ITAT Kolkata: Appeal Partially Allowed on Disallowance of Expenses for Exempt Income

The Appellate Tribunal ITAT KOLKATA partially allowed the appeal of the assessee, modifying the disallowance amount in relation to expenses incurred to earn exempt income u/s. 14A for the assessment year 2007-08. The Tribunal determined the expenses related to dividend income at Rs. 22,504/-, adjusting the disallowance from Rs. 3,00,209/- to Rs. 22,504/- based on the lack of evidence provided by the assessee regarding expenditure incurred to earn the dividend income.

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Issues involved: Confirmation of addition made u/s. 14A by invoking Rule 8D for assessment year 2007-08.

The Appellate Tribunal ITAT KOLKATA addressed the grievance of the assessee regarding the confirmation of the addition made u/s. 14A amounting to Rs. 3,00,209/- by invoking Rule 8D of the I.T. Rules for the assessment year 2007-08. The Assessing Officer had calculated the expenditure to earn exempt income u/s. 14A read with Rule 8D at Rs. 3,00,209/- based on the dividend income earned by the assessee, which was claimed as exempt income. The Ld. CIT(A) upheld this decision, leading to the appeal before the Tribunal.

During the hearing, the Ld. Counsel for the assessee referred to a previous Tribunal decision in a similar case and argued that @ 1% of the dividend income should be considered as expenses related to dividend income. On the contrary, the Ld. DR supported the Ld. CIT(A)'s order and requested the Tribunal to uphold the same.

After considering the submissions and case law, the Tribunal noted that the assessee did not provide any evidence of expenditure incurred to earn the dividend income. Following a consistent approach taken in previous cases, the Tribunal determined the expenses related to dividend income at Rs. 22,504/-, which is 1% of the dividend income. Consequently, the disallowance was adjusted to Rs. 22,504/-, partially allowing the assessee's appeal.

In conclusion, the Appellate Tribunal ITAT KOLKATA partially allowed the appeal of the assessee, modifying the disallowance amount in relation to expenses incurred to earn exempt income u/s. 14A for the assessment year 2007-08.

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