TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 516
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....nds. The assessee does not have to incur any efforts to receive or recover such income. The warrant of the same is received on its own at the instance of the respective companies or mutual funds. He further submitted that the assessee has not taken any loan for the purpose of investment in shares or mutual funds. He also referred to the details of investment by the assessee in shares and mutual funds and pointed out that no fresh investment is made in the shares though some investment is made in the mutual funds. He also referred to the list of dividend received and pointed out that dividend of only Rs. 11,85,879/- was received from 22 mutual funds. He also referred to the assessment order and pointed out that the satisfaction of the Assessing Officer for applicability of Section 14A is a bald assertion without pointing out which expenditure was incurred by the assessee for earning of exempt income. He, therefore, submitted that on these facts, the disallowance made under Section 14A read with Rule 8D is not justified. In support of this contention, he relied on the following decisions of ITAT:- (i) Relaxo Footwears Ltd. Vs. ACIT - [2012] 18 taxmann.com 333 (Delhi). (ii) Priya Ex....
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....e accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :] [Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001.]." 7. From sub-section (1) of Section 14A, it is evident that the legislature has provided that no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to income which does not form part of total income. Therefore, incurring of some expenditure by the assessee in relation to exempt income is essential so as to invoke the provisions of Section 14A(1) by the Assessing ....
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.... him to explain why the disallowance under Section 14A should not be made because the assessee has received dividend income of Rs. 11,85,879/- which is exempt. He discussed the assessee's reply dated 23rd September, 2011. He also discussed the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co.Ltd. Vs. DCIT in ITA No.626 & WP 2010 and thereafter, recorded the following finding:- Since no disallowance has been done by the assessee company going by the decision of Hon'ble High Court of Mumbai as discussed above and as per the facts and circumstances of the case, I have reasons to arrive at the satisfaction for disallowance u/s 14A of the Act, r/w Rule 8D of the Rules, that there are expenses relatable to the earning of exempt income by the assessee company. Since, the assessee company has invested its money for such investment of shares, which is capable to generate income which does not or shall not form part of total income of the assessee company and indirect cost in the form of administrative expenditures and interest is involved in this process. There is direct and proximate nexus between the exempted income, which the investments shall gen....
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....e Act, the primary responsibility is upon the assessee to specify the expenditure incurred by him for earning of exempt income. In this case also, the Assessing Officer asked the assessee to state what was the expenditure incurred by him for earning of exempt income. The assessee denied to have incurred any expenditure. 11. To examine the correctness of the assessee's contention, let us go through the details of investment made by the assessee. The details of such investments are at pages 13 & 14 of the assessee's paper book and copy of which is annexed hereto as Annexure- Annexure-A for ready reference. We find that the investment in the shares is only Rs. 6,46,000/- plus Rs. 2,42,648/- but, it is in large number of companies. The investment in the mutual funds is Rs. 14,58,81,026/-. The investment in the mutual funds as on 31st March, 2008 was Rs. 10,17,39,223/-. If we see the list, we find that the assessee invested in more than 50 different mutual funds. Various mutual funds were liquidated during the year under consideration and there was fresh investment in 17 mutual funds. On these facts, we are unable to accept the assessee's contention that not a single Rupee ....