TaxTMI 
TaxTMI 
2012 (12) TMI 130
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....rming the disallowance of Rs. 8,90,039/- out of expenses other than interest u/s 14A in relation to exempt income i.e. dividends. On facts, hardly any expense other than interest was incurred for earning of non-taxable income i.e. dividend on investments. There is no specific identification of any such expenditure for earning of such non-taxable income identified by the Assessing Officer. As such and otherwise too the expenditure assumed to be incurred on non-taxable income cannot be disallowed. That the said disallowance of expense has been made on erroneous views and/or non-appreciation of facts, law evidences, submissions and case law relied upon by the assessee in its favour. 2. That on the facts and in law involved the L....
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....tly attributable to the investment in shares, it has not disallowed any expenditure relating to administrative and managerial services and in view of that he added back an amount of Rs. 8,90,039/- being 0.5% of average investment in shares as per provisions contained in Rule 8D. 3. Aggrieved the assessee filed an appeal before Ld CIT(A) and submitted that Assessing Officer had made disallowance without any basis and pleaded that from the combined reading of section 14A and Rule 8D, it is apparent that the disallowance u/s 14A can be done only if the Assessing Officer is not satisfied about the claim of expenses made by assessee. 4. The Ld AR Also pleaded before Ld CIT(A) that section 14A is not mandatory as per the decision of the Spe....
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....ccordance with Rule 8D. In the case under consideration, the Assessing Officer has made disallowance under Rule 8D by computing 0.5% of average investment. I am of the considered opinion that Rule 8D has been correctly applied by the Assessing Officer. Therefore, the plea of the appellant cannot be accepted. In view of the legal position and judicial pronouncements on the issue, I hold that disallowance made by the Assessing Officer under Rule 8D is correct and thus no interference is called for in this regard. Accordingly, these grounds of appeal are rejected." 6. Aggrieved the assessee filed appeal before this Tribunal. The Ld AR pleaded that no particular expense was brought before the notice of assessee which could have been incurred....
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....n submissions filed by him saying that section 14A is not mandatory as was held by the Special Bench, Mumbai in the case of Daga Capital Pvt. Ltd. (supra) and also on the judgment of Hon'ble Punjab & Haryana High Court in the case of Haryana Land Reclamation & Development Corn. (supra). He further invited our attention to the case of CIT v. Hero Cycles Ltd., [2010] 323 ITR 518 as decided by Hon'ble Punjab & Haryana High Court that section 14A requires finding of incurring of expenditure and where it is found that for earning exempted income, no expenditure has been incurred, disallowance u/s 14A cannot be made. 9. We have heard the rival parties and perused the material on record. From the balance sheet as on 31.3.2008 filed in the paper....
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....ession prescribed in section 2(33) must be prescribed by Rule made under the Act. What merits emphasis is that the jurisdiction of the Assessing Officer to determine the expenditure incurred in relation to such income which does not form part of total income in accordance with the prescribed method, arises if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not form part of total income. Moreover, the satisfaction of the Assessing Officer has to be arrived at having regard to the accounts of the assessee. Hence, sub-section (2) does not ipso facto enable the Assessing Officer to apply the method p....