Tribunal allows appeal, specifies disallowance calculation under Rule 8D(2)(iii) for dividend-yielding investments. Importance of substantiating claims emphasized.

The Tribunal allowed the appeal for statistical purposes, directing a specific calculation for disallowance under Rule 8D(2)(iii) based on investments yielding dividends. The judgment highlighted the importance of substantiating claims and the consequences of non-appearance in appellate proceedings.

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Issues:
1. Disallowance of expenditure u/s 14A of Income-tax Act, 1961.
2. Appeal heard ex parte due to non-appearance of assessee.
3. Disallowance calculation under Rule 8D of I.T. Rules.

Issue 1: Disallowance of expenditure u/s 14A:
The appeal concerned the disallowance of Rs. 6,25,975 under Section 14A of the Income-tax Act, 1961. The Assessing Officer (AO) disallowed the amount as the assessee failed to justify its claim of expenditure related to exempt income. The AO applied Rule 8D of I.T. Rules for disallowance calculation. The Commissioner of Income Tax (Appeals) upheld the AO's decision, noting that the disallowance was only under Rule 8D(2)(iii) - 0.5% of average investments. The appellate authority confirmed the disallowance as the assessee did not appear or submit any written arguments.

Issue 2: Appeal heard ex parte:
The appeal was heard ex parte as the assessee did not appear despite multiple notices. The Departmental Representative for the Revenue was present. The disposal ex parte was in line with Rule 24 of the Income Tax Appellate Tribunal, 1963.

Issue 3: Disallowance calculation under Rule 8D of I.T. Rules:
The Tribunal directed the AO to compute the disallowance under Rule 8D(2)(iii) by considering only investments yielding dividends during the previous year. This direction was based on a previous decision by the ITAT Kolkata and affirmed by the Calcutta High Court. The Tribunal allowed the appeal for statistical purposes, emphasizing the specific consideration of dividend-bearing securities for disallowance calculation.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing a specific calculation for disallowance under Rule 8D(2)(iii) based on investments yielding dividends. The judgment highlighted the importance of substantiating claims and the consequences of non-appearance in appellate proceedings.

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