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TMI Blog2017 (3) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... 011- 12. 2. In this case, the brief background is that the Ld. AO made disallowance u/s14A read with Rule-8D(2) and (3) only. No disallowance has been made under rule 8D (2) (i) and (iii). It is noted that assessment year 2008-09, Ld.CIT(A) restricted the disallowance to the amount of exempt income of dividend received in the said year under consideration by observing as under.: (a) I have gone through the findings of the A.O. as well the contentions made by the A/R for the appellant. Keeping in view the above facts and circumstances of the case it is held that the A.O. was not correct in applying Rule 8D by disallowing the expenditure of Rs. 2,84,11,415/- under Rule 8D(iii). It was incumbent on the Assessing Officer to establish a nexus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hoc disallowance 14A. He has also relied on the order of Special Bench of Hon'ble ITAT in the case of Cheminvest Limited Vs. ITO and Technipak Advisor Private Limited for his finding that even if no exempt income is actually earned or received during the year the disallowance u/s-14A can be made. The appellant during the course of appellate proceedings has relied on the following facts:- (i) No direct expenditure "in relation to earning dividend income" has been incurred. The disallowance of Rs. 25,000/- was made suo moto. No dividend income has been earned during the year. The appellant relied on the judgments discussed supra in support of its contention that no disallowance can be made u/s-14A where no income has been claimed exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal bench of the high court is binding on the Income Tax Authorities working in the territorial jurisdiction of a high court. The reference can be made to the decision of the Honible Bombay High Court in the case of K Subramanian v. Siemens India L td. (1983) 15 Taxman 594{Page 23 to 24 of judgment Index) that the ITO is bound by the decision of a single judge or Division Bench of the court within whose jurisdiction is operating. The above said judgment has been followed by the Hyderabad Bench 'A' of the Hon`ble ITAT in the case of KMC Construction Ltd. (2013) 36 Taxmann.com 416 [Page 7 to 22 of Judgment Index] in which it has been held as under;- "At this juncture, it is pertinent to mention the observations of the High Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee during the said year by making identical observation which were made in assessment year 2010-11. 5 . During the course of hearing, Ld. Counsel of the assessee drew our attention upon the relevant pages of the paper book and contended that the balance-sheet in all the 3 years is in support of the fact that no dividend income or exempt income has been credited by the assessee in the profit and loss account. It was also submitted that no disallowance u/s14A can be made in absence of any exempted income. Reliance was placed by him on the following judgments in support of his claim. Sr.No Particulars Page No. Disallowance u/s-14A, if any, should be restricted to exempt income 1 Joint Investments Pvt. Ltd. v. CIT (37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference Shares held by the assessee, no income has accrued to the assessee. Therefore, Ld. CIT(A) has deleted the disallowance based upon a factual finding. It was also argued that in the assessment year under consideration also the A.O. has not brought out any such facts and has not mentioned any such things to indicate any type of receipt of exempt income by the assessee during A.Y. 2010-11 & 2011-12. Therefore, order of the Ld. CIT(A) is to be upheld. It was also submitted that nothing has been brought on record by the Ld. D.R. to show that the case of the assessee is not squarely covered in its favour by the aforesaid judgments as has been relied upon by Ld. CIT(A) and has been cited by the learned counsel before us. 9. We have gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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