2016 (1) TMI 35

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....4A of the Income Tax Act, 1961 (for short "the Act") r/w rule 8D of the Income Tax Rules, 1962 (for short "the Rules"). 3. Briefly stated the facts are, the assessee company filed its return of income on 30th January 2009, declaring total income of Rs. 5,60,430. In the course of assessment proceedings, the Assessing Officer, while verifying the Profit & Loss account, noticed that the assessee has earned income by way of dividend amounting to Rs. 35,72,428, during the relevant previous year which is exempt under section 10(34) of the Act. However, the assessee has failed to make disallowance of expenditure as required under section 14A of the Act. He, therefore, called upon the assessee to furnish a working showing disallowance under sect....

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....isallowance by the assessee on pro-rata basis. 5. Reiterating the stand taken before the Departmental authorities, the learned Counsel for the assessee submitted before us that the assessee having voluntarily disallowed an amount of Rs. 2,49,45,390 under section 14A of the Act, further disallowance over and above the said amount is not only unreasonable but without justification. The learned Counsel for the assessee, referring to the working of suo-motu disallowance made by the assessee submitted in the paper book, submitted, the assessee having already made disallowance under section 14A on pro-rata basis which is much more than the actual disallowance which should have been made in terms with rule 8D, further disallowance made by the A....

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....essing Officer was, correct in calling upon the assessee to work out the disallowance under section 14A by applying provisions of rule 8D. As could be seen during the assessment proceedings, the assessee also furnished a working computing the disallowance under section 14A r/w rule 8D, which worked out to Rs. 18,45,336. The Assessing Officer, in fact, has accepted the disallowance under rule 8D computed by the assessee. Therefore, from the aforesaid facts, it is very much clear that the maximum disallowance which could have been made under section 14A r/w rule 8D, was to the tune of Rs. 18,45,336. However, as is apparent on record, the assessee itself has made a suo-motu disallowance of expenditure to the tune of Rs. 2,49,45,390, which is m....