TMI Blog2019 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment year : 2013-14) - - - Dated:- 27-9-2019 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER Appellant by: Shri Sunil Jain, CA Respondent by: Smt. R. Premi, Jt. CIT(DR)(ITAT), Bengaluru. ORDER Per N V Vasudevan, Vice President This appeal by the assessee is against the order dated 28.07.2017 of the CIT(Appeals), Bengaluru, relating to assessment year 2013-14. 2. The only issue that arises for consideration in this appeal by the assessee is with regard to disallowance of expenses incurred in earning income which does not form part of total income under Chapter III of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,20,868 2 Investments as on March 31, 2012 10,27,34,88,684 Less: Investments earning taxable Income 6,41,37,500 Opening Investments 10,20,93,51,184 3 Investments as on March 31, 2013 10,23,11,65,430 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Admin Expenses: 0.5% of Average Investments 5,09,02,072 Total Disallowance U/s 14A 27,09,88,037 5. The difference between the disallowance made by the AO and the disallowance made by the assessee in the computation of income viz., a sum of ₹ 2,21,67,169 was added to the total income of the assessee by way of disallowance u/s.14A of the Act. On appeal by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has made disallowance at the time of filing of return of income and referred to computation of income. Further in the course of assessment proceedings, the assessee has filed revised statement of income in disallowing expenditure to the extent of dividend income received. Whereas the CIT(A) has passed the order allowing the alternative ground. We find that the Hon ble Delhi High Court in the case of Principal CIT vs. Caraf Builders Constructions (P.) Ltd. (101 taxman.com 167) has dealt on this issue. The Headnote reads as under: Section 14A of the Income-tax Act, 1961, read with rule 8D of the Income-tax Rules, 1962 Expenditure incurred in relation to income not included in total income (Rule 8D) Assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: 11.16. Therefore, in our considered opinion, no contrary view can be taken under these circumstances. We, accordingly, hold that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. Thus the proposition that the amount of disallowance cannot exceed exempt income is settled. Accordingly, we hold that the disallowance cannot exceed the amount of exempt income. On the second limb of argument that only investments which yielded exempt income should alone be considered, in the light of the decision of the Special Bench of Tribunal in the case of ACIT vs. Vireet investment Pvt. Ltd. anr (165 ITD 27) (SB), the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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