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Justice Mohan Lal Verma (Retd) Versus ACIT, Circle 63 (1) , New Delhi

2017 (9) TMI 731 - ITAT DELHI

Disallowance u/s 14A r.w.r. 8D - assessee has not claimed any expenditure against the investment - Held that:- The assessee has not claimed any expenditure against the investment income. The AO has made the addition on estimate basis which is not permissible under the law. - We have no reason to disagree with the claim of the assessee that no further expenditure over and above the expenses already disallowed in the return of income is required to be disallowed under section 14A of the IT Act .....

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Appeal against the impugned Order dated 01.9.2015 passed by the Ld. CIT(A)-XXVIII, New Delhi relevant to assessment year 2011-12 on the following grounds:- 1. That the learned CIT (Appeals) erred in not holding that the assessment proceedings being under CASS, the scope of enquiry should have been limited by the AO to such notice and any other variation to returned income without approval of concerned senior authority is unsustainable and therefore further erred in not deleting the said addition .....

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tter and spirit of the Order of the ITAT in the case of the assessee for A.Y. 2009-10, as the AO has not even come to the conclusion that the assessee had claimed expenses in earning tax free income and therefore the impugned order is non speaking and in violation of the Tribunal's Order. 4. That the CIT (Appeals) erred in not holding that the disallowance of ₹ 80,182 made by AO could not be sustained as the AO had failed to verify the veracity of the assessee's statement that it h .....

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ts and circumstances the case and in law the appeal be allowed. 2. The brief facts of the case are that Assessee, Justice (Retd.) M.L. Varma, after having retired from the High Court of Delhi, is presently carrying on his legal practice in the Hon ble Supreme Court of India. Besides this, he has also adjudicates on arbitration proceedings or by way of appearances in Hon ble High Courts outside Delhi. For the relevant assessment year the assessee had filed a return of total income of ₹ 2,71 .....

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015 has partly allowed the appeal. 4. Against the impugned order dated 01.9.2015, assessee has filed the Appeal before the Tribunal. 5. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor his authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the vi .....

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s 14A of ₹ 80,182 as against NIL computed by the assessee towards expenses claimed as related to earning of income on which tax is not payable. In our view, the disallowance is contrary to the law laid down by Hon ble Delhi High Court in case of Maxopp Investment v. CIT (reported in 203 Taxman 364(Delhi), and hence, not sustainable, because the AO had failed to verify the veracity of the assessee's statement that it had not claimed any expense in the earning of the tax free income and .....

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reme Court In the case of Walfort Share & Stock Brokers, which has been followed and applied by the Bombay High Court in the case of Godrej Boyce and the Jurisdictional High Court in the case of Maxopp Investment. Reference may be made to certain observations of the Bombay High Court and the Delhi High Court in the said judgments which are as under: (i) The Bombay High Court in the case of Godrej Boyce has held as under: ..... In order to determine the quantum of the disallowance. there must .....

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n. …….. Hence, the intention of section 14A is clearly to disallow all expenses relating to the non taxable income, and to curb the practice of claiming allowances for expenditures on exempt income. All that is required is to show that there is a 'proximate cause' between the expenditure incurred and the exempt income, A 'proximate cause' connotes a relationship between the expense and the exempt income (Walfort).... . (ii) The Delhi High Court in the case of Maxopp .....

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