TMI Blog2015 (10) TMI 2757X X X X Extracts X X X X X X X X Extracts X X X X ..... s above) being ₹ 31,13,082/-, the total income ( as above) being of ₹ 80,189,889/- and out of this income, dividend being of ₹ 904,668/-, the disallowance of expenses needs to be worked out by applying the proportionate method, as per which, the disallowance works out to ₹ 35120/- it is found to be acceptable. The total income, the dividend and the total expenses claimed being as above, as discussed, the disallowable expenses would work out to ₹ 35,120/-, applying the proportionate method. Therefore, the disallowance is restricted to ₹ 35,120/-. Accordingly, Ground No.1 is partly accepted. Disallowance u/s 94(7) - According to CIT(A) as per section 94(7) only the short term capital loss ought to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , apropos disallowance of administrative expenditure under Rule 8D(2)(iii) of the I.T. Rules, the ld. CIT(A) maintained the disallowance, holding as follows: 7. I have gone through the issue and the submissions of the appellant. In this case the appellant has made huge investments in tax free investments totaling to ₹ 96,54,43,531/-. Certainly expenditure like clerical expenses, telephone expenses, stamp duty, etc. are incurred by the appellant with regard to these investments. The appellant has not maintained any separate account with regard to the expenditure met out for earning of tax free income. The expenses are mixed up and from the accounts maintained by the appellant it is difficult to know the exact amount of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in respect of expenditure relating to income, which does not form part of the total income under the I.T.Act, having regard to the accounts of the assessee. It has been contended that as is evident from the phraseology specifically employed in the section, if from the accounts of the assessee, a reasonable disallowance could be worked out, there is no need to invoke Rule 8D of the Rules, particularly, if doing so gives an absurd and unreasonable result. In this regard, reliance has been placed on K.P. Varghese vs. CIT , 131 ITR 597 (SC), as per which, a manifestly absurd and unjust result which could have never been intended by the legislature should be avoided. 5. On the other hand, the ld. DR, strongly relied on the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is huge other income, the quantum of disallowance is entirely unreasonable. Rather, a reasonable disallowance can be made, if the accounts of the assessee are considered, without taking recourse to Rule 8D of the Rules. The ld. counsel for the assessee has contended that the total expenses claimed (as above) being ₹ 31,13,082/-, the total income ( as above) being of ₹ 80,189,889/- and out of this income, dividend being of ₹ 904,668/-, the disallowance of expenses needs to be worked out by applying the proportionate method, as per which, the disallowance works out to ₹ 35120/-. 7. The contention of the assessee is found to be acceptable. The total income, the dividend and the total expenses claimed bei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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