9911796707
TMI Blog2017 (5) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from the assessment order dated 25th March, 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 in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "1. Under the facts & in Law, the Learned CIT(A), has erred in confirming disallowance of Rs. 5,58,104/- u/s 14A of Income tax 1961 r.w.Rule 8D(2)(iii) of the I.T.Rules, 1962." 3.The assessee company is engaged in the business of Financial Services, the assessee being a category I Merchant Banker engaged in the business of providing a full range of services from private p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax free income. The assessee also further submitted that if the AO is not satisfied with the correctness of the claim made by the assessee in relation to income which does not form part of the total income of the assessee, then only, provision of Rule 8D of the 1962 Rules can be invoked by the Assessing Officer. The AO considered the submission of the assessee and held that Section 14A of the 1961 Act was introduced by Finance Act,2001 was applicable from retrospective effect and it mandates that expenditure incurred in relation to income not includible in total income shall not be allowed. The AO invoked Rule 8D of Income-tax Rules, 1962 to make disallowance u/s 14A of the 1961 Act. The AO held that the assessee had earned exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternative investment opportunities and hence was parked in investments. The assessee submitted before learned CIT(A) that it did not required much capital and income mainly arose from professional services rendered for which professional fees were received from clients. The assessee further submitted copies of financial accounts and submitted that it has made investment in mutual funds and mainly administrative expenses were incurred. It was submitted that the assessee has not incurred any interest expenditure as there were no bank borrowings or other interest bearing borrowings. It was submitted before the learned CIT(A) that the AO had mechanically applied Rule 8D of the 1962 Rules read with Section 14A of the 1961 Act. It was submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have observed that the assessee company is engaged in the business of Financial Services, the assessee being a category I Merchant Banker engaged in the business of providing a full range of services from private placements and public offerings to advisory services and mergers, acquisitions and debt syndication. The assessee had earned dividend income of Rs. 54,83,240/- which was claimed as exempt by the assessee. The assessee has submitted that it has no interest bearing borrowings and hence no interest expenditure was incurred.The assessee has submitted that it has incurred administrative expenses of Rs. 1,09,665/- towards earning of exempt income which is to be disallowed u/s 14A of the 1961 Act but no details were given by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as is contemplated u/s 14A of the 1961 Act. The primary onus is on the assessee to work out the disallowance of expenditure incurred in relation to earning of the income which is not forming part of total income of the assessee having regards to the accounts of the assessee. These are facts which are especially in the knowledge of the assessee and primary onus/burden is on the assessee to bring those facts before the AO of having incurred expenditure in relation to earning of income which does not form part of the total income having regards to the accounts of the assessee. Thereafter, the onus shifts to the Assessing Officer to work out the disallowance of expenditure incurred in relation to earning of income which does not form par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 Rules r.w.s. 14A of the 1961 Act can be removed Keeping in view facts and circumstances of the case, in our considered view the matter needs to be set aside and restored to the file of AO for re-computing the disallowance u/s. 14A of the 1961 Act of the expenditure incurred in relation to the earning of income which does not form part of the total income having regards to the accounts of the assessee. The assessee is directed to produce working of disallowance of expenditure incurred in relation to the earning of income which does not form part of the total income having regards to the accounts of assessee as is contemplated u/s 14A of the 1961 Act. The primary onus/burden is on the assessee to produce such working as the said fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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