TMI Blog2022 (8) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... tained separate books of account for the aforesaid two activities. Dividend income was earned by the assessee in his personal account. The assessee has also claimed to have incurred expenditure in his personal account. The expenditure incurred on personal account by the assessee was not claimed as deduction and thus, no question arises of disallowing any part of such expenditure. As during assessment 2011-12, AO only took into account the exempt income forming part of the personal account, for the purpose of invoking the provisions of section 14A - Assessing Officer as well as learned CIT(A) though alleged that common pool of human and financial resources have been utilised to earn the income, however, failed to appreciate that the assessee has already recorded expenditure incurred in personal account, which has also not been claimed as deduction by the assessee. Therefore, no basis for upholding the disallowance made by the Assessing Officer under section 14A read with Rule 8D - Decided in favour of assessee. - ITA No.1391/Mum./2020 And ITA No.1392/Mum./2020 - - - Dated:- 11-8-2022 - Shri Om Prakash Kant, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y control. 10. The appellant sincerely regrets the delay and request the Honourable Members to kindly condone the delay and request your honours to kindly admit the same. 4. In view of the above, the assessee has requested to condone the delay as the same is unintentional and due to circumstances beyond the control of the assessee. On the other hand, learned Departmental Representative ( learned DR ) did not raise any serious objection against the application seeking condonation of delay. Having perused the application, which is also supported by an affidavit, we are of the considered view that there exist sufficient cause for not filing the present appeals within the limitation period and therefore we condone the delay in filing the appeals by the assessee and we proceed to decide the appeals on merits. ITA no.1391/Mum./2020 Assessment Year 2011 12 5. In this appeal, the assessee has raised following grounds: 1) On the facts and in the circumstances of the case the Learned CIT(A) erred in law and in facts in confirming the disallowance of Rs.11,94,665/- made by the Assessing Officer: a) Without recording his satisfaction as to why the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( learned AR‟) submitted that no specific satisfaction was recorded by the Assessing Officer, while making disallowance under section 14A of the Act. Learned AR further submitted that assessee is an investor and also trades in shares and the entire expenditure claim by the assessee is the business expenditure. 9. On the other hand, learned Departmental Representative ( learned DR‟) vehemently relied upon the orders passed by the lower authorities. 10. We have considered the rival submissions and perused the material available on record. Section 10 of the Act deals with income which do not form part of total income of the assessee. Section 14A of the Act provides that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does in form part of the total income under this Act. Further, section 14A (2) of the Act, reads as under: (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable. (emphasis supplied) 12. The satisfaction as required to be recorded under the provisions of section 14A of the Act is not limited to merely disagreeing with the submission of the assessee and requires that the Assessing Officer should also provide the basis for reaching such conclusion, after having regard to the accounts of the assessee. In the present case, assessee is an investor in shares as well as also does trading in shares under proprietary firm i.e. M/s Gaurav Trading Company. Assessee claimed to have maintained separate books of account for the aforesaid two activities. Dividend income of Rs. 67,90,256 was earned by the assessee in his personal account. The assessee has also claimed to have incurred expenditure of Rs. 3,94,436 in his personal account. The expenditure incurred on personal account by the assessee was not claimed as deduction and thus, no question arises of disallowing any part of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Assessing Officer vide order dated 19/02/2016, passed under section 143(3) of the Act did not accept the submission of the assessee and made disallowance of Rs. 16,62,672 under section 14A read with Rule 8D of the Rules, after taking into account the entire salary expenses of Rs. 78,305, in trading account and 0.5% of average value of investments. 16. In the present case, the Assessing Officer took into account the entire salary expenses of Rs. 78,305, in trading account, while making disallowance under section 14A read with Rule 8D. Accepting the plea of Revenue would result in an illogical conclusion that the assessee did not incur any salary expenditure for running its proprietary concern, and entire expenditure was only incurred for the purpose of earning the exempt income. Further, similar to assessment year 2011-12, assessee also claimed to have incurred expenditure of Rs. 2,14,189 in his personal account, which was not even claimed as deduction by the assessee. In addition, the direct / salary expenditure of Rs. 78,305 for earning business income of Rs. 19,16,230 is quite nominal, which constitutes only 4%. The Assessing Officer also rejected the suo-moto disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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