2017 (4) TMI 1407

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.... assessee is challenging the disallowance of Rs. 1,92,00,000 under section 14A r/w rule 8D. 3. Brief facts are, the assessee a company is engaged in the business of trading in raw cotton bells, guar and caster seeds, commodity futures and paintings. During the assessment proceedings, the Assessing Officer noticed that in the relevant previous year, the assessee had earned income of Rs. 20,69,58,657, from dividend on shares and mutual funds. He also noticed that the assessee had shown profit earned from partnership firm which is also claimed to be exempt from taxation under section 10(12A). Further, he found that the assessee itself has disallowed an amount of Rs. 1,52,03,446 under section 14A in the computation of income. After verifying t....

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....tinda, Shriganga Nagar and Surendranagar where no investment activity is being carried on. Therefore, expenditure relating to the branches cannot be considered for disallowance. He submitted, even out of other expenses incurred by the assessee certain expenditures are not at all attributable to the investment activities resulting in earning of exempt income, therefore, cannot be considered for disallowance under section 14A. Learned Authorised Representative submitted, exactly similar disallowance was made by the Assessing Officer in assessment year 2009-10 and while deciding assessee's appeal in ITA no.6972/Mum./2012, order dated 17th April 2015, the Tribunal deleted the addition made by the Assessing Officer having found the suo-motu disa....

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.....L A/c (Rs.) Branch (not considered for earning exempt income (See Note 1 (Rs.) Head Office (Rs.) Expenditure not for purpose of earning exempt income (Rs.) Other (Rs.) 1. Godown Rent & Warehousing Charges 26,32,272 25,32,447 99,825 99,825 - 2. Insurance 4,30,445 2,57,498 1,72,947 1,72,947 - 3. Foreign Travelling 43,12,757 - 43,12,757 43,12,757 - 4. Service Charges 26,40,000 18,00,000 8,40,000 - 8,40,000 5. Freight & Transportation Charges 6,80,705 6,80,705 - - - 6. Other Trading Expenses 13,74,271 13,74,271 - - - 7. Legal & Professional Fees 1,06,17,546 (Rs. 38,60,500 has been disallowed in return of income) - 1,06,17,546 - 67,57,046 8. Auditor's Remuneration 3,86,050 - 3,86,050 - ....

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....he total expenditure as compared to 35.10% in assessment year 2009-10. Moreover, the Assessing Officer has not recorded any satisfaction that the disallowance made by the assessee with reference to its books of account is incorrect or unreasonable. Moreover, no distinguishing fact has been brought to our notice by the learned Departmental Representative to deviate from the earlier order of the Tribunal in assessee's own case. Therefore, we are of the view that the disallowance under section 14A by the assessee in the computation of income being reasonable should be accepted. Accordingly, the addition of Rs. 1,92,00,000 is hereby deleted. Grounds raised are allowed. 8. In the result, assessee's appeal for A.Y. 2010-11 is allowed. ITA no.34....