2016 (9) TMI 748

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....grounds have been raised in this appeal: "1. That on the facts and circumstances of the case and in law, the Assessing Officer ("AO"), erred in completing the assessment of the appellant at an income of Rs. 24,909,651 as against the original returned income of Rs. 20,799,325. 1.2 That on the facts and circumstances of the case and in law, the AO / Dispute Resolution Panel ("DRP") has erred in making a disallowance of Rs. 3,725,040 under the provisions of section 14A of the Income-tax Act, 1961 ("Act"). 1.3 That on the facts and circumstances of the case and in law, the AO / DRP has erred in not accepting the contention of the appellant that no expenditure has been incurred for earning dividend income, which is not....

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....interest under section 234D of the Act.  The above grounds are independent and without prejudice to each other. The appellant craves, leave to add, alter, amend or withdraw any ground of appeal at or before the time of hearing." 3. Ground No. 1 is general in nature, Ground No. 1.7 is was not pressed so these grounds do not require any comment on our part. 4. Vide Ground Nos. 1.2 to 1.6, the grievance of the assessee relates to the disallowance of Rs. 37,25,040/- under the provisions of Section 14A of the Act. 5. Facts of the case in brief are that the assessee filed its return of income on 31.10.2007 declaring an income of Rs. 2,07,99,325/- which was processed u/s 143(1) of the Act on 20.02.2009. Later on, th....

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....ubmissions of the assessee. 7. The assessee also raised the objection before the ld. DRP and submitted that the assessee had not incurred any expenditure to earn this income. Therefore, the AO was not justified in disallowing any sum u/s 14A of the Act. It was also stated that the Rule 8D of the Income Tax Rules, 1962 was not applicable for the assessment year under consideration. The DRP after considering the submissions of the assessee observed that similar disallowance was proposed by the AO in the assessment year 2006-07 in his draft assessment order and ld. DRP had confirmed the same. Accordingly, the disallowance proposed by the AO was confirmed. 8. Subsequently, the AO by following directions given by the ld. DRP made the disal....

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....ounsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee did not incur any expenses to earn the dividend income exempted u/s 10(34) of the Act. Therefore, the disallowance made by the AO u/s 14A of the Act was not justified, particularly when, the AO had not recorded his satisfaction relating to the incurring of expenses by the assessee. It was further submitted that even if disallowance was to be made the benefit of deduction u/s 10A of the Act was to be given to the assessee. The reliance was placed on the following case laws: • Ø iNautix Technologies India (P.) Ltd. Vs ACIT (2015) 42 ITR(T) 324 (Chennai Trib.) • Ø CIT Vs Gem Plus J....