TMI Blog2016 (1) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... those investments which did not earn any dividend during the year. Thus set aside the issue to the file of the AO with the direction to work out the disallowance u/s14A r.w. Rule8D(2)(iii) by taking those investments which yielded dividend during the year by giving reasonable and proper opportunity to the assessee. - Decided in favour of assessee for statistical purposes. - I.T.A. No 6207/Mum/2012 Assessment Year : 2009-10) - - - Dated:- 15-1-2016 - Shri Saktijit Dey And Shri Rajesh Kumar, JJ. Appellant by : Shri Haresh P. Shah Respondent by : Shri J. Saravanan ORDER Rajesh Kumar, This appeal by the assessee is directed against the order dated 09-08-2012 of Commissioner of Income Tax (Appeals)-3, Mumbai (Herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,09,015/-. The assesee did not disallow any expenses u/s 14A r.w. Rule 8D of the Act. The case of the assessee was selected for scrutiny and due notices u/s 143(2) 142(1) were issued and served on the asessee. During the course of assessment the AO noticed that the assessee did not disallow any expenses which were attributable to the exempt income, not forming part of the assessee s total income and therefore, issued the show cause notice. In response to said notice the assessee replied that he had not made any borrowing for the purpose of investment in shares nor incurred any expenditure relating to the dividend income and interest on PPF which is covered by the provision of section 14A r.w. Rule 8D of the Act. The ld. AO by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cult to accept the hypothesis that one can earn substantial dividend income without incurring any expenses, whatsoever, including management or administrative expenses and Gujarat Gas financial Services Ltd v ACIT (2008) 14 DTR (Ahd) (SB) 481) wherein it was held that there is no dispute and there cannot be any doubt, that some expenditure is incurred for making or earning the income from dividend . I find that the AO has made disallowance on the basis of Rule8D which is very much applicable for AY under consideration as held by the Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd v DCIT(2010) 328 ITR 81 (Bom). The Hon ble High Court further lay down that The Assessing Officer can adopt a reasonable basis for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule8D (2) (iii) were applicable to the assessment year 2009-10 which is before us however we find a merit in the contention of the assessee that the disallowance has to be worked out on the basis of investments which yielded dividend during the year and not by factoring in the total amount of investments. In the case of ACB India Ltd. Vs. Assistant Commissioner of Income-tax [2015] 62 taxmann.com71 (Delhi) (supra). The Hon ble Delhi High Court has held that while calculating disallowance u/s 14A r.w. Rule8D (2)(iii) only those investments which yielded dividend should be taken into account and not those investments which did not earn any dividend during the year. We, therefore, respectfully following the ratio laid down in the above decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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