2018 (11) TMI 1111

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....le 8D of the I.T. Rules. 2. The learned A.R. submitted that the assessee is engaged in the business of manufacturing of carburettors, components and allied engineering products. During the year under consideration the assessee has earned dividend income of Rs. 332.12 lakhs, tax free interest income of Rs. 4.84 lakhs and long term capital gain of Rs. 234.15 lakhs, all are exempt from tax. The AO noticed that the assessee has disallowed a sum of Rs. 1,26,000/- only as expenditure incurred towards exempt income under Section 14A of the Act. The Assessing Officer, however, took the view that the disallowance has to be computed as per provisions of Rule 8D. Accordingly, the AO worked out the disallowance as per Rule 8D at Rs. 102.82 lakhs. Aft....

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....ile computing the average value of investments. The learned A.R. further submitted that the assessee has disallowed a sum of Rs. 16,97,462/- under Rule 8D(2)(i) as they are direct expenses incurred towards DMAT charges and STT. He submitted that the tax authorities did not consider this disallowance voluntarily made by the assessee. He submitted that the amount of Rs. 1,26,000/- disallowed by the assessee was out of administrative expenses falling under Rule 8D(2)(iii) of the I.T. Rules. 5. We heard the learned D.R. and perused the record. From the Statement of computation of total income filed along with the return of income, which is placed in page 1 of the Paper Book, we noticed that the assessee has disallowed DMAT charges and Security....