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TMI Blog2016 (11) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) arising from the assessment order dated 15th February, 2013 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income Tax Act,1961 (Hereinafter called "the Act"). 2. The grounds of appeal raised by the assessee company in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- "1. The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance u/s.14A amounting to Rs. 9,26,019/- worked out as per Rule 8D. Your appellants submit that the disallowance is unwarranted and the same ought to be deleted. Without prejudice to the above, your appellants submit that the disallowance is excessive and ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee submitted that investment in Mutual Funds is Rs. 15,31,55,660/- as on 31- 03-2010 which was much less than accumulated reserves. The profit after tax for the year was Rs. 5,20,63,839/-. It was submitted that the assessee has invested only the surplus funds and has not borrowed any funds for the purpose of investments which is clear from the above details. The investments are made from the surplus funds available with the assessee and no finance cost, i.e. interest expense was incurred for the same. It was submitted that the income earned by way of dividend was directly credited through ECS to the assessee's bank account and no expenses were incurred for realizing the dividend income. The assessee has earned tax free dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the AO is required to prove that the expenditure has been incurred towards earning of exempt income. The assessee submitted that no expenditure has been incurred for earning exempt income. The A.O. rejected the contentions of the assessee and held that the assessee has incurred interest expenditure of Rs. 5,72,676/- which is towards mixed activity of business and tax free investment . The AO relied upon decision of Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing Company Limited in ITA No. 626 of 2010 wherein Hon'ble Bombay High Court held that even if the assessee has utilized its own funds for making investments which had resulted in exempt income but still the disallowance of expenditure incurred in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative and other indirect expenses was confirmed by learned CIT(A) and the assessee got relief of Rs. 84,650/- vide appellate order dated 27.12.2013 passed by learned CIT(A). 5. Aggrieved by the appellate order dated 27.12.2013 passed by the ld. CIT(A), the assessee is in second appeal before the Tribunal. 6. The ld. Counsel for the assessee, at the outset, submitted that the issue is covered by the decision of the Tribunal in assessee's own case vide common orders dated 15-02-2016 in ITA No. 7435/Mum/2011 and ITA No. 7849/Mum/2011 both for the assessment year 2008-09 and ITA No. 6518/Mum/2012 for the assessment year 2009-10 whereby disallowance made by the authorities below by applying Rule 8D(2)(iii) of Income Tax Rules, 1962 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. We find that the assessee is engaged in the business of rendering services as clearing and forwarding agents. In our considered view the disallowance under Rule 8D(2)(iii) of Income Tax Rules, 1962 read with Section 14A of the Act can be made having regard to the accounts of the assessee as per the mandate of Section 14A(2) of the Act and it cannot be applied straight-away without having regard to the accounts of the assessee. The assessee has not submitted any details of the expenses incurred and claimed that no expenditure has been incurred which could be attributable to the earning of exempt income. The assessee has incurred expenses of Rs. 8.31 crores towards personnel costs and Rs. 10.05 crores towards administrative expenses which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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