9911796707
TMI Blog2020 (10) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... same may kindly be quashed. 2. Rs. 5,18,894/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the disallowance of Rs. 5,18,894/- u/s 14A. hence, the disallowance so made by the ld. AO and sustained by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the penalty may kindly be deleted in full. 3. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Brief facts of the case are that the assessee is engaged in manufacturing of bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss receipts of Rs. 19,12,36,713/-. 2. That the company has earned income from dividend which is an exempt income of Rs. 85898/- which is very negligible in comparison to overall operation of the company. 3. That gross receipts of the company was Rs. 19,12,36,713/-, and the exempted income by way of dividend was merely Rs. 85,898/- which is 0.044% of gross revenue of the company. 4. Further the company has invested its own and spare funds in the shares of the listed companies and there were hardly 10- 15 transactions during the year in relation to the investment activity and on which the company has earned the short term capital gain of Rs. 68,079/- on which company has paid the tax as per the provisions of the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest would not be disallowed under section 14A even if it is not directly attributable to any other income. Hence in view of the facts of the case and submission made herein above the disallowance made of Rs. 518894 / is without any basis, illegal, bad in law and against the principal of natural justice. We pray you to kindly delete the above disallowance or restrict the disallowance up to the amount of dividend of Rs. 85898/-." 6. On the other hand, the ld DR has relied on the orders of the authorities below. 7. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Later on, the above view was also accepted by the Coordinate Bench of Mumbai Tribunal in the case of Daga Global Chemicals Pvt. Ltd. Vs ACIT. Thus, while keeping in view the principles laid down by the Hon'ble Delhi High Court as well as the Coordinate Bench of the ITAT, Mumbai Benches we are of the view that the window for disallowance is indicated in Section 14A of the Act and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. Therefore, this proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. From the above fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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