TaxTMI 
TaxTMI 
2014 (11) TMI 985
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.....2011. 2. The assessee, in the business of real estate and hotels, was observed to have for the relevant year dividend income at Rs. 25,80,944/- as well as profit from partnership firm (at Rs. 1,46,977/-), claimed exempt under difference clauses of section 10 of the Act. Section 14A of the Act would therefore apply, even as the assessee had made no disallowance of any expenditure in relation to this income. The same was worked out under Rule 8D, at Rs. 35,70,437/-, as under: (a) Qua direct expenditure (r. 8D(2)(i)) Nil (b) Qua indirect expenditure (r. 8D(2)(ii) Rs.25,60,423/- (c) Qua indirect expenditure - other than interest (r. 8D(2)(iii)) Rs.10,10,014/- The same being confirmed in first appeal, the assessee is in secon....
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....n v. CIT [2012] 147 TTJ 142 (Ahd)(SB), as directed by the co-ordinate bench in the case of Palm Grove Beach Hotels (P.) Ltd. (supra). 3. We have heard the parties, and perused the material on record. 3.1 As regards the claim qua disallowance of interest expenditure, the argument of sufficient capital, so that the same must be presumed as having been applied toward investments yielding tax exempt income, misses the point completely. The matter has to be decided on the basis of facts and not presumptions. Until and unless therefore it is shown and, again, with reference to the assessee's accounts, that the investments have been financed from own capital, so that no part of the borrowed capital has been utilized for the purpose, no such ....
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....nditure in relation to the earning of such income. Even if the assessee has utilized its own funds for making investments which have resulted in income which does not form part of the total income under the Act, the expenditure which is incurred in the earning of that income would have to be disallowed. That is exactly a matter which the Assessing Officer has to determine. Whether or not any expenditure was incurred by the assessee in relation to the earning of non-taxable income falls within the domain of the Assessing Officer. The basis on which the Tribunal had come to its decision for the assessment years 1998-99, 1999-2000 and 2001-02 would not conclude that question.' Where therefore the assessee is able to show, with reference t....
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....and AFL P. Ltd. vs. Asst. CIT [2013] 28 ITR (Trib) 263 (Mum). Under the circumstances, we only consider fit and proper that the matter is restored back to the file of the A.O. to allow the assessee an opportunity to present and exhibit its case as stated hereinabove, the onus for which would only be on it, and shall stand to be decided in terms of our foregoing observations, on the basis of definite findings of fact to be issued by the A.O. The other aspect of the disallowance u/s. 14A is in respect of indirect administrative expenditure, covered under Rule 8D(2)(iii), at Rs. 10.10 lacs The same stands made applying the said rule. While the A.O. effected the disallowance invoking the said rule, mandatory for the current year, the ld. CIT(A....
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....see. If the same is not in the books of account, where we wonder it is? Both the income and expenditure, determining the net profit, which forms the basis for computing income under the Act, are only as per the books of account. The provision of section 14A only codifies the law, which is otherwise inherent in tax jurisprudence, that only the net income (i.e., net of the expenditure), from whatever source, is to be brought to tax and, consequently, only the net income, where tax-exempt, is to be so. Further, rule 8D prescribes a method/s toward determining the said income, i.e., on net basis, providing a uniform basis for ascertaining the amount of expenditure liable to be excluded in computing the income chargeable to tax. The legal basis ....