AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 37
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....nce of Rs. 9,63,355/- made by the respondent without recording mandatory satisfaction as contemplated under Section 14A of the Income Tax Act read with Rule 8D(2)(iii) of the Income Tax Rules. (ii) Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in confirming the disallowance of Rs. 9,63,355/- made under Section 14A of the Income Tax Act read with Rule 8D(2)(iii) of the Income Tax Rules without there being any finding by the respondent that the appellant assessee has actually incurred such expenditure for earning exempt income. (iii) Whether in the facts and circumstances of the case, the order passed by the ITAT is perverse inasmuch as the same has been passed in mechanical manner witho....
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....iture. He was of the opinion that in such investment activity there would be certain expenditure involved. Out of the total expenditure of the assessee for its business, a portion would be included towards expenditure for such investment activity and for earning tax exempt income such as cost of interest, administrative and management associated charges etc. He was also of the opinion that the assessee would have incurred administrative expenditure such as documentation, salaries of employees, handling the investment port folio, administrative over heads like stationery, telephone, computer, office equipments, vehicles etc which came to Rs. 9.75 lakhs which he disallowed. He was, therefore, of the opinion that the assessee had incurred dire....
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....e assessee that no expenditure has been incurred in relation to income which does not form part of the total income. It is an common knowledge that holding of such investments would entail ordinary expenses like DEMAT charges and engagement of senior management. We also notice that there are several instances of change in the investment during the year qua the investments held in the previous year. Naturally, the Board and Senior Management has devoted time and attention in the decision making process. Therefore, the contention of the assessee about NIL administrative expenditure for holding the investment stands belied in the facts of the case. In the event, the Assessee claims that no expenditure has been incurred by him in relation to ex....
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....d that mere general observations that some expenditure must have been incurred would not be sufficient and unless the Assessing Officer makes specific reference to the expenditure actually incurred, neither Section 14A nor Rule 8D would apply. In this context, counsel relied on the judgement of the Supreme Court in case of Godrej & Boyce Manufacturing Co. Ltd. vs. Deputy Commissioner of Income-Tax And Another reported in 394 ITR 449 in which finding that in the earlier years the issue of the expenditure sought to be disallowed had actually been incurred in earning dividend income was already decided in favour of the assessee and therefore in the present order the Assessing Officer could not have taken a different view. Reliance was also pla....
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....on of subsections (2) and (3) of Section 14A where it provides that if the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the expenditure or the claim made is that no expenditure has been incurred in relation to the income which does not form part of the total income, he would determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). Sub-rule (2) of Rule 8D prior to its amendment with effect from 02.06.2016 provided a formula to apportion the expenditure in connection with the tax free income. Section 14A as well as Rule 8D require the Assessing Officer to arrive at a satisfaction that the claim of the expenditure m....