AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 1225
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.... 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 purpose of earning exempt income as worked out by the Appellant. ....
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....ction 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 view under identical facts that no disallowance should be made under section 14A read with rule 8D over and above the suo mott....
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....sallowance. 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 7.3 We have thereafter identified the expenses that are indirectly incurred in relation to such investments by way of cost on the personnel of RBCL wh....
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....d 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 TOTAL 1,85,01,021 7,71,492 The AO, however, calculated the disallowance at Rs. 2,27,18,529/- under section 14A read with rule 8D and after allowing the credit of suo motto disallowance of Rs. 52,05,005/-, the addition under section 14A was restricted to Rs. 1,75,13,524/-. 7. In the appellat....
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....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 Bank Ltd. (supra). As regards to direct expenditure under Rule 8D (1), there is no dispute. As regards to working of disallowance under Rule 8D (3), the assessee has computed the disallowance and the Assessing Officer could not point out any discrepancy or unreasonableness or could not find any fault in the same. A....