TaxTMI 
TaxTMI 
2016 (3) TMI 1211
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....ts of the case as noted in the assessment order are that during the course of assessment proceedings the Assessing Officer observed that assessee had invested a significant amount in mutual funds. The Assessing Officer further observed that assessee had borrowed funds from bank and also from other relatives and had paid interest of Bank and relatives. Therefore, he relying upon the provisions of section 14A, made a disallowance of Rs. 3,05,694/-. 4. Aggrieved the assessee filed appeal before learned CIT(A) and learned CIT(A) allowed part relief to assessee by holding as under: " 6. The assessee has filed 2 grounds of appeal and first ground of appeal is regarding disallowance of interest of Rs. 3,05,694/- on account of investment made by....
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....es were only for business was not met by the assessee. However, these expenses are restricted to 1/8th of total expenses instead of 1/5th being excessive." 5. Still aggrieved the assessee is in appeal before us. 6. At the outset, learned AR submitted that assessee had sufficient funds of its own and in this respect our attention was invited to paper book page 3 to 18 where capital accounts of partners was placed. The learned AR submitted that at page 3 is a capital account of Smt. Nirmal Rani where the capital stood at Rs. 69.52 lacs. Similarly, he submitted that page 8 is a copy of account of partner Sh. Rajesh Kumar, in whose capital outstanding balance was Rs. 288.337 lacs. Similarly we were taken to paper book page 14 where copy of ca....
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....the learned AR invited our attention to an order of ITAT, Mumbai Benches dated 1.1.2015 in ITA No. 5592/Mum/2012 and submitted that Hon'ble ITAT has held that addition u/s 14A if any has to be restricted to the amount of dividend income and dividend in this year was received only to the extent of Rs. 60015.81 and in this respect was our attention was invited to paper book page 1 where the details of dividend receipts was placed. 8. The learned DR, on the other hand, submitted that assessee has not been able to prove the existence of surplus funds as a major part of capital of partners and bank and unsecured loans were struck up in receivables and as regards the argument of learned AR that at the time of making investments no significance b....
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....learned AR that the disallowance be restricted to the amount of dividend is acceptable as the Coordinate Bench in the case of M/s Daga Global Chemicals Pvt. Ltd. in ITA No. 5592/Mum/2012 vide order dated 1.1.2015 has held that the disallowance u/s 14 r. w Rule 8D cannot be exceed the exempt income. The findings of the Hon'ble Tribunal are reproduced below. "We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a limited company, engaged in trading of bulk and fine, chemicals, solvent and pharmaceutical raw materials declared its income at Rs. 74,40,000/- on 26/09/2009. The assessee credited dividend income of Rs. 1,82,262/- in its profit and loss account.....