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ACIT, Circle 9 (1) , New Delhi Versus M/s. Feedback Infra Pvt. Ltd.

2017 (9) TMI 1148 - ITAT DELHI

Addition on account of disallowance u/s 14A r.w.r 8D - Held that:- By following the law laid down by Hon’ble Apex Court in judgment cited as Godrej & Boyce Manufacturing Company Ltd. (2017 (5) TMI 403 - SUPREME COURT OF INDIA) and Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court) we are of the considered view that the findings returned by AO that, “disallowance u/s 14A is to be made even if no exempt income has resulted or earned by the assessee during the year under consideration” i .....

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. So, in these circumstances, the ld. CIT (A) by considering all these facts rightly deleted the addition. So, finding no illegality or perversity in the order of the ld. CIT (A), we hereby dismiss the appeal filed by the Revenue. - ITA No.5980/Del./2015 - Dated:- 18-9-2017 - SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Gaurav Jain, Advocate For The Revenue : Shri Arun Kumar Yadav, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, .....

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.r 80 of the I.T. Rules. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : During scrutiny proceedings, Assessing Officer noticed that the assessee company has shown investment in equity shares to the tune of ₹ 10,54,72,000/- and ₹ 26,52,86,250/- as on 01.04.2011 and 31.03.2012 respectively. AO while examining the investment in view of the provisions contained under section 14A of the Income-tax Act, 1961 (for short the Act ) observed that the in .....

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he above, it is held that the case of the assessee is a fit case for computing the disallowance u/s 14A in accordance with Rule 8D. The computation of disallowance is as under: i) The amount of expenditure directly relating to income which does not form part of total income. Nil ii) In a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the foll .....

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1952 53,57,560/- balance sheet of the assessee, on the first day and the last day of the previous year. 2 = 1500991011 iii) An amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. Average investments: Rs.18,02,79,125/- = 0.5% of Rs. 18,02,79,125/- = ₹ 9,01,396/- 9,01,396/- Disallowance(i+ii+ .....

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e documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Ld. DR for the Revenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly explained at the second last page of the assessment order; that section 114 of the Evidence Act, 1872 raises presumption in favour of the Revenue that there was nonsatisfacti .....

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of the ITAT, Special Bench, New Delhi in case of M/s. Cheminvest Ltd. vs. ITO - 317 ITR 86, relied upon by the AO, has since been overruled and that the ld. AR further relied upon the case of Holcim India Pvt. Ltd. - ITA No.486/3024 & ITA No.299/2014. 8. Undisputedly, the AO, without recording dis-satisfaction, as the working out made by the assessee that no expenses have been incurred nor earned any dividend income, proceeded to invoke the provisions contained u/s 14A read with Rule 8D in a .....

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Assessing Officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of sub-section (2) of section 14A. Prior to that, the assessee was free to adopt any reasonable and acceptable method. So, even for the prerule 80 period, whenever the issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain the correctness of the claim of the assessee in respect of the expenditure incurred in relation to i .....

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the quantum of disallowance under section 14A is concerned. In such eventuality, the Assessing Officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the Assessing Officer is not, on the basis of the objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the Assessing Of .....

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resaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribe .....

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