TMI Blog2016 (11) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... ot clear as to what were the facts or the reason given in that case and on what basis whether any observation has been made cannot be discerned and so the reliance by the Assessing Officer of the said decision of the Kolkata Bench of the Tribunal not to record any satisfaction has no legs to stand and so it falls down and since the pre-requisite condition for invoking rule 8D has not been satisfied as per law by the Assessing Officer so the entire disallowance made under section 14A has to go and the Commissioner of Income-tax (Appeals) has rightly done so and therefore we confirm the order of the learned Commissioner of Income-tax (Appeals) and dismiss the appeal of the Revenue. - Decided in favour of assessee Addition u/s 36(1)(va) regarding late deposit of the employee's contribution to the PF and ESI - Held that:- we find that the dues were paid before filing of return of income which was filed on September 29, 2012 and since the learned Departmental representative could not controvert this fact recorded by the learned Commissioner of Income-tax (Appeals) that PF/ESIC dues were in fact paid before the assessee filed the return of income, so we are of the considered opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat when the taxpayer does not offer any disallowance on his own, the provisions of section 14A(2) read with rule 8D can be invoked without there being any need to express satisfaction about incorrectness of such claim. The disallowance under section 14A read with rule 8D of the Income-tax Act is being calculated as follows : A = Average amount of expenditure by way of interest ₹ 1,41,66,02,934 Investment A.Y. 2012-13 A.Y.2011-12 30,07,67,119 39,23,96,259 B = Average value of investment (30,07,67,119 + 39,23,96,259)/2 = ₹ 34,65,81,690 C = Average of total assets (32,64,30,93,862 + 23,10,40,33,403)/2 = ₹ 27,87,35,63,633 8D(2)(ii) = A x B/C = 1,41,66,02,934 x 34,65,81,690 / 27,87,35,63,633 = 1,76,14,132 8D(2)(iii) = % (B) [ % of 34,65,81,690] = ₹ 17,32,908 Total = ₹ 1,93,47,040 Therefore, as per the provisions of rule 8D(2)(ii)/8D(2)(iii) read with section 14A, the disallowance of expenditure attributable to exempt income comes to ₹ 1,93,47,040 and added back to income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot form part of total income, then as per sub-section (3) of section 14A recourse can be taken by the Assessing Officer of sub-section (2) of section 14A and in this case when the assessee assert that no expenditure had been incurred in relation to the earning of exempt income then the Assessing Officer has to record his dissatisfaction in respect to the correctness of the claim of the assessee that no expenditure has been incurred by the assessee for earning exempt income and then only invoke the prescribed method as laid down under rule 8D. The Assessing Officer has relied on the co-ordinate Bench decision in the case of Asst. CIT v. Ratan Housing Development Ltd., wherein the Bench observed that even if the assessee does not earn any exempt income still disallowance under section 14A of the Act need to be carried out. The co-ordinate Bench observed that it is immaterial whether any dividend in fact is earned or not, whether the said observation of the co-ordinate Bench is correct proposition of law in the light of the decision of the hon'ble jurisdictional High Court (Allahabad) wherein the hon'ble High Court held in the case of Income-tax Appeal No. 88 of 2014, CIT v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions need to exist. (i) There must be income taxable under the Act ; (ii) The said income must not form part of the total income under the Act ; (iii) There must be an expenditure incurred by the assessee ; and (iv) The said expenditure must have a relation to the income which does not form part of the total income under the Act. 10. In the present case, we note that the assessee had earned dividend income to the extent of ₹ 2,22,343 and has claimed it as exempt income and informed the Assessing Officer that it has not incurred any expenditure in earning the income which is claimed as exempt income and the hon'ble Delhi High Court in the case of CIT v. Taikisha Engineering India Ltd. dated November 25, 2014, [2015] 370 ITR 338 (Delhi) ; [2015] 275 CTR (Delhi) 316 wherein it was held that The Assessing Officer at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempted income. If and only if the Assessing Officer is not satisfied on this count after making reference to the accounts, that he is entitled to adopt the method as prescribed, i.e., under rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thereby, the resultant effect will be nil to the returned income of the assessee. The authorised representative of the assessee has relied upon the case law (supra) wherein the payments made after due date but before the filing of return of income are allowed. On overall consideration of facts and circumstances of the case, the addition made by the Assessing Officer is not justified, hence, the addition is hereby deleted. 14. Aggrieved by the aforesaid order of the learned Commissioner of Income-tax (Appeals), the Revenue is before us. 15. We have heard both the parties and perused the records. The Assessing Officer has given a chart in page 5 of his order in which the months, particulars of the amount (PF/ESIC) the due date of payment have been stated therein. We have perused the same and we find that the dues were paid before filing of return of income which was filed on September 29, 2012 and since the learned Departmental representative could not controvert this fact recorded by the learned Commissioner of Income-tax (Appeals) that PF/ESIC dues were in fact paid before the assessee filed the return of income, so we are of the considered opinion that the expenditure ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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