TaxTMI 
TaxTMI 
2013 (12) TMI 74
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal is against the confirmation of disallowance of Rs. 7,39,752 made u/s 14A read with rule 8D. Briefly stated the facts of the case are that the assessee received dividend income of Rs. 21.77 lakh which was claimed as exempt. The Assessing Officer noticed that no disallowance was offered u/s 14A. It was opined that : a certain percentage of expenses claimed by the assessee would definitely be attributable to tax free income earned by the assessee' as it was the common pool of human and financial resources which was being utilized for earning income in various forms'. Invoking the provisions of rule 8D, the A.O. made disallowance at 0.5% towards expenses, other than interest, amounting to Rs. 7,39,752. This disallowance was confirmed in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t taken up before the learned CIT(A) as is apparent from the grounds taken in the first appeal. From the second ground reproduced above, it is seen that the same has been worded as if the learned CIT(A) "erred in confirming the addition" of Rs. 7.39 lakh while computing the book profit u/s 115JB of the Act. However, the fact of the matter is that no such issue was ever raised before the learned CIT(A) and it is for the first time that the assessee has challenged this issue before the Tribunal. This ground can be dismissed on this very short note of it being not emanating from the impugned order. 6. Be that as it may, we will proceed to decide this ground on merits as well because it involves a pure legal issue as to whether the amount di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eof) or section 11 or section 12 apply;". A bare perusal of clause (f) of Explanation (1) makes it abundantly clear that the amount of expenditure "relatable to" any exempt income, other than section 10(38), is liable to be added back to the amount of net profit as shown in the profit and loss account. When we turn to the language of section 14A, it transpires that it talks of disallowing any expenditure incurred in relation to' income not includible in the total income. Sub-section (1) of this provision provides that : "For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....less any expenditure is incurred and claimed as deduction, there can be no question of any hypothetical disallowance u/s 14A. It, therefore, follows that the amount disallowable u/s 14A is covered under clause (f) of Explanation (1) to section 115JB(2). Our view is fortified by another order dated 29 August, 2012 passed by the Mumbai Bench of the tribunal in the case of Esquire P. Ltd, Mumbai (ITA No. 5688/Mum/2011). As the assessment year under consideration is assessment year 2008-2009 in which disallowance u/s 14A is required to be computed as per Rule 8D and further it is this amount which has been disallowed and also added to the amount of net profit for computing book profit' u/s 115JB, we see no reason to disturb the impugned order o....