TaxTMI 
TaxTMI 
2017 (7) TMI 427
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....Rs. 12,22,441/- made u/s.14A r.w.Rule 8D(2)(iii) of the Act. 3. The facts of the case are that the assessee had admitted dividend income which was exempt from tax. Therefore, the AO disallowed u/s.14A by applying Rule 8D as follows:- Rs. Rule 8D(2)(ii) 3,21,927/- Rule 8D(2)(iii) 12,22,441/- 15,44,368/- On appeal the Ld.CIT(A) remitted the issue relating to Rule 8D(2)(ii)for fresh consideration. However, he confirmed the addition in respect of disallowance made under Rule 8D(2)(iii). Against this, the assessee is in appeal before us. 4. The ld.A.R submitted that in assessment year under consideration assessee has not made any investment yielding exempted income in the assessment year and also no....
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....a live nexus between the expenditure incurred and the income not forming part of total income. No notional expenditure can be apportioned for the purpose of earning exempt income unless there is an actual expenditure in relation to earning the income not forming part of total income. If the expenditure is incurred with a view to earn taxable income and there is apparent dominant and immediate connection between the expenditure incurred and taxable income, then no disallowance can be made under section 1 4A merely because some tax exempt income is received by the assessee. 5.2 Averting to the facts of the case in hand, the assessee had made a claim that no expenditure has been incurred or claimed for earning the exempt income. From ....
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.... purpose of business and these investments are in his personal capacity. The A.O. also has not disallowed any expenditure of personal nature out of the income from business or profession in the computation of income in the assessment order. In view of this we are of the opinion that the expenditure claimed in the business of share dealings cannot be correlated to the incomes earned in personal capacity that too on dividend, PPF interest and tax free interest on RBI bonds. In view of this, we are of the opinion that estimation of expenditure of '20,000/- out of business expenditure claimed in business activity cannot be considered for being incurred for this earning of tax free income of above nature. In view of this disallowance so made und....
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....e an assessee claims that no expenditure was incurred, the assessing authority has to presume the incurring of such expenditure as provided under sub-sec.(2) read with Rule prescribed. Therefore, it becomes clear that even in a case where the assessee claims that no expenditure was so incurred, the statute has provided for a presumptive expenditure which has to be disallowed by force of the statute. In a distant manner, literally speaking, it may even be considered for the purpose of convenience as a deeming provision. When such deeming provision is made on the basis of statutory presumption, the requirement of factual evidence is replaced by statutory presumption and the Assessing Officer has to follow the consequences stated in the statut....