance. M/s. Kirloskar Oil Engines Ltd. in their books of account have claimed electricity expenses only to the extent shared by them. Therefore, it is not the case where electricity expenses have been claimed twice, once in the hands of assessee and again in the hands of M/s. Kirloskar Oil Engines Ltd. In respect of disallowance of ₹ 3,04,830/- u/s. 14A affirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and M/s. Kirloskar Oil Engines Ltd. The assessee has simply stated that the assessee is sharing 40% to 50% of the electricity bill with M/s. Kirloskar Oil Engines Ltd. There is no document on record to show any statistics or detail of the components produced during the year and the corresponding consumption of electricity for manufacture of the components. In so far as disallowance u/s. 14A is concerned the ld. DR submitted that the assessee must have incurred certain expenditure towards administrative cost of maintaining portfolio. The ld. DR prayed for dismissing the appeal of the assessee and upholding the findings of Commissioner of Income Tax (Appeals). 6. The ld. AR conroverting the submissions advanced by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irloskar Oil Engines Ltd. This fact is further fortified by the Job order receipt reflected in the profit and loss account of the assessee for the year ended on 31-03-2007. Merely because electricity consumption charges are shared by M/s. Kirloskar Oil Engines Ltd. suspicion should not be raised on electricity bills paid. The ld. Counsel for the assessee stated at the Bar that M/s. Kirloskar Oil Engines Ltd. has not claimed the entire electricity expenditure but only to the extent of expenditure borne by it is claimed in the books of account. We find no reason to disbelieve the arrangement made between the assessee and the M/s. Kirloskar Oil Engines Ltd. the promoter of the assessee company. In so far as the observations of the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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