2017 (1) TMI 1217

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....sessing Officer (AO) Under Section 153A/143(3) of the Income Tax Act 1961, (in short the 'Act'), dated 06.06.2011. 2. Brief facts of the case qua the issue are that a search and seizure operation was conducted on 17.03.2010 at the office premises at 25-27, Netaji Subhas Road, Kolkata-700001 and Panchanama was drawn. The search was concluded on 19.03.2010. Consequently, a notice u/s.153A of the Act was issued to the assessee company on 12.01.2011, which was duly served upon the assessee on the said date calling for return for assessment year 2009-2010. In response to such notice, the assessee filed its return of income on 21.01.2011 declaring a taxable income at Nil (loss of Rs. 53,21,035/-). The AO has completed the assessment by making ....

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....0,000/- u/s 14A but neither in the course of assessment proceedings nor in the appellate proceedings, the appellant was able to explain the basis of computation of disallowance at Rs. 50,000/-. It appears that the appellant had made the disallowance of Rs. 50,000/- on ad-hoc basis. However, the quantum of disallowance made by the appellant cannot be accepted because in the year under appeal for the purpose of calculation u/s 14A, provisions of Rule 8D are applicable. It is observed that as on 31.03.2009, the appellant company was having 'Share Capital' and 'Reserves & Surplus' at Rs. 1,57,24,981/- and the 'Unsecured Loans' at Rs. 5,84,16,416/-. The amount of 'Investments' was Rs. 6,20,26,176/-. Thus, there ca....

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....o exempt income for the purpose of Rule 8D(ii) of IT Rules 1962 on a proportionate basis. 3. That on the facts and in the circumstances of the case, Ld. CIT(Appeals) acted arbitrarily in confirming disallowance of Rs. 42,73,432/ - u/ s.14A read with Rule 8D of IT Rules, 1962. 4. That the appellant craves leave to add, alter, adduce or amend any ground or grounds on or before the date of hearing. 5. Although, in this appeal, the assessee has raised four grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to ground No.3 only and other grounds were not pressed by the assessee. 5.1. Regarding ground No.3, the Ld. AR for the assessee has submitted that the issue under c....

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....y credited in the bank account of the assessee and no expenditure was claimed. What it may be, we find that the assessee only received Rs. 1,82,362/- as dividend income, therefore, there is no question of disallowance of Rs. 14,58.412/- by invoking section 14A r.w. Rule 8D under the facts available on record. It was also explained by the Id. counsel for the assessee that on identical fact in earlier years, no disallowance was made. In the present assessment year also, no borrowed funds were invested by the assessee for making investment in shares or for earning dividend income. At best, if any disallowance could be made that can be restricted to Rs. 1,485/- which were claimed as demat charges. Disallowance u/s 14A r.w. Rule 8D cannot exceed....