TaxTMI 
TaxTMI 
2016 (5) TMI 1362
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.... Tax Rules. 2. Both the parties mainly argued in assessment year 2010-11 and submitted that issue is same in both the appeals 3. We have heard ld. Representatives of both the parties and perused the material available on record. The facts are taken from assessment year 2010-11 for the purpose of disposal of both the appeals. 4. The brief facts of the case are that assessee had earned dividend income of Rs. 29,600,822/- during the year under consideration. The Assessing Officer noticed that assessee had incurred operating and administrative expenses of Rs. 2257.77 lacs and bank and other financial charges of Rs. 2.86 lacs and so he worked out the disallowance under section 14A at Rs. 22,45,649/- and made the addition of Rs. 19,97,20....
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....fficer or before him as to which funds have been used for all the purposes. The ld. CIT(Appeals) found that there is commonality of funds and management in relation to business activity and investment activity, income from which does not form part of the total income. The ld. CIT(Appeals), accordingly, dismissed this ground of appeal of the assessee. 7. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that assessee has not incurred any expenditure for earning exempt income and that no interest bearing funds have been diverted to make investments leading to tax exempt income. She has referred to PB-41 which is balance sheet as on 31.03.2010 and submitted that reserves and surplus of a....
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....ts to earn exempted income. Hon'ble Punjab & Haryana High Court in the case of CIT Vs Abhishek Industries Ltd. 380 ITR 652 held as under : Section 14A of the Income-tax Act, 1961, empowers an Assessing Officer to disallow expenditure in relation to exempted income from shares if interest bearing funds have been used by the assessee. Section 14A may only be invoked if the assessee has made investments in purchase of shares out of borrowed funds. As a consequence, if the assessee has invested his own money in purchase of shares, there is no question of disallowance under section 14A. Section 14A requires the Assessing Officer to record satisfaction that interest bearing funds have been used to earn tax-free income. The satisfacti....
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....ribunal holding that as the Assessing Officer had failed to prove that interest bearing funds were used, it would not invite disallowance under section 14A. On appeal: Held, dismissing the appeal, that as there was no tangible material on record that could have enabled the Assessing Officer to record satisfaction in terms of section 14A the findings recorded by the Commissioner (Appeals) and the Tribunal that the Assessing Officer had failed to discharge this onus were neither perverse nor arbitrary and, therefore, did not call for interference". 9(i) Same views taken by Hon'ble Punjab & Haryana High Court in the case of CIT Vs Kapsons Associates in ITA 354 of 2013 dated 04.08.2015. The assessee has now clearly stated that s....