2015 (3) TMI 57

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....that the assessee received a sum of Rs. 2,02,531/- as dividend income from shares and mutual funds, which was claimed and allowed as exempt u/s 10 of the Act. No expenditure was disallowed against this amount. On being called upon to explain as to why no disallowance was made u/s 14A read with Rule 8D, the assessee submitted its explanation which has been reproduced in the assessment order. Rejecting such submission advanced on behalf of the assessee, the AO held that the provisions of section 14A were attracted. He computed disallowance as per Rule 8D amounting to Rs. 9,46,228/-. This amount was eventually added to the total income of the assessee. The ld.CIT(A) upheld the assessment order on this score. 4. We have heard the rival submiss....

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....e in the matter." In view of this legal position emanating from the above discussed judgments of the Hon'ble Summit court, it is patent that the argument about the non-recording of satisfaction about the incurring of expenses in relation to exempt income does not hold water. 5. Now coming to the merits of the addition, it is observed that the first amount of disallowance is Rs. 8,22,725/- being the interest towards investment in shares and mutual funds yielding exempt income. In this regard, it is observed from the assessee's balance sheet that total investments made by it stand at Rs. 2.33 crore. Some of such investments yielded exempt income. When we turn to the amount of Shareholders' funds, it can be seen that the same stands at Rs....

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.... Rule 8D applies as per the judgment of the Hon'ble jurisdictional High Court in the case of Maxopp Investments Ltd. Vs. CIT (2012) 347 ITR 272 (Del). We, therefore, sustain the disallowance u/s 14A at Rs. 1,23,503/-. These grounds are partly allowed. 7. Ground No.5 is against confirmation of disallowance of Rs. 42,000/- on account of prior period expenses. The assessee had shown 'Prior period expenses' in its tax audit report at Rs. 5,45,791/-. However, in the computation of income, only a sum of Rs. 5,03,791/- was added back. On being called upon to explain as to why the remaining amount of Rs. 42,000/- was not added, the assessee stated that this represented the Effluent treatment plant apportioned share demanded by Commissioner of Indu....