TaxTMI 
TaxTMI 
2014 (6) TMI 705
X X X X Extracts X X X X
X X X X Extracts X X X X
....see is directed against the order of the Ld. CIT(A)-I, Lucknow dated 18.12.2009 for the assessment year 2006-07. 2. In this appeal, the assessee has agitated the decision of the Ld.CIT(A) confirming the disallowance of Rs.2,27,22,918/- made by the AO under section 14A of the Income Tax Act. 3. Briefly stated, the assessee, a company made investments in shares and mutual funds to the extent of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ities which might be disallowed. Having not satisfied with the explanation offered by the assessee, the AO disallowed Rs.2,27,22,918/- under section 14A of the Act out of expenditure incurred on interest of Rs.43,76,918/- and Rs.1,83,46,000/- out of other expenses as indirect expenditure for earning the exempt income. It is noteworthy to mention that the AO has applied Rule 8D of the Income Tax ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase in hand is 2006-07 to which the said Rule is not applicable. Considering the said decision, we are of the view that the authorities below are not justified in making the disallowance by invoking Rule 8D of the Income Tax Rules. 5. As regards the disallowance out of the expenditure incurred on account of interest of Rs.43,76,918/-, the perusal of the balance sheet available at page no.29 of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the exempt income can constitute a reasonable estimate for making disallowance in the years earlier to the A.Y.2008-09. Depending on the facts in each case, such disallowance ranges between 2 to 5 percentage of the dividend income. In this connection, it is the contention of the assessee that Rs.3,22,637/- being 25% of the expenses incurred by the Mumbai office would constitute a reasonable disal....