TMI Blog2016 (2) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ₹ 54,54,90,000/-. Therefore, no direct expenditure was incurred for earning the income which does not form part of total income. The assessee also has not incurred any expenditure by way of interest. Therefore, the second limb of the Rule 8D(2) is not applicable. Now coming to the third limb, the amount equal to 0.5% of the average value of the investment, income from which does not or shall not form part of total income as appearing in the balance sheet of the assessee on the first day and the last day of the previous year, has to be taken into consideration. This Tribunal is of the considered opinion that the third limb of Rule 8D(2) has to be applied. Therefore, the computation made by the Assessing Officer by adopting secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer disallowed the claim of the assessee under Section 14A of the Income-tax Act, 1961 (in short 'the Act') on the ground that the assessee could have incurred managerial, administrative and monitoring expenses. According to the Ld. counsel, the assessee being State Government undertaking and the business of the assessee is to finance infrastructure facilities, no external expenses were incurred. Therefore, the disallowance made by the Assessing Officer is not justified. 3. On the contrary, Sh. A.B. Koli, the Ld. Departmental Representative, submitted that the assessee had invested ₹ 5 Crores in the tax free bonds issued by Chennai Metropolitan Water Supply and Sewerage Board. Referring to Section 14A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation relating to market situation in the field of finance, investment, etc. It is not in dispute that the assessee utilised the reserves available to the extent of ₹ 54,54,90,000/- for making investment in Chennai Metropolitan Water Supply and Sewerage Board. 5. We have carefully gone through the order of this Tribunal in Lakshmi Ring Travellers (supra) relied on by the Ld. D.R. In the said case, the assessee is engaged in the business of travel. In those factual situation, the Tribunal found that even in a case where the assessee claims that no expenditure was incurred, the statute has provided for a presumptive expenditure which has to be disallowed. In the case before us, the business of the assessee is finance and infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in clause (i) incurred during the previous year ; B =the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balancesheet of the assessee, on the first day and the last day of the previous year ; C =the average of total assets as appearing in the balance-sheet of the assessee, on the first day and the last day of the previous year ; (iii) an amount equal to one-half per cent. of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance-sheet of the assessee, on the first day and the last day of the previous year. 3. For the purposes of this rule, the total assets shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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