2018 (5) TMI 1020

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.... ld AO] under section 143(3) of the Act dated 19.02.2013 for the Asst Year 2010-11. Let us take assessee's appeal first. 2. The only issue to be decided in this appeal is with regard to disallowance u/s 14A r.w.r.8D of the Rules. 3. The brief facts of this issue is that the assessee is a non banking finance company (NBFC) engaged in the business of truck hiring, renting, financing and investment in shares and securities. The assessee earned dividend income of Rs. 14,70,96,573/- and claimed the same as exempt. The ld. AO observed that the assessee had made huge investments as on 31.03.2010 and the average investments was worked out at Rs. 113,90,02,815/-. The assessee made disallowance of Rs. 5,13,033/- on account of expenses linked....

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....appellant while computing Total Income. 2.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified in upholding the action of the AO in applying Rule 8D on the basis of wrong finding of fact that appellant has offered disallowance u/ s 14A on adhoc basis. 3.0 That on the facts and in the circumstances of the case and without prejudice to Ground No. 1.0 & 2.0 taken here-in-above, necessary directions may be given to AO. to compute disallowance u/s 14A as per Rule 8D by excluding investments in group companies which have been made for the purpose of acquiring controlling stake and for business expediency and not for the purpose of earning exempt income. 4.0 That on the facts a....

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....rovisions of the Act in the instant case. We find that the assessee had already disallowed a sum of Rs. 5,13,033/- u/s 14A of the Act under normal provisions of the Act. The assessee has also disallowed the direct expenses of Rs. 1,05,692/- representing Security Transaction Tax (STT) separately in the return of income. Hence there is no need to again disallow the same u/s 14A r.w.r. 8D(2)(i) of the rules. We direct the ld. AO to delete the same accordingly. We find that the total common indirect expenses of the assessee are as under :- a) Staff cost : Rs.22,94,975/- b) Administrative expenses : Rs.29,96,994/-     - Rs.52,91,969/ The assessee had given the workings for disallowing Rs. 5,13,033....