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TMI Blog2015 (6) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... s) erred in confirming disallowance of Rs. 16,23,432/- u/s.14A of the Act as against Rs. 4,85,000/- disallowance by the assessee. 2) The appellant prays that: i) Disallowance u/s.14A may be restricted to the amount of Rs. 4,85,000/- ii) Recovery of demand in dispute may be stayed; iii) Personal hearing may be granted; iv) Any other relief your honours may deem fit. Grounds of Revenue's Appeal: "On the facts and in the circumstances of the case and law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. The order of the CIT(A) is opposed to law and facts of the case. 2. " On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal filed before Ld. CIT(A)and assessee submitted a calculation before Ld. CIT(A) for making the disallowance u/s.14A. The said calculation is reproduced by Ld. CIT(A) in para-4.1 of his order, which for the sake of convenience is reproduced below: "Disallowance on the bas si Expenses to ratio of Sales: Taxable Income Amount Proposition Other Income 12,84,809 Sales 1,93,62,156 2,06,46,964 16% Exempt Income Dividend 10,12,02,024 Interest on Tax Free bonds 79,18,562 Long term gain -Exempt 10,91,20,586 84% Total Income As Per P&L 12,97,67,550 100% Indirect Expenses 86,83,860 Less : Directly related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the assessee expenses other than related to sales are Rs. 9,04,906/- directly related to investment u/s. 14A and other apportionable expenses are Rs. 6,18,526/- as per the chart given by the assessee and, therefore, the disallowance on account of expenses should not be more than Rs. 15,23,432/- which are the total expenses other than the expenses directly related to sales. Whereas, the expenses claimed by the assessee as directly relatable to sales have not been verified by the A.O. and certain expenses, like repair and maintenance, rent and electricity, travelling expenses etc. cannot be said to be entirely related to sales, therefore, on adhoc basis Rs. 1 lakh are more allocated to the dividend earning activity of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal for Revenue submitted that disallowance was rightly calculated by AO as per Rule 8D, which is a reasonable disallowance. In reply to the arguments of Ld. AR it was submitted by him that Ld. CIT(A) did not commit any error in making further addition to the aforementioned calculation submitted by the assessee. 8. We have heard both the parties and their contentions have carefully been considered. As per aforementioned decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. (supra), rule 8D is not applicable to the assessment years prior to assessment year 2008-09. The disallowance calculated by the AO at a sum of Rs. 29,82,705/- is in accordance with Rule 8D, which cannot be upheld, therefore, finding no meri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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