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2016 (11) TMI 1405 - ITAT MUMBAI

2016 (11) TMI 1405 - ITAT MUMBAI - TMI - Disallowing the expenses relatable to exempted income by invoking the provisions of Section 14A read with Rule 8D - Held that:- No disallowance u/s Rule 8D can be made as the assessee is having non-interest bearing funds available in the shape of share capital and reserves and surpluses with him amounting to ₹ 285.27 crore which is more than the amount of investment made in interest earning instruments amounting to ₹ 18.19 crores and once avai .....

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or unreasonableness or could not find any fault in the same. Accordingly, we delete the addition and allow the appeal of the assessee retaining the same to the extent of the assessee suo-moto disallowance of sum of ₹ 11,78,104/-.- Decided in favour of assessee. - ITA No.7490/Mum/2013 - Dated:- 10-11-2016 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM Assessee by : .Ronak Doshi, AR Revenue by : Sivaji Ghote, Sr. DR O R D E R PER MAHAVIR SINGH, JM: This appeal by the assessee is arising o .....

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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 ₹ 15,26,721/- and claim the same as exempted u/s 10(34) of the Act, but the expenses to the extent of ₹ 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 .....

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sequently vide letter dated 09-10-2012 revised the working of disallowance relatable to exempt income qua-expenses other than interest on borrowings as under: Expenses other than interest on borrowings: 7. 4. RBCL has incurred a total expense of ₹ 58,361 towards demat and depository charges and this has been considered for the purpose of disallowance. 7.5. In so far as other expenditure is concerned, based on the internal records, expenditure directly identifiable such as stamp duty, trans .....

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are indirect/ y incurred in relation to such investments by way of cost on the 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 R .....

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expenses of HO, which are duly allocated in relation to such personnel. There are total Eighty Four (84) employees in HO out of which four (4) employees mentioned at S. NO. 1, 2, 3&4 in the above table are working in the Fund management team of the company. Details of such expenses are given below and the basis of allocation is the ratio of employees of the FMT to the total number of employees in HO: Sr. No. Particulars Amount in Rs. Expense of HO Appropriated Amount (4/84 of Expense of HO) .....

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e disallowable under Section 14A of the Act amount to ₹ 11,78,104/- and it comprises of: 1. Demat and depository charges 58,361 2. Emoluments of employees in FMT (See 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 ₹ 11,78,104/- as against the earlier computation at ₹ 75,84,842/-. The .....

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rch 31,2010 March 31,2009 Share Capital 12,500 12,500 Reserve & Surplus 28,40,270 23,59,727 Total 28,52,770 23,72,227 5. In view of this learned Counsel for the assessee stated that no element of expenditure on account of interest which was relatable to exempt income rather the exempted income is out of non-interest bearing on funds which are more than the investments. The learned Counsel for the assessee stated that presumption go in favour of assessee and for this he relied on the decision .....

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