2012 (8) TMI 581

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....s, vehicle sales, governor service, travels and cargo, boat building, plantation and running windmills. The assessee filed return of income for the year under consideration declaring business loss of Rs. 2,85,57,907. After due process, scrutiny assessment was completed determining business loss at Rs. 2,53,13,231/-. The only ground raised in this appeal relates to disallowance u/s 14A of the I.T. Act r.w.r. 8D of the I.T. Rules. During the course of assessment proceedings, the Assessing Officer observed that during the year under consideration, the assessee company had admitted dividend income of Rs. 85,82,000/- and claimed entire income as exempt. The assessee company was given an opportunity to explain why proportionate amount of ex....

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....cord. The only dispute in this appeal is whether the ld. Commissioner of Income-tax(Appeals) is right in directing the Assessing Officer to disallow 2% of the dividend income or not? However, the ld. Commissioner of Income-tax(Appeals), without considering the order of the AO properly, disallowed 2% of the expenses on the ground that the assessee has not incurred any expenditure to earn the dividend income. We are unable to agree with the above order of the ld. Commissioner of Income-tax(Appeals) that there is no basis for him to come to such a conclusion. In similar circumstances, the Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT 328 ITR 81 [Bom] held as under:- "That the provisions of rule 8....