2016 (12) TMI 864

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.... 50,040/- computed by the assessee as expenses related to earning of income on which tax is not payable. 2. That the order of the authorities below holding that Rs. 14,56,385/- was to be disallowed out of the expenses incurred by the assessee in the course of his practice as a Senior Advocate is not sustainable as at no stage have said the authorities found any dissatisfaction as regards the correctness of the claim made by the assessee. 3. That the disallowance of expenses u/s. 14A on subjective and presumed facts contrary to the realties of the case is a hypothetical disallowance which needs to be deleted. 4. That the orders of the ld. Authorities below being contrary the facts and circumstances of the case and ....

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....large portfolio entail expenses right from diversion of manpower / staff for indulging in investment activities to various activities like visiting banks, use of vehicle and telephone, use of internet if portfolio management is web based, cost of computer and its depreciation, computer operator, consequent electricity, use of office premises, fee charged by mutual fund agents/ bankers, portfolio record maintenance and its tracking to ensure time sale/purchase of mutual fund units, etc. Accordingly, the held that in view of provision of section 14A read with Rule8D of the Income Tax Rules, 1962, an expenditure of Rs. 14,56,385/- was determined which is attributable to the earning of exempt income and added back to the income of the assessee ....

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....authorities. We find that disallowance made u/s. 14A of the Act of Rs. 14,56,385/- was against Rs. 50,400/- computed by the assessee as expenses related to earning of income on which tax is not payable in the eyes of law. We further find that disallowance out of expenses incurred by the assessee in the course of his practice as a Senior Advocate is not sustainable as at no stage it has been said that the authorities found any dissatisfaction as regards the correctness of the claim made by the assessee. In view of above, no disallowance under section 14A is sustainable in the eyes of law. Our view is fortified by the following decisions:- CIT Vs Taikisha Engineering India Ltd. (Delhi High Court) ITA 115/2014 & 119/2014 dated 25-11-2....