9911796707
TMI Blog2014 (7) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... at 10 companies merged with the assessee company w.e.f. 1.4.2007, vide order of the Hon'ble Delhi High Court dt. 22.8.2008. The assessee filed its original return declaring loss of Rs. 1,90,84,382/- on 30.9.2008. It filed a revised return at an income of Rs. 2,43,19,331/- on30.9.2009. 3. During the year the assessee earned dividend income of Rs. 7,81,04,411/-. This was claimed as exempt u/s 10(34) of the Act. The assessee made a suo- moto disallowance of Rs. 1,73,45,967/- being interest expenditure incurred during the Previous Year on the ground that it is directly attributable to the earning of dividend interest. The assessee did not make any disallowance of administrative expenses. The Assessing Officer applied Rule 8'D'(2)(iii) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Ld.Sr.D.R. on behalf of the Revenue. 5. The sum and substance of the contentions of the assessee are that most of the expenditure was incurred for statutory compliances/legal fees, professional charges etc. for the process of amalgamation. It was submitted that the expenditure incurred towards statutory compliance cannot be disallowed. It was further argued that these expenditure cannot said to have been incurred for the purpose of earning exempt income and under such circumstances, the disallowance is bad in law. The details of the expenditure and the purpose for which it is incurred were furnished in the form of a chart and it was contended that the nature and purpose of expenditure demonstrates that it cannot be disallowed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the authorities below, case laws cited, we hold as follows. 8.1. The ITAT Mumbai Bench of the Tribunal in the case of Udhav Holdings Pvt.Ltd. vs. ACIT, (2014) (1) TMI 1134 - ITAT Mumbai, at para 6 held as follows. "6. We have heard the rival contention, perused the relevant findings of the authorities below and the material available on record. Insofar as the disallowance on account of interest is concerned, there is no dispute as the learned Commissioner (Appeals) has removed the disallowance from the working of rule 8 D. As regards disallowance of Rs. 22,497, it has been brought on record that the assessee has itself disallowed the depository charges of Rs. 21,954. Thus, to the extent of Rs. 21,954, this amount has been added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub- section (2) of section 14A, provides that the Assessing Officer has to determine the amount of expenditure incurred in relation to such exempt income, if the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure relating to exempt income. This fact of incurring of the expenditure needs to be examined and then only provisions of section 14A can be applied. In this case, no such exercise has been done by the Assessing Officer. Insofar as the Assessing Officer's observation regarding interest income is concerned, the assessee's plea has already been accepted that no borrowed funds have been utilized for the investment purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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