TaxTMI 
TaxTMI 
2016 (7) TMI 378
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....f section 14A of the Income Tax Act (the Act) r.w.rule 8D of the Income tax Rules, 1962 (the Rules). 3. Brief facts relating to the issue are that the assessee has exempt income in the form of dividend from various investments amounting to Rs. 68.46 crores. The assessee itself computed the disallowance of direct and indirect expenditures after allocating the sum of Rs. 28,28,638/- qua exempt income. The computation /details of working of disallowance made by the assessee itself is provided in para 5.2 at page 4 of the assessment order. The AO has invoked the provisions of section 14A of the Act r.w.r 8D of the Rules and by following the decision of the Special Bench of the Tribunal in the case of Daga Capital Management Pvt. Ltd. (2008) (26 SOT 603) (Mum)(SB), disallowed the claim of the assessee. The assessee before the CIT(A) challenged the disallowance made by AO disallowing direct expenses under Rule 8D (2)(ii) amounting to Rs. 11,56,498/- and 0.5% of average investment under rule 8D (2)(iii) at Rs. 6,82,00,000/-. The CIT(A) confirmed the action of the AO by observing as under (Para 5): "5. I find that the A.O., while computing the disallowance under Rule 8D has taken a s....
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....e following reasons. On going through the submissions made by assessee before the first appellate authority as well as the grounds raised before us, we are of the opinion that the issue raised emanates from the assessment order as well as the order of the learned Commissioner (Appeals) and is covered under ground no.1, raised before us. Having held so, we will now examine whether the Assessing Officer has validly invoked the provisions of section 14A. It is the contention of the learned Counsel for the assessee that in terms with section 14A(2), the Assessing Officer must record a satisfaction that claim of expenditure by the assessee with reference to its books of account for earning exempt income is not correct. Though, recording of satisfaction as provided in sub-section (2) was brought to statute by Finance Act, 2006, w.e.f. 1st April 2007, and applicable for assessment year 2007-08, but, as held by Hon'ble Delhi High Court, in Maxopp Investment Ltd. (supra), even prior to introduction of sub-section (2) to section 14A, the Assessing Officer is required to record his satisfaction regarding correctness of assessee's claim. In the present case, on a perusal of the assessment ....
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....Ltd. (supra). In view of the aforesaid, we do not see any reason to uphold the disallowance of indirect expenses made by the Assessing Officer by applying a provisions of rule 8D(2)(iii). However, there is no dispute to the fact that the assessee did incur certain expenses towards earning the exempt income. In fact, the assessee has also accepted this factual position and has submitted a working before the Assessing Officer computing the disallowance under section 14A of the Act at Rs. 15,95,064. The judicial precedents on the issue including the decision of the Hon'ble Jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. (supra) are also unanimous while holding that though rule 8D would not apply prior to assessment year 2008-09, but a reasonable disallowance can be made under section 14A. After considering the facts of the present case, we are of the opinion that the disallowance made by the assessee under section 14A amounting to Rs. 15,95,064, is reasonable. We, therefore, direct the Assessing Officer to restrict the disallowance to that amount. In view of our decision as above, the issue raised by the assessee in ground no.2(iii) becomes redundant. Grounds are partly ....
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....ction of the AO in not granting the TDS credit amounting to Rs. 38,06,399/-. 8. We have heard both the parties and perused the record placed before us. We find that the AO has not allowed the claim of the credit for TDS amounting to Rs. 11,95,766/- and credit for TDS as not claimed by the assessee amounting to Rs. 26,10,633/- for the reasons that the TDS certificate were received after filing the return of income. The assessee has filed a copy of rectification letter dated 24.12.2009 addressed to the AO stating that the original TDS certificate mentioning amount of Rs. 26,10,633/- were filed with the AO and also details of TDS claimed for an amount of Rs. 11,95,766/- were filed during the course of hearing before the AO vide letter dated 13.11.2009. In view of the above facts we are of the view that the AO should have allowed credit to the assessee when the assessee has filed rectification petition before him and even the CIT(A) has directed the AO to allow claim of TDS after verifying the same. We direct the AO to allow the claim of TDS amounting to Rs. 11,95,766/- which were filed before him during the course of assessment proceedings and also the TDS certificate received late....
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..... Counsel of the assessee stated that now short credit for TDS is to the extent of Rs. 18,55,481/- and advance tax credit is amounting to Rs. 1,70,00,000/-. We find from the case record that the assessee has moved a rectification application dated 25.6.2011 and subsequent reminders dated 11.8.2012 and 23.1.2012 but AO has not given any effect on the same. We direct the AO to decide the claim of the assessee immediately with regard to granting the issue of credit for TDS and advance tax. We direct the AO accordingly. 13. The next issue in ITA No.1836/Mum/2013 for assessment year 2009-01 is as regard to the direction of CIT to verify the amount of Rs. 99,751/- as reflected in ITS-TDS information-C belonging to assessee. We find that the CIT(A) has only directed the AO to verify the same. We further add that AO will allow opportunity before making addition on this count. Accordingly, this issue of assessee's appeal is allowed for statistical purposes. 14. The next issue in the appeal bearing ITA No.1836/M/2013 is with regard to charging interest under section 234C of the Act. 15. The ld. Counsel for the assessee submitted that the interest charged by the revenue on the amount....