2011 (10) TMI 653

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....exempt income so as to make a reasonable disallowance by applying the provision of section 14A of the Act ? (b) Whether the Assessing Officer was justified in disallowing a sum of Rs. 59,833/-, as expenditure not relatable to business, mainly on the ground that income earned by the assessee is only in the form of dividend income, capital gains on sale of units and in the absence of not carrying of any other business, business expenditure cannot be claimed and allowable ? (c) Whether professional fees pertaining to the period 1990-1991 to 2003-2004 is allowable as deduction in the assessment year 2005-2006 mainly on account of the fact that it was actually paid in this year ? 2. During the previous year relevant to the a....

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....ovisions of section 14A read with Rule 8D, the Assessing Officer disallowed the said expenditure and the learned CIT(A) confirmed the action of the Assessing Officer. 3.1. Assessing Officer further observed that in the absence of carrying on any business in the year under consideration assessee is not entitled to claim any business expenditure and accordingly disallowed a sum of Rs. 59,833/-. Learned CIT(A) was of the opinion that in the absence of any business transaction in this year, question of allowing any deduction towards business does not arise and accordingly confirmed the action of the Assessing Officer. 4. With regard to deduction of Rs. 19,850/- claimed by the assessee, representing professional tax, the Assessing Officer ....

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....riteria to disallow the claim of deduction. 6. With regard to disallowance of Rs. 19,850/-, learned Counsel submitted that professional tax can be claimed as deduction, under section 43B of the Act, only in the year of payment and by statutory compulsion the assessee-company has to make a claim of deduction in this year i.e., the year of payment. 6.1. On the other hand, learned DR strongly relied upon the Orders passed by the tax authorities. 7. We have carefully considered the rival submissions and perused the record. As regards the first issue we find that Rule 8D is not retrospective in its operation, in the light of decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. 328 ITR 81. Even under section ....