TMI Blog2021 (3) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the facts and the issue but did not expressly record his dissatisfaction, would not per se justify that he has not recorded cogent reason for his dissatisfaction . In our opinion, the learned CIT(A) has dealt with all the objections of the assessee, therefore, we do not find any infirmity in the same. Accordingly, we uphold the findings of the learned CIT(A) on the issue in dispute. The grounds of appeal of the assessee are accordingly dismissed. - ITA No. 6503/Del./2017 - - - Dated:- 11-3-2021 - SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI O. P. KANT , ACCOUNTANT MEMBER Appellant by : None Respondent by : Ms. Rinku Singh, Sr.DR ORDER PER O. P. KANT, AM This appeal by the assessee is directed against the order dated 23rd August, 2017 passed by the learned Commissioner of Income-tax (Appeals)-28, New Delhi, [in short the learned CIT(A)] for assessment year 2014-15, raising following grounds: 1. On the facts and in circumstances of the case, learned CIT(A) has erred in law and on facts in confirming the action of Learned Assessing Officer in disallowing ₹ 2105899/- under Section 14A of the Act as against amount of ₹ 17500/- already m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The suo motu disallowance by the assessee was on estimate of 5% of the dividend income earned. The Assessing Officer being dissatisfied with the correctness of the claim of disallowance made by the assessee, show-caused to the asessee, as to why the Rule 8D of the Income Tax Rules, 1962 (in short the Rules ) might not be invoked. The assessee contended that the investment in shares was made for strategic purpose in the sister concerns with no motive of earning dividend income. The learned Assessing Officer rejected the contention of the assessee and made disallowance invoking Rule 8D as under: i. Rule 8D(2)(i) Nil ii. Rule 8D(2)(ii) ₹ 2,10,590 iii. Rule 8D(2)(iii) ₹ 18,95,309 Total ₹ 21,05,899/- Less: already disallowed in computation ₹ 17,500/- Balance to be disallowed: ₹ 20,88,399/- 4.1 Before the learned CIT(A), the assessee filed detailed submissions and contested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. In other words, the AO is under a mandate to apply the formulae as it were under Rule 8D because of Section 14A(2). If in a given case, therefore, the AO is confronted with a figure which, prima facie, is not in accord with what should approximately be the figure on a fair working out of the provisions, he is but bound to reject it. In such circumstances the AO ordinarily would express his opinion by rejecting the disallowance offered and then proceed to work out the methodology enacted.' Thus, the Hon'ble Court also holds that if the AO is not satisfied with the amount offered by way of disallowance by the assessee, he has no choice except to follow the particular methodology enacted as per provisions of 14A(2) r.w. Rule 8D (2) (1) of IT Rules. Hon'ble Court clearly says that the AO Is under mandate to apply the formula as per aforesaid provisions in such cases. In the case of appellant, AO was not satisfied with the disallowance of ₹ 17,500/- made by appellant against the exempt income earned by it. The appellant itself is not sure of disallowance made by it as during the appellate proceedings, it has worked out the disallowance at 2,10,590/- against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee company. However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Sectionl4A of the Act in mind, the said provision has to be interpreted, particularly, the word 'in relation to the income1 that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act. This is so held in Walfort Share and Stock Brokers P Ltd., relevant passage whereof is already reproduced above, for the sake of continuity of discussion, we would like to quote the following few lines therefrom. The next phrase is, in relation to income which d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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