2015 (7) TMI 976

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at the assessee, an advocate by profession, was observed during the course of assessment proceedings to have substantial investments in securities/investments yielding, or liable to yield, income not forming part of the total income, i.e., at an average of Rs. 21.71 crores for the relevant year; the assessee having for the current year earned tax-free income by way of dividend (Rs.3.23 lacs) and interest (at Rs. 39.96 lacs). Even though the assessee sought to justify its suo motu disallowance u/s.14A, made at Rs. 1 lac, the Assessing Officer (A.O.), unsatisfied therewith, proceeded with the disallowance by applying rule 8D, effecting a disallowance of Rs. 9,85,283/-. The same being confirmed in appeal by the ld. CIT(A), relying on the decis....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nd'. Accordingly, the expenditure could not be apportioned on the basis of the quantum of investment in tax-free investments visà- vis the total assets. 3.2 The ld. Departmental Representative (DR), on the other hand, would rely on the orders of the authorities below, stating that the assessee's method is arbitrary in-as-much as income could not be the basis of the allocation of the expenditure. The Revenue was thus justified in applying rule 8D, which only seeks to, in the absence of the assessee's accounts forming the basis of the suo motu disallowance u/s. 14A, the correctness of which could thus be verified with reference thereto, invoke the statutory estimate prescribed per r. 8D, which is only toward providing a uniform, non-a....