9911796707
TMI Blog2018 (6) TMI 1738X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer erred in applying provisions of section 14 A of Income Tax Act 1961 read with Rule 8D of Income Tax Rules 1962. Reasons given by the Assessing Officer while making above addition are insufficient and contrary to the facts and evidence on records and without application of mind. 2. Addition of Rs. 33,956/- on account of difference in reconciliation with balance as per the books of account of the assessee and as per the books of account of Continental Warehousing Corporation (N.S.) Ltd. The Assessing Officer erred in making addition of a sum of Rs. 33,956/- being difference in closing balances as on 31st March 2010 as per the books of account of the assessee and Continental Warehousing Corporation (N.S.) Ltd. Reasons given by the Assessing Officer while making above addition are insufficient and in spite of the fact that the Assessee has given full particulars of the difference and explained that the difference is due to incorrect entries passed by Continental Warehousing Corporation (N.S.) Ltd. in its books of account." 2. Briefly stated, the facts of the case are that the assessee company which is engaged in the business of providing freight forwardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance made by the A.O under Sec.14A r.w. Rule 8D and sustained by the CIT(A) was liable to be struck down. Alternatively, it was submitted by the ld. A.R that even otherwise the disallowance of Rs. 2,29,151/- made by the A.O under Sec. 14A was substantially excessive. The ld. A.R in order to fortify his aforesaid contention submitted that in its own case for A.Y 2005-06 a coordinate bench of the Tribunal viz. ITAT "A" bench, Mumbai had held a disallowance under Sec. 14A of Rs. 25,000/- as reasonable in the case of the assessee. It was further submitted by the ld. A.R that the lower authorities failing to appreciate the explanation of the assessee in the right perspective, as regards the reasons leading to the variance in the balance reflected against the account of M/s Continental Warehousing Corporation (NS) Ltd. in the books of account of the assessee, as in comparison with that shown by the aforesaid party, had wrongly made an addition of Rs. 33,956/- in the hands of the assessee company. It was submitted by the ld. A.R. that the impugned variance was on account of incorrect entries passed by M/s Continental Warehousing Corporation (NS) Ltd. in its books of account. It was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the backdrop of the judgment of the Hon‟ble Supreme Court in the case of Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT & Anr. (2017) 394 ITR 449 (SC), it was obligatory on the part of the A.O to have recorded his satisfaction, having regard to the accounts of the assessee, as to why the latters claim that no expenditure was attributable to earning of the exempt dividend income was not to be accepted. The Hon‟ble Supreme Court while deliberating on the said issue at length had observed as under: "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Subsections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of difference in the account of M/s Continental Warehousing Corporation (NS) Ltd. We find that the assessee had submitted before the lower authorities that the aforesaid difference of Rs. 33,956/- was on account of two reasons viz. (i) non-posting of TDS entry of Rs. 32,346/- by the aforesaid party viz. M/s Continental Warehousing (NS) Ltd; and (ii) difference in opening balance of Rs. 1,610/-. We find that both of the lower authorities had summarily disregarded the claim of the assessee, not only as regards the reasons leading to the impugned variance in the respective balances, but rather had also brushed aside its contention that the said variance would not have any bearing on the income of the assessee for the year under consideration. We have deliberated on the conceded facts leading to the aforesaid variance of Rs. 33,956/- and find substantial force in the claim raised by the assessee before the lower authorities. We concededly the difference of Rs. 32,346/- had arisen on account of non-posting of a TDS entry by the aforementioned party viz. Continental Warehousing Corporation (NS) Ltd, in the account of the assessee as appearing in its books of accounts. We find ourselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant craves leave to add, amend, alter, modify or omit any of the aforesaid Grounds of Appeal as occasion may arise of demand." 12. Briefly stated, the facts of the case are that the assessee had e-filed its return of income for A.Y 2011-12 on 29.09.2011, declaring total income at Rs. 4,07,58,340/-. The income of the assessee was assessed under Sec. 143(3) at Rs. 4,12,14,690/-. During the course of assessment proceedings, the A.O had inter alia made the following additions/disallowance: Sr. No. Particulars Amount 1. Disallowance under Sec.14A r.w. Rule 8D Rs. 4,06,350/- 2. Disallowance of administrative expenses Rs. 50,000/- 13. We shall first advert to the disallowance of Rs. 4,06,350/- made by the A.O under Sec. 14A r.w. Rule 8D, which thereafter had been sustained by the CIT(A). We have perused the order of the A.O and find that he while dislodging the claim of the assessee that no expenditure debited in the profit & loss account was attributable to earning of the exempt dividend income of Rs. 18,70,574/-, has however failed to arrive at a satisfaction having regard to the accounts of the assessee, as placed before him, that it was not possible to generate the requisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of amount of Rs. 50,000/- made by the A.O out of the administrative expenses of Rs. 3,27,482/- which were booked by the assessee in its profit and loss account. We find that the A.O while making the disallowance of Rs. 50,000/- had observed that on verification of the bills and vouchers pertaining to the administrative expenses, some bills/vouchers were found to be undated or unsigned and many vouchers were not supported with relevant bills. We have deliberated on the aforesaid observations of the lower authorities and are unable to persuade ourselves to subscribe to the same. We find that though there is a mention by the lower authorities that some bills/vouchers pertaining to the administrative expenses were found to be undated or unsigned and many vouchers were not supported with relevant bills, but surprisingly there is not a mention of a single such bill/voucher which is found to be suffering from any such alleged infirmity. We are of the considered view that in the case before us, as there is no evidence which could support the claim of the A.O that some of the bills/vouchers were found to be undated or unsigned or not backed by relevant bills, it is difficult for us to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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