TaxTMI 
TaxTMI 
2016 (5) TMI 471
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.... 1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the assessing officer by sustaining disallowance of Rs. 8,84,5421- u/s 14A of the IT. Act, 1961 as alleged expenditure incurred in relation to the exempt income. 2. It is therefore prayed that above disallowance made by the assessing officer may please be deleted. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 2. Briefly stated facts as culled out from the assessment records are that the assessee is a company engaged in the business of manufacturing of textile machineries an....
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....e no cost can be associated in making the said investment. It is to be noted that assesee has already disallowed Management fees of Rs. 11,01,973/- which comprises of Portfolio management services fees and custodian charges in its computation of income and STT charges of Rs. 69,482/- as expenses in relation to exempt income. However, Assessing Officer was not satisfied with the explanation of the assessee nor did the Assessing Officer consider the expenses already disallowed in the computation of income and as per his findings given at para no. 5 of assessment order he calculated Rs. 8,84,542/- as expenditure in relation to exempt income under Rule 8D(iii) and added the same to the total income of assessee. Ld. AR also submitted that ass....
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....nt fees of Rs. 11,01,973/- which comprises of Portfolio management services fees and custodian charges in its computation of income and STT charges of Rs. 69,482/- as expenses in relation to exempt income. The computation of income along with Acknowledgement is filed in the Paper Book at Pg No. 2. The figure of Management fees and STT also gets tallied with the Audited Financial Statements in Schedule 17 - Sales and Administrative expenses at Pg. No. 15 of the Paper Book. However, assessing officer did not record any such satisfaction nor did he consider the disallowances already made by assessee in the computation but has mechanically proceeded to make disallowance on the basis of formula given u/s 14A of the Act. The assessing officer has....
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....ne the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Asse....
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....amounts : (a) The amount of expenditure directly relating to income which does not form part of total income. (b) In the case of interest on borrowed funds which is not directly attributable to any particular income or receipt, the amount computed in accordance with this following formula : A x B C A = Amount of interest, other than the amount of interest which is directly attributable to the exempt income stated in (a) above. B = The average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the relevant accounting year. C = The average of total asse....