2015 (6) TMI 1163

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....) The Learned Commissioner of Income Tax (appeals) erred in confirming disallowance of Rs. 16,23,432/- u/s.14A of the Act as against Rs. 4,85,000/- disallowance by the assessee. 2) The appellant prays that: i) Disallowance u/s.14A may be restricted to the amount of Rs. 4,85,000/- ii) Recovery of demand in dispute may be stayed; iii) Personal hearing may be granted; iv) Any other relief your honours may deem fit. Grounds of Revenue's Appeal: "On the facts and in the circumstances of the case and law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. The order of the CIT(A) is opposed to law and facts of the cas....

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....ng the expenditure and computed the disallowance at Rs. 29,82,705/-. The disallowance was agitated in the appeal filed before Ld. CIT(A)and assessee submitted a calculation before Ld. CIT(A) for making the disallowance u/s.14A. The said calculation is reproduced by Ld. CIT(A) in para-4.1 of his order, which for the sake of convenience is reproduced below: "Disallowance on the bas si Expenses to ratio of Sales: Taxable Income   Amount Proposition Other Income 12,84,809     Sales 1,93,62,156 2,06,46,964  16% Exempt Income       Dividend 10,12,02,024     Interest on Tax Free bonds 79,18,562     Long term gain -Ex....

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.... allocation does not arise. But Hon'ble ITAT in the case of Gillette Group India Pvt. Ltd. 16 ITR (Trib) 57 has held that the disallowance cannot be more than the expenses charged to profit and loss Alc. even as per Rule BD, whereas, in the case of the assessee expenses other than related to sales are Rs. 9,04,906/- directly related to investment u/s. 14A and other apportionable expenses are Rs. 6,18,526/- as per the chart given by the assessee and, therefore, the disallowance on account of expenses should not be more than Rs. 15,23,432/- which are the total expenses other than the expenses directly related to sales. Whereas, the expenses claimed by the assessee as directly relatable to sales have not been verified by the A.O. and certa....

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....on over and above Rs. 4,85,000/- but assessee's grievance in the present appeal is limited only to the extra disallowance upheld by Ld. CIT(A) above Rs. 14,25,020/-, calculated in the aforementioned table. 7. On the other hand, Ld. DR arguing the appeal for Revenue submitted that disallowance was rightly calculated by AO as per Rule 8D, which is a reasonable disallowance. In reply to the arguments of Ld. AR it was submitted by him that Ld. CIT(A) did not commit any error in making further addition to the aforementioned calculation submitted by the assessee. 8. We have heard both the parties and their contentions have carefully been considered. As per aforementioned decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mf....