TMI Blog2015 (6) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court : The subject matter of challenge in the appeal is a judgment and order dated 5th October, 2006 pertaining to assessment year 2002-03 passed by the learned Tribunal. The following substantial questions of law were formulated at the time of hearing of the appeal: "(a) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal has erred in law in deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said expenses as falling within the ambit of section 40A(9) but had stated such expenditure to be allowable in accordance with the decision of the Hon'ble Calcutta Tribunal in case of DCIT - Vs - Chloride Industries Ltd. reported in 76 ITD 1. The Ld. CIT(A) also confirmed the disallowance made by the A.O. At the time of hearing, it was brought to the notice of the Bench that this issue had come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was decided initially by the assessing officer on the basis of a thumb rule. The assessing officer opined as follows: " The assessee has earned exempt dividend income amounting to Rs. 13,43,74,967/- on a total investment of Rs. 906,93,00,000/- but has not disallowed the expenditure incurred for earning the said dividend in the computation of total income. During the course of hearing the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,87,086/- (Rs.311,05,00,000/- Rs. 9982,44,000 x Rs. 13,43,74,967) is being disallowed u/s. 14A." The CIT(A) upheld the order of the assessing officer, but the Tribunal was of the opinion that "this issue is squarely covered by various decision of this Tribunal, where it has been held that possibility of direct and indirect expenses in connection with earning of dividend income cannot be ruled ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the sum of Rs. 40 lack and odd disallowed by the assessing officer is in accordance with law. When the sum of Rs. 40 lacs and odd was on the basis of a pure guesswork and the learned Tribunal has reduced to a sum of Rs. 20 lacs, it cannot be said that the discretion was exercised unreasonably or illogically. Therefore, the second question is answered in the negative. The appeal is, thus, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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