TaxTMI 
TaxTMI 
2011 (9) TMI 239
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.... u/s 80 IB on account of insurance claimed in respect of Dadra and Sambha Unit.3. The ld. CIT(A) ignored the fact that the disallowance under section 14A was worked out by the AO in accordance with the provisions of Rule 8D of Income Tax Rules, 1962." 2. The assessee has taken the following cross objections:- "1. That the CIT(A) erred on facts and in law in computing disallowance under section 14A of the Income Tax Act, 1061 ("the Act"), amounting to Rs. 19,43,022/-, by applying provisions of Rule 8D of the Income Tax Rules, 1962("the Rules"). 2. That the CIT (A) erred on facts and in law in not restricting the disallowance under section 14A to the amount of Rs. 13,62,488/-, suo moto disallowed by the appell....
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.... decision dated 22.12.2010, for assessment year 2007-08 (copy at pages 152 to 158 of the Assessee's Paper Book). 7. The learned DR, on the other hand, has placed strong reliance on the impugned order. 8. In this regard, we find that indeed, the issue has been decided in favour of the assessee by the Tribunal vide its aforesaid order dated 22.12.2010 (authored by one of us - the J.M.). Therein, it has been held as follows:- "11. We find that reliance placed by the CIT (A) on "Spot King India Ltd. "(supra) is proper. In that case, the plea of the assessee regarding claim of deduction u/s 80 IB in respect of insurance claim receipt was accepted. The provisions of section 80 IA are in para materia with section 80 IB of the Act. "Spot K....
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.... but gave only part relief to the assessee by reducing the interest, whereas regarding 0.5% of exempt investments, he approved the action of the AO; and that once Rule 8D cannot be applied, the assessee' s working is to be accepted. 11. The ld. DR, on the other hand, has strongly supported the impugned order in this regard also, contending that the ld. CIT (A) has excluded security taken from customers. 12. The ld. CIT(A), it is seen, restricted the disallowance u/s 14A to Rs.19,43,022/-, calculating the disallowance of expenditure in terms of section 14A read with Rule 8D of the Rules as follows:- a) Direct expenses attributable to earning of exempt income: NIL b) Average exempt investments&n....
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.... in mutual funds. In the return of income filed, a suo moto disallowance of expenses to the tune of Rs. 1, 73,038/- had been made by the assessee u/s 14A of the Act. In the assessment order, the AO made a disallowance of Rs. 32,18,475/- by applying the method provided in Rule 8D of the I. T. Rules, 1962. This was done without pointing out any inaccuracy in the method of apportionment or allocation of expenses, as adopted by the assessee. All through, the assessee was maintained that the assessee was during the year, carrying on manufacturing activities at its manufacturing units at several places. Its head office was at Delhi. The assessee had maintained separate books of account for each unit. Common expenses incurred at the head office an....
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...." (P&H) 323 ITR 518, under similar circumstances, it was held that the disallowance u/s 14A of the Act requires a clear finding of incurring of expenditure and that no disallowance can be made on the basis of presumptions in "ACIT v. Eicher Ltd." 101 TTJ (Del) 369, that it was held that the burden is on the AO to establish nexus of expenses incurred with the earning of exempt income before making any disallowance u/s 14A of the Act. In "Maruti Udyog v. DCIT" 92 ITD 119(Del), it has been held that before making any disallowance u/s 14A of the Act, the onus to establish the nexus of the same with the exempt income, is on the revenue. In "Wimco Seedlings Limited v. DCIT" 107 ITD 267 (Del) (TM), it has been held that there can be no presumption....