2023 (7) TMI 138

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..... , development and real estate. Respondent filed its return of income on 30/09/2010 declaring loss of Rs. 86,50,349/-. Assessment order under Section 143(3) of the Income Tax Act, 1961 ('the Act') came to be passed on 28/03/2013 and the income came to be assessed at Rs. 3,86,29,793/- after making disallowances of Rs. 4,05,42,608/- under Section 14A of the Act and of Rs. 67,37,534/- under Section 36(i)(iii) of the Act. The assessed income thereafter was set off against carried forward business loss making the total income of respondent as nil. 3. Aggrieved by the said assessment order, respondent preferred an appeal to the Commissioner of Income Tax (Appeal)-36, Mumbai [CIT(A)]. CIT(A) partly allowed the appeal of respondent and relied upon .....

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..... ts and in the circumstances of the case and in law disallowance of expenditure was required to be made u/s. 14A in relation to the share income from the firm received by the assessee as such share income is exempted under 10(2A) of the Act and whether such disallowance was required to be determined in accordance with Rule 8D of the Income Tax Rules 1962?" (c) "Whether on the facts and in the circumstances of the case and in law the Hon'ble ITAT was justified in not upholding the computation of the disallowance u/s. 14A made by the assessing officer when the assessing officer has simply accepted the computation made by the assessee?" (d) Without prejudice to the above, whether on the facts and in the circumstances of the case and in la .....

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..... uch an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. Rule 8D provides for method for determining amount of expenditure in relation to income not includible in total income. 7. In view of the judgment of the Apex Court in Maxopp Investment Ltd. (supra), we hereby quash and set aside the order impugned passed by ITAT and direct the AO to give effect to this order passed by us. The AO shall strictly follow the law and formula laid down in Maxopp Investment Ltd. (supra). Before pa .....

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