TaxTMI 
TaxTMI 
2012 (11) TMI 701
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....nue's appeal and the solitary ground reads as under:- 1. The Ld. CIT(A) has erred in law and on facts in restricting the addition made on account of disallowance of Administrative & Other Expenses u/s.14A to Rs. 60,000/- from Rs. 10,88,777/-. 2.1. This appeal had a chequered past. An original return was filed declaring an income of Rs.41,150/-, since the assessee-company is engaged in the business of construction and development of residential/commercial complexes. Certain disallowances were made and the income was assessed u/s.143(3) determining assessed income at Rs.91,346/- due to a disallowance of travelling expenses. Thereafter, it was noticed that the assessee had earned dividend income which was found to be an exempted i....
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....ssing authorities cannot disallow according to their own discretion and the same is to be computed in the manner provided in sub-sections (2) and (3) of section 14A, by following observations:- " (ii) That the provisions for quantification of disallowance as contained in sub-sections (2) and (3) of section 14A are procedural and therefore apply to all pending matters. It is no longer open to the Assessing Officer to make disallowance according to his own discretion or on ad hoc basis. He is statutorily required to compute the disallowance in the manner provided by subsections (2) and (3) of section 14A. Therefore the orders passed by the Commissioner (Appeals) and the Assessing Officer were liable to be set aside. The matter was restored....
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....t income earned is Rs.4,55,829/-. After considering the facts of the case, in the first round of appeal proceedings CIT(A) in order No.CIT(A)-XI/137/2007-08 dated 16-10-2007 came to the following finding. "With regard to the disallowance of Rs.10,88,777/- out of administrative expenses, it is seen that during the year under consideration the appellant has received only one dividend warrant amounting to Rs.4,55,829/-. In this regard it is to be mentioned that it is highly improbably and beyond rational view that in order to earn dividend of Rs.4,55,829/- no one can incur administrative expenses amounting to Rs.10,88,777/-. Therefore, I am of the view that the A.O. is not justified in making heavy disallowance on this account. Since the di....
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....se of the appeals by setting aside the orders of the Tribunal and that of the first appellate authority on this issue and remand all the assessments back to the Assessing Officer for reworking disallowance under section 14A in the case of each assessee for each assessment year. The proportionate disallowance under section 14A should be limited to only interest liability and not overheads or administrative expenditure, which should be considered for disallowance under rule 8D from 2007-08 onwards." Unquote. 5.2. In respect of administrative expenses an another decision has also been cited of Hon'ble Kerala High Court pronounced in the case of CIT vs. Catholic Syrian Bank Ltd. & Ors. 237 CTR 164 (Ker.), wherein as well the same view has be....