TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 50
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....2. The dispute in the present case revolves around the validity or otherwise in law, and in the facts and circumstances of the case, of the disallowance u/s. 14A, at Rs. 4,90,371/-, in respect of the assessee's tax-exempt income, being dividend on units, shares and securities (Rs.56.25 lacs) and long-term capital gain (LTCG), at Rs. 5.92 lacs. The assessee has also earned another Rs. 2,62,431/- as dividend income in a proprietary concern, M/s. Datamatics Financial Software Services Ltd., claimed exempt u/s. 10(34) of the Act and, two, the figure of Rs. 56.25 lac includes Rs. 77,994/- by way of interest (tax free) on securities (computation of income at PB pgs. 15-21). 3. The disallowance effected by the Assessing Officer (A.O.) and sustain....
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..... The A.O. could not proceed mechanically to apply rule 8D, but has to record his dissatisfaction with the correctness of the assessee's claim, giving cogent reason for not accepting the same. This sums up the assessee's case. 4. We have heard the parties, and perused the material on record. 4.1 Section 14A reads as under: 'Expenditure incurred in relation to income not includible in total income. 14A. (1) For the purposes of computing the total income under this Chapter no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such inc....
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....e a bald claim, made in the face of expenditure being incurred and claimed. How could, one may ask, the correctness of a bald claim be examined? Such a claim has no sanction in law, and no cognizance could be given therein to it. It is only where the claim, again, with reference to its accounts, is made by the assessee that the A.O. could, having regard thereto, examine the same as to its correctness and express his satisfaction or, as case may be, dissatisfaction therewith, proceeding to invoke rule 8D in case of the latter. Rule 8D is toward an estimation of such expenditure, and mandatory in its application, so that the A.O. has no discretion in the matter once the rule gets attracted. The plea of no expenses having been incurred cannot,....
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....isfaction has to be explicit and informed. The same, thus, is not a jurisdictional requirement, but toward completing the inbuilt fairness of the procedure as provided for. The requirement of recording dissatisfaction predicates on the discharge of the onus cast on the assessee, and which may not always obtain. The Revenue on its part could only extend opportunity to the assessee for the discharge of the said onus. In a particular case, the assessee may not produce the accounts. How could the A.O. possibly verify the correctness of the assessee's claim in such a case? In another, the assessee does not state the basis of its claim or makes the same de hors the expenses incurred and claimed. The A.O. could not possibly verify the correctness ....
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....rtainly requires being, and is being, managed. This would entail making new as well as disposing investments already made. Even the decision to hold an investment requires a periodic review of its performance as well as of the investment environment/scenario. Could this be without any associated cost? Even as much as maintaining and keeping the records, including safe-keeping of the securities (where not dematerialized), entails cost. A meeting of the 'assessee' with his investment consultant or broker in relation to a IPO or any other emerging investment option is to be conducted (say). This would require visit by the consultant to the assessee's premises or vice versa. This explains the appropriation of the expenditure claimed on telephon....