9911796707
TMI Blog2016 (11) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the action of the Assessing Officer in disallowing the expenses relatable to exempted income by invoking the provisions of Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter 'the Rules'). 3. Briefly stated facts are that the Assessing Officer during the course of assessment proceeding noticed that the assessee has earned dividend income of Rs. 15,26,721/- and claim the same as exempted u/s 10(34) of the Act, but the expenses to the extent of Rs. 75,84,842/- was attributed towards exempt income. The assessee took us through the computation of disallowance made by Assessing Officer u/s 14A of the Act read with Rule 8D Rule as under: - 2 (i) The amount of expenditure directly relating to income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personnel of RBCL who are engaged in the day-to-day activity of Fund management and investments. Following table shows the entire emoluments of Fund management team on cost-to-company basis and also the portion thereof reasonably attributable, based on time spent by the team, to the activity of investment which gives/may rise to tax free income. Sr. No Name Employee Designation Emolument (cost to company) (amount in Rs.) % Attributable to investments activity Attributed amount in Rs. 1. Mr. Ketan VP - Finance 1,498,598 15% 187,725 2. Mr. S K Shenoy Sr. Manager Finance 422,341 15% 53,873 3. Mr. Vithoba Patil Sr. Executive-Accounts 309,822 15% 39,990 4. Mr. Laxman Addagatla Executive -Accounts 281,913 15% 36,248 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Para 7.3) 317,835 3. Other expenses of Ho Prorated (See Para 7.4) 801,908 Total amount disallowable under section 14A of the Act 11,78,104 Accordingly, the assessee work out the disallowance u/s 14A of the Act read with Rule 8D of the Rules at Rs. 11,78,104/- as against the earlier computation at Rs. 75,84,842/-. The learned Counsel for the assessee stated the fact that the assessee has not attributed any disallowance in respect to interest under Rule 8D (2) by stating that assessee's position of total own funds (non interest bearing) i.e. share capital and reserves and surplus is at about Rs. 285.27/- crores as against the amount of investment of Rs. 18.19 crores. The assessee has given the following details of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts amounting to Rs. 18.19 crores and once availability of amount from interest free fund of the assessee is more than the investment, then a presumption arises that assessee might have invest out of interest free fund available with him. This view of ours is supported by the decisions of Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra). As regards to direct expenditure under Rule 8D (1), there is no dispute. As regards to working of disallowance under Rule 8D (3), the assessee has computed the disallowance and the Assessing Officer could not point out any discrepancy or unreasonableness or could not find any fault in the same. Accordingly, in view of the given facts and circumstances, we delete the addition and allow the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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