2017 (9) TMI 110

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....de. 2. That having regard to the facts and circumstances of the case, Ld.CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in not giving credit of municipal taxes paid of Rs. 13,34,371/- for 'M' Block property by the appellant under the had income from house property. 3. That having regards to the facts and circumstances of the case, the Ld.CIT(A) has erred in confirming the addition of Rs. 17,70,837/- out of addition of Rs. 38,68,698/- made by Ld. A.O u/s 14A read with Rule 8D. 4. That the order passed by Ld.CIT(A) and Ld. Assessing Officer is against the principles of natural justice. 3. The assessee is engaged in the business of Dealership for products of JCB India Ltd. (....

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....he entire investment in the mutual funds as on 31.3.2009 and 31.3.2010. Hon'ble High Court of Mumbai in the case of Godrej and Boyce Manufacturing Company Limited Vs. Deputy Commissioner of income Tax and another(supra) has held that Rule 8D is applicable from the AY 2008-09 and the AO is duty bound to make the disallowance u/s 14A where any direct and indirect expenses have been incurred to earn exempt income. It is an admitted fact that the appellant company has earned dividend income of Rs. 1,00,84,565/- which is exempt from tax. To earn such kind of dividend, the involvement of top management is required, financial resources and infrastructure of the appellant company are required to be used and therefore the claim of the appellant ....

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.... of the above facts of the case, I do not find any merit in the submissions of the Ld. AR. Therefore, this ground is rejected. 5. The Ld. AR submits that Ground No. 1 is general in nature. As relates to Ground No. 2, the Ld. AR submits that during the year, the assessee company claimed deduction of house tax paid of Rs. 13,34,371/- from rental income of "M Block Property" under the head "House Property." The A.O did not give credit of the same while passing order u/s 143(3) of the Income Tax Act, 1961, instead the Assessing Officer gave credit for Rs. 8780/- only. In this connection, the Ld. AR submitted that in respect of let out property, the rent received is usually taken as Annual Lettable Value (ALV) and municipal taxes are to be de....

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....n included by the AO. It was further submitted that investment of Rs. 16,28,24,730/- was made in the mutual funds during the year which Assessment are growth funds and do not declare any dividend. It was submitted that the capital gain from the growth funds is taxable and therefore, Section 14A is not applicable. However, the AO has ignored these facts. According to the Ld. AR the average investment in shares, mutual funds and growth funds comes to Rs. 35,41,67,397/- and 0.5% of this average investment comes to Rs. 17,70,837/-. It was submitted that expenditure directly related to exempt income was nil and 0.5% of average investment comes to Rs. 17,70,837/-. The Ld. AR further submitted that the disallowance made by the AO should be deleted....