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TMI Blog2017 (9) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1961 and also the issue of disallowance u/s 40(a)(ia) of Rs. 606,650/- made on account of non-payment of TDS on processional fees. 2. Brief facts of the case are that the assessee filed its return of income showing a loss of Rs. 33,85,526/- which was processed under section 143(1) of the Act. Thereafter the case of the assessee was selected for scrutiny and the statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO observed that the assessee has earned a dividend income of Rs. 3,97,85,799/- and long term capital gains of Rs. 49,97,230/- which were claimed as exempt whereas no allocation of expenses pertaining to earning of said exempt income were made. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding as under(4.1,4.1.1 CIT) : "4.1 I have considered the facts and circumstances of the case, the submissions of the appellant and the assessment order. The gist of the submission of the appellant is that where no specific expenditure is incurred in relation to exempt income, disallowance u/s 14A is not warranted and that there is no nexus between dividend income and administrative & other expenses incurred. However, the same arguments were placed before the AO also on this issue, who has elaborately discussed the factual and legal position in the assessment order in para 3, which has been reproduced above for the sake of convenience. The decision of the Hon'ble Jurisdictional High Court in Godrej & Boyce referred above is a specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant that no expenditure has been incurred for earning exempt income cannot be accepted. The word appearing in Section 14A for disallowance of expenditure is 'in relation to' which is to be considered without any restriction of expenditure being direct / dominant etc. The indicated expenditure in relation to exempt income pointed out by the AO is sufficient and confirming to the applicability of Section 14A read with Rule 8D as done by the AO. The decision in the case of Laxmi Ring Travelers CTS-210 - ITAT- 2012(Chny) is relevant and applicable where it was laid down that even in a case where an assessee claims that no expenditure was incurred, the assessing authority has to presume the incurring of such expenditure as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) also by relying on the finding of the AO confirmed the action of assessing authority. The ld.AR relied on the decision of Delhi High Court in the case of CIT V/s Taikisha Engg. India Ltd reported in 370 ITR 338(Del) in defence of his arguments. The ld. AR also alternatively argued that a sum of Rs. 2 lakhs may be disallowed towards exempt income. Therefore, the ld. AR submitted that since there is no satisfaction recorded by the AO before invoking the provisions of section 14A r.w.r.8D the addition made by the AO and confirmed by the ld. CIT(A) be deleted. 5. The ld.DR relied upon the orders of authorities below. 6. We have carefully considered the rival submissions, material placed before us and the orders of authorities below includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld succeed and the appeal should be dismissed" 7. During the course of hearing, the ld. AR also offered that disallowance of Rs. 2 lakhs may be made in the line with the decision of the Co-ordinate Bench in the earlier year in assessee's own case in which the similar disallowance was made on lump sum basis. The ld. AR also took us through the annual accounts of the company specifically schedule-J, "administrative and other expenses" and pointed out that all the expenses was incurred in connection with the business of the assessee exclusively and cannot be so attributed to exempt income. However, the expenditure on telephone, postage Rs. 1,49,989/-, rent Rs. 6,00,000/- and Electricity charges Rs. 1,91,484/- out of which only a small fracti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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