TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 130
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.... The assessee filed its return of income for the AY 2013-14 originally on 15.09.2013 declaring loss of Rs. 8,77,20,449/-. Later a revised return was filed declaring loss of Rs. 8,35,36,788/- on 30-09-13, the same was again revised on 25-09-2014 by declaring loss at Rs. 8,38,14,180-. The case was taken up for scrutiny by issue of notices u/s.143(2) and 142(1). The AO completed the assessment u/s 143(3) on 31/03/2016 determining the assessee's loss at Rs. 7,48,33,819/- by disallowing an amount of Rs. 78,74,968/- u/s 14A and Rs. 11,05,393/- u/s 43B of the Income-tax Act, 1961 (in short 'the Act'). 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of AO. 4. Aggrieved with the order of CIT(A), the asses....
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.... of Income Tax (Appeals) ought to have seen that provisions of Sec,43B are not attracted to Rs. 1,76,564/- comprising of interest paid to a bank and on delayed payments of statutory dues. Hence confirming such disallowance is not justified. 4. For all of the above and such other grounds as may be urged at the time of hearing it is most respectfully prayed that this Hon'ble Tribunal may be pleased to direct the respondent herein to delete the disallowances made in Asst. Order." 4. Ground No. 1 & 4 are general in nature, hence, need no adjudication. 5. As regards ground No. 2 with regard to disallowance u/s 14A of the Act, the AO observed that from the information filed by the assessee, the company made non-current investments amoun....
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....ely covered by the decision of the coordinate bench of this Tribunal in the case of SNJ Synthetics Ld. (supra) wherein the coordinate bench has observed as under: 6. We have considered the rival contentions and perused the facts on record and the case law relied upon. As seen from the order of the AO as well as the CIT(A), there is no finding that assessee has incurred any expenditure for earning the said dividend income. There was no diversion of borrowed funds, hence there is no disallowance interest under rule 8d(2)(ii). The disallowance was only under Rule 8D(2)(iii). 6.1. Coming to the disallowance of % of average value of investment, some proportionate expenditure can be disallowed but in no case, it should exceed the amount earn....
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....d. It has not been disputed that the administration, expenses and books of account of investment division are separately carried out and maintained by the assessee. No infirmity has been found by the department in this behalf. One of the main issue is on whom lies the onus to establish nexus of available funds with free and taxable income. Similarly courts have held that a finding in objective terms about assessee working being unsatisfactory is to be recorded by AO in the order. Chandigarh Bench of the Tribunal in the case of Punjab State Co-op. & Marketing Fed. Ltd. (supra) has held that in any case the disallowance u/s 14A cannot exceed tax free income of the assessee. If mechanical method of rule 8D is applied, it leads to manifestly ab....
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.... citations. This ground of the assessee is partly allowed. 10. Respectfully following the above principles, as the disallowance made by AO has resulted in absurd situation of disallowing genuine other business expenditure, on which assessee earned more than Rs. 19 Lakhs income (as against Rs. 8,100/- of dividend), I am satisfied that the disallowance u/s. 14A should be restricted to the income earned of Rs. 8,100/-. AO is directed accordingly. 6.2. Respectfully following the principles laid down in various judgments of the Hon'ble High Courts and the decisions of the Co-ordinate Benches, we are of the opinion that the disallowance under Rule 8D cannot exceed the dividend income earned and claimed as exempt. Therefore, the disallow....
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....er, the AO disallowed the same u/s 43B. CIT(A) relying on various decisions, upheld the disallowance. 12. Before us, the ld. AR reiterated the submissions as made before the revenue authorities, while, the ld. DR relied on the orders of revenue authorities. 13. Considered the rival submissions and perused the material on record. Provisions of section 43B read as under: 43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or] (b) any sum payable by the assessee as an employer by way of contribution to any providen....