TMI Blog2020 (2) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure for cogent reasons. Satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessed as enunciated in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] and Godrej Boyce v DCIT [ 2017 (5) TMI 403 - SUPREME COURT] From the records or from the arguments of the ld. DR, we find that the invocation of sub-Section (2) of Section 14A is conspicuously absent and hence re-computation of the Disallowance is not legally valid. And considering the investments in mutual funds and in shares are through PMS, hardly any expense is incurred. As such the estimated Disallowance made by asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.O. to exclude the amount of investments in shares on which no dividend income was received while computing the average value of investments yielding exempt income. 5. The Ld. CIT(A) erred in note directing the Ld. A.O. to exclude the amount of investment in capital account of the firm while computing the average value of investments yielding exempt income. Ld. CIT(A) failed to appreciate the fact that as per the provisions of Partnerships Act, 1932 the profit share of a partner is not dependent on the capital contribution of the partner in the firm and interest if any received on capital , is taxable as business income of the partner. 3. The brief facts of the case are that the assessee is a company registered under Indian co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by Rs. 3.47 Crores and stands as on 31.3.2012 of Rs. 6.47 Crore as against Rs. 9.94 Crore as on 31.3.2011. It was reiterated that investment was made out of surplus funds and not borrowed funds. There is no increase in the working capital loan this year. The loan was raised in earlier years. Total balance as on 31.3.2012 was Rs. 2.45 Crore as against Rs. 3 Crore on 31.3.2011. The profit before tax is Rs. 4.96 crores and Share Capital Plus Reserves Surplus as on 31.3.2011 and 31.3.2012 respectively are Rs. 30.11 crore and Rs 34.13 crore, thus proving that the assessee has got sufficient own funds. The facts in brief are as under: Particulars Amount as on 31/3/2012 (Rs.) Amount as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of expenses, the assessee has disallowed the same as under: DP charges STT - Rs.28,140 Indirect expenses - Rs.1,20,000 12. The total investments as considered by AO for calculation of Disallowance u/s 14A r.w. Rule 8D include investments in partnership firm of Rs 1 lakh as on 31.3.2012 (Note No. 11) on which no exempt income was received during the year. 13. In this regard, the basis of principles laid down to determine the quantum of Disallowance on issue under consideration by the Hon ble High Court of Bombay in the case of Godrej Boyee Mfg. Co. Ltd. v. DCIT in ITA No.626 WP 2010, which fan be enumerated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for his conclusion. vi) The effect of Section 14A is to widen the theory of the appointment of expenditure. vii) Sub section (2) and (3) of Section 14A are intended to enforce and implement the provisions of Sub section (1). viii) Even in the absence of sub-section (2) of Section 14A, the Assessing Officer would have to apportion the expenditure after following a reasonable method consistent with what the circumstances of the case would warrant and having regard to all relevant facts and circumstances to disallow the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. ix) The expenditure incurred u/s 14A would include direct and indirect but relationship with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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