TaxTMI 
TaxTMI 
2014 (2) TMI 559
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....ee. Aggrieved by the aforesaid order CIT(A), the Assessee and Revenue both are now in appeal before us. The concise grounds of appeal filed by the Assessee reads as under:- 1.1 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in dismissing ground No.1 of the appellant's appeal (challenging the very validity of the assessment order impugned before him) on the ground that it was general in nature not requiring any adjudication by him. He ought to have appreciated, inter alia,: (a) that the assessment order impugned before him contained additions of Rs. 46.57 lacs out of which Rs. 13.49 lacs on account of disallowance of expenditure u/s.14A read with Rule 8D was made without jurisdiction; (b) that the remaining addition of Rs. 33.08 lacs, apart from seeking effectively to disallow the entire administrative expenditure debited to the appellant's Profit and Loss Account, was so erroneous [which error had in fact been appreciated and rectified by the learned CIT(A)] as clearly to show that the assessment order had been passed without application of mind; 1.2 The learned CIT(A) ought accordingly to have quashed th....
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.... total disallowance of Rs. 33,08,407/- without appreciating facts that assessee had claimed various expenses inspite of there is no business activity. 5. We now take up Assessee's appeal ITA No. 2647/AHD/2012 Ground No. 1.1 and 1.2 are not pressed and the same are dismissed as not pressed. 6. Ground no. 2 is with respect to disallowance under section 14A. 7. During the course of assessment proceedings, A.O. noticed that Assessee has earned dividend income of Rs. 1,75,43,512/-. The Assessee was asked to submit as to why disallowance under section 14A of the Act not be made. Assessee interalia submitted that the investments which were held by it were old investments, made out of interest free funds and further no new investments were made during the year. The submissions of the Assessee was not found acceptable to the A.O. He was of the view that Assessee has failed to furnish and prove the nexus from which it could be established that the investment made in shares were from own funds and not from interest bearing funds. He thereafter worked out the disallowance on the basis of Rule 8D of the Income Tax Rules and the total disallowance was worked out at Rs. 13,48,680/....
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....ance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom.). He also placed reliance on the decision of Ahmedabad Tribunal in the case of Kamal Madmohan Mangaldas ITA No. 2839/AHD/2011 and also placed on record the copy of the aforesaid order. Reliance was also placed on the decision in the case of Torrent Power Ltd. vs. DCIT (2013) 33 Taxman.com 287 (Ahmedabad) and a copy of the aforesaid order was also placed on record. The ld. A.R. further submitted at the most some Adhoc disallowance may be made. The ld. D.R. on the other submitted that in the year under appeal, provisions of Rule 8D of the I.T. Rules were mandatory and therefore the A.O. was fully justified in making the disallowance. 9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the Assessee has earned dividend income of Rs. 1.75 crores. From the copy of the Balance Sheet placed on records it can be seen that the interest free funds available with the Assessee in the form of Share Capital and Reserves Surplus are in excess of the investments. Before us, the Assessee has submitted that no new investments have been made during the year and the investments held by it are ....
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.... CIT(A) after considering the submissions made by the Assessee granted partial relief by holding as under:- 4.2 I have carefully considered the assessment order and the submissions made on behalf of the appellant. The A.O. has given a specific finding that the appellant is not doing any business in the current year as also in the earlier year. The business of the appellant is that of advertising business of all publications of Lok Prakashan Ltd. It is never stated that earning of income from FD is business activity. Even earning of interest income from FD cannot be considered to be business activity. Thus the A.O. was justified in holding that the appellant has not done any business and therefore, income is to be assessed as income from other sources. Accordingly he had justifiably observed that business expenditure cannot be claimed by the appellant. It is noticed that the appellant has itself claimed only aggregate expenditure of Rs. 18,64,109 in the return of income as against aggregate expenditure of Rs. 46,61,807 debited in the Profit & Loss Account. Therefore, when the A.O. has adopted the income as per the return of income in the computation of total income, he was not ju....
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....nder: Disallowance expenses u/s. 14A Rs. 13,48,480 Disallowance of claim for depreciation Rs. 2,35,848 The A.O. is directed to work out the total income accordingly. 14. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. Before us, the ld. D.R. relied on the order of A.O. On the other hand the ld. A.R. reiterated the submissions made before CIT(A) and thus supported the order of CIT(A). 15. We have heard the rival submissions and perused the material on record. We find that CIT(A) has noted that the Assessee has itself claimed only aggregate expenditure of Rs. 18,64,109/- in the return of income as against the aggregate expenditure of Rs. 46,61,807/- debited to the Profit and Loss account. He therefore concluded that when the A.O. has adopted the income as per return of income, he was not justified in considering the entire amount debited to the Profit and Loss account for the purpose of making disallowance. He has further given a finding that the nature of administrative expenses claimed by the Assessee was in respect of Audit fees, Conveyance, Bank Commission, Office maintenance etc. He relying on the decision of Calcutta High Court in the ca....