TMI Blog2018 (2) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered opinion the disallowance needs to be recomputed. As there are no expenses other than the expenses recorded in Schedule 10 to P&L account, we find it appropriate to restrict the disallowance to a sum of ₹ 10,000/- which could be attributed to earning of exempt income. - Decided against assessee. - ITA No. 4043/Del/2014 - - - Dated:- 15-1-2018 - SHRI R . K . PANDA, ACCOUNTANT MEMBER AND SMT . BEENA A PILLAI, JUDICIAL MEMBER For The Appellant : Sh . Tarandeep Singh, CA For The Respondent : Shri Amit Jain, Sr . D . R . ORDER PER BEENA A PILLAI, JUDICIAL MEMBER The present appeal has been filed by assessee against order dated 20/05/14 passed by Ld. CIT (A)-8, New Delhi for Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O observed that assessee is in the business of Non-Banking Financial Company. It was observed that assessee had investments in shares and mutual funds to an extent of ₹ 72,90,00,000/-as on the last day of the financial year relevant to the assessment year under consideration. Ld.AO observed that assessee had earned dividend income of ₹ 5,13,682/-which was claimed exempt. Ld. AO accordingly issued notice, show cause as to why disallowance under section 14 A read with Rule 8D of the Act should not be made. 2 . 2 . Assessee in response, submitted that it had neither incurred any interest expenditure nor any other charges for investment for earning exempt income. It was submitted that assessee had not incurred any expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ) of Rule - 8D have 3 sub - clauses :- ( i ) Direct expenditure incurred in relation to exempt income . ( ii ) Interest expenditure incurred in relation to exempt income, which is not directly attributable to any particular income or receipt, a formula is prescribed . ( iii ) An amount equal to one - half percent 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 last day of the previous year . Thus the 3rd sub - rule ( iii ) above is very clear and mandatory for disallowance, in all cases, if there is any exempt income or not . It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which could be considered for the purposes of disallowance under section 14A read with Rule 8D of the Act. He submitted that the disallowance made by Ld.AO is without application of mind and therefore deserves to be deleted. 6 . On the contrary Ld.DR placed reliance upon the observations made by Ld.CIT(A). He placed reliance upon the decision of Hon ble Delhi High Court in case of India Bulls Financial Services Ltd vs . DCIT reported in ( 2017 ) 395 ITR 242 and submitted that the Ld.AO in the computation made by him regarding disallowance under section 14A has taken income under direct expenses and interest income that could be attributable for such disallowance as NIL . He submitted that this itself indicates application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than exempt income. Hon ble Delhi High Court in the case of Cheminvest Pvt . Ltd . vs . CIT reported in ( 2015 ) 378 ITR 33, wherein it has been held that disallowance under Rule 8D cannot exceed the exempt income. Therefore in our considered opinion the disallowance needs to be recomputed. As there are no expenses other than the expenses recorded in Schedule 10 to P L account, we find it appropriate to restrict the disallowance to a sum of ₹ 10,000/- which could be attributed to earning of exempt income. 7 . 4 . Accordingly the grounds raised by assessee stand dismissed. 8 . In the result appeal filed by assessee stands dismissed. Order pronounced in the open court on 15th January, 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
