AI Drafter 
TaxTMI 
TaxTMI 
2016 (3) TMI 50
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.....Y.) 2008-09 vide order dated 06.12.2010. 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 effec....
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....ely because the assessee had earned such income. 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 shal....
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....sessee toward or in pursuing such activity. The assessee's claim, however, cannot be 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....
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....bject to judicial review. It is in this context that it has been held that the said dissatisfaction 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 h....
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....ntry, postage and stationery, etc. The assessee has a sizeable investment portfolio, which certainly 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 p....
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....l, viz. CIT vs. UTI Bank Ltd. [2013] 32 taxmann.com 370 (Guj); CIT vs. Gujarat State Fertilizers & Chemicals ltd. [2013] 217 Taxman 343 (Guj); CIT vs. Taikisha Engineering India Ltd. [2015] 370 ITR 338 (Del) and Dy. CIT vs. Jammu & Kashmi Bank ltd. [2013] 142 ITD 553 (Amritsar-Trib). The same clarify that the suo motu disallowance by the assessee or its' claim of no expenditure having been incurred to earn tax exempt income is to be found non-satisfactory by the A.O. before resort to computation (of disallowance) under rule 8D(2) could be made. This, as afore-stated, is the statutory prescription, on which therefore there is no quarrel. Then, it is further stated that sufficiency of interest-free funds would operate to the non invocation of....