2018 (6) TMI 1225

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....unds raised by the assessee are as under: Ground No 1 :Disallowance u/s 14A of the Act Amounting to Rs. 1,75,13,524/-. "1 On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO to disal low a SLIM of Rs. 1,75,13,524/- in addition to suo moto disallowance made by the Appellant of Rs. 52,05,005/- as expenses incurred towards earning exempt income under section 14A of the Act r.w.r. 8D of the Income Tax Rules, 1962 (the Rules'). 2. The Appellant prays that disallowance of Rs. 1,75,13,524/- made under section 14A of the Act r.v.r. 3D of the Rules be deleted and the disallowance u/s. 14A should he restricted to Rs. 52,05,005/- towards expenses incurred for the purp....

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....LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT: 1. The AO erred in levying excess interest under section 234B and 234C of the Act. 2. The Appellant prays that the aforesaid addition be deleted." 3. The issue raised in ground No.1 & 2 is against the upholding of disallowance of Rs. 1,75,13,525/- by Ld. CIT(A) as made by the AO by ignoring the fact that the assessee has suo motto disallowed a sum of Rs. 52,05,005/- towards the expenses incurred on earning of exempt income. 4. At the outset, the Ld. A.R. submitted that the case of the assessee is identical to one as has been decided in ITA No.7490/M/2013 for A.Y. 2010-11 in the own case of the assessee in which the co-ordinate bench of the Tribunal has taken a ....

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.... 7.1 RBCL has incurred a total expense of Rs. 38,00,098/- towards demat, depository charges and this has been considered for the purpose of disallowance. 7.2 In so far as other expenditure is concerned, based on the internal records, expenditure directly identifiable such as stamp duty, transfer fees and safe custody charges has not been disallowed as such expenses are not directly relatable to earning of dividend; they may be relatable to acquisition of shares but not to dividend being earned. For this view reliance is placed on CIT Vs GIC of India (254 ITR 203) (Born) which has held that expenses incurred on account of salary paid to staff, stamp duty, transfer fees, custody are not directly relatable to earning of dividend ....

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....f such expenses is given below and the basis of allocation is the ratio of employees of the FMT to the total number of employees in HO: Sr. No. Particulars Amount (Rs. Lacs)     Expense of HO Appropriated Amount (4/90 of Expense of HO) 1. Staff Welfare 8,08,247 33,704 2. Electricity Expenses 25,30,603 1,05,526 3. Repairs and Maintenance 20,09, 738 83,806 4 Printing & Stationery 17,06,922 71,179 5 Books & Periodicals 2,8 7,671 11,996 6 Telecommunication Expenses 65,45,141 2, 72,932 7 Postage and Telegram 7,73,152 32,240 8 Automobile Expenses 34,99,986 1,45,949 9 Conveyance Charges 3,39,561 14,160 &nbsp....

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....h the fact and circumstances of the case. From the above it is clear that no disallowance u/s Rule 8D can be made for the reason that the above facts clearly demonstrated that the assessee is having non-interest bearing funds available in the shape of share capital and reserves and surpluses with him amounting to Rs. 285.27 crore which is more than the amount of investment made in interest earning instruments amounting to Rs. 18.19 crores and once availability of amount from interest free fund of the assessee is more than the investment, then a presumption arises that assessee might have invest out of interest free fund available with him. This view of ours is supported by the decisions of Hon'ble Bombay High Court in the case of HDFC B....