TMI Blog2013 (11) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 1 4A as per decision of ITAT Mumbai Bench in the case of DCIT Vs. HDFC BANK Ltd, 217/ Mum! 2008 when disallowance for this year has to made as per the provisions of rule 8D in accordance with the decision of Mumbai High Court in the case of Godrej and Boyce Manufacturing Company Ltd. 234CTR 1. ii) Whether on the facts and in the circumstances of the case and in law, the learned CIT (A) is justified in directing the Assessing Officer to make disallowance under section 1 4A as per decision of ITAT Mumbai bench in the case of DCIT Vs. HDFC Bank Ltd. 217/ mum! 2008 when Learned CIT (A) could not find any error in the computation of disallowance made as per rule 8D by the Assessing Officer. 2. The only issue arises for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ACIT in ITA No. 267//2012 dated 23.3.2012. The Ld. A.R has referred the schedule 14 to the balance sheet and submitted that the total administrative expenditure booked by the assessee to the profit and loss account is ₹ 19 lacs whereas the A.O disallowed 27,68,708/-. Thus, the Ld. A.R has submitted that the disallowance u/s 14A cannot be more than the actual expenditure booked to the profit and loss account. Further the said expenditure has been incurred for the entire business activities of the assessee and therefore, the expenditure which has been incurred in relation to earning exempt income can be disallowed. 4. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has worked o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive given by way of exemption of certain categories of incomes shall not reduce the tax payable on non-exempt income by debiting the expenses incurred to earn the exempt income against the taxable income. Thus, the expenses incurred to earn exempt income cannot be allowed and only the expenses relatable to the earning of taxable income shall be allowed. If there is expenditure directly or indirectly incurred in relation to the exempt income the same cannot be allowed against the income which is taxable. Thus, for attracting the provision of Section 14A there should be proximate cause for disallowance which has relationship with the tax exempt income. The apportionment of expenditure is needed when expenditure is incurred in relation to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Stationery 25214 81011 Profession Tax 2500 2500 Repairs Maintenance Expenses 21512 80256 Salary 873720 811424 Staff Welfare Expenses 16701 19970 Transaction Charges 411401 419769 Transport Charges 35781 91160 Rent, Rates Taxes 1900 73722 Total 1901068 2110970 6. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of total income. Sub-section (2) of Section 14A provides the procedure for determination of such expenditure by the Assessing Officer. The Board has also prescribed Rule 8D for determining the expenditure incurred by the assessee for earning of exempt income. Thus, the disallowance can be made under sub-section (1) for the expenditure incurred for earning of exempt income. In the case under appeal before us, from the perusal of the assessee s profit loss account, it is evident that the total expenditure incurred was 49,04,028/- only. Thus, the assessee claimed the deduction for the expenditure of 49,04,028/- which is debited to the profit loss account. The disallowance cannot exceed the expenditure actually claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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