2013 (9) TMI 764

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....re directed against the common order of Income Tax Appellate Tribunal, Amritsar Branch, Amritsar (for short, the Tribunal) passed in ITA No.457(ASR)/2010, ITA No.249(ASR)/2011, ITA No.338(ASR)/2011, ITA No.456(ASR)/2010, ITA No.138(ASR)/2011 and ITA No.339(ASR)/2012 dated 17.10.2012 wherein the revenue has proposed following substantial question of law, for answer: "Whether on the facts and in law the Hon'ble ITAT was legally justified in deleting the disallowance of Rs. 30,31,212/- under Section 14-A of the Income Tax Act, 1961 read with rule 8-D of the Income Tax Rules, by ignoring the evidence relied on by the Assessing Officer and holding that a clear nexus has not been established that the interest bearing funds have been vested for i....

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....t expenses. Contention of the revenue is that Section 14-A of the Act is a special provision and in order to escape applicability of this provision, onus was upon the assessee to prove that no expenditure was incurred by him for earning this exempted income. It is further urged by the revenue that the Tribunal completely overlooked the scope of Rule 8-D of the Rules in relation to provision of Section 14-A of the Act. 6. The revenue has referred to sub-section 3 of Section 14-A of the Act, whereas the assessee has pointedly mentioned about sweep of subI. section 2 of Section 14-A of the Act to which sub-section 3, relied upon by the revenue, also makes reference. 7. For better evaluation, provision of Section 14-A of the Act is reproduced....

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....idend, is correct. 9. When consistent case of the assessee, despite notice given by the Assessing Officer to give details of the expenditure made on earning of exempted income in the nature of dividend, version of the assessee was that he had not made any expenditure on earning such income, the Assessing Officer in terms of sub-section 2 of Section 14-A of the Act was to proceed further to collect such material or evidence to determine expenditure, if any, incurred by the assessee but the Assessing Officer instead relying on Rule 8- D of the Rules applied as a formula, applicable to an assessee who has incurred expenditure by way of interest which is not directly attributable to any particular income or receipt which is not the case of the....

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....331 of 2009 Commissioner of Income Tax-II Versus M/s Hero Cycles Limited wherein this controversy has been set at rest. Paras 3 and 4 of the said judgment for ready reference are given as below: "3. Learned counsel for the appellant relies upon Section 14A (2) and Rule 8D (1) (b) to submit that even where the assessee claimed that no expenditure had been incurred, the correctness of such claim could be gone into by the Assessing Officer and in the present case, the claim of the assessee that no expenditure was incurred was found to be not acceptable by the Assessing Officer and thus disallowance was justified. We are unable to accept the submission. 4. In view of finding reproduced above, it is clear that the expenditure on interest was s....