TaxTMI 
TaxTMI 
2018 (12) TMI 1315
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....st ground of appeal 1. The CIT(A) erred in confirming disallowance of Rs. 1,75,18,216, being interest to be attributed to earning exempt dividend income u/s. 14A by invoking the provisions of Rule 8D(2)(ii) as against NIL claimed by the Appellant. 2. He erred in disregarding the accounts of the Appellant and ignoring the detailed submissions made regarding the correctness of the Appellant's claim. 3. He further erred in confirming the action of AO with respect to invoking Rule 8D without AO being recording any satisfaction regarding incorrectness of the Appellant's claim. 4. He further erred in disregarding the accounts of the Appellant and erred in invoking Rule 8D without recording his satisfaction on how the Appellant'....
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....the facts are that the appellant is a Non Banking Finance Company (NBFC) and engaged in the business of providing loans against shares, lending and investment. It is a wholly owned subsidiary of M/s Kotak Mahindra Bank Ltd. During the course of assessment proceedings, the Assessing Officer (AO) observed that the appellant had earned dividend income of Rs. 34,52,754/-, against which it has made a disallowance suo motu of Rs. 20,58,424/-. The AO has recorded that on the basis of account of the appellant, he was not satisfied with the correctness of its claim in respect of expenditure in relation to income which does not form part of the total income under the Act. Therefore, the AO made a disallowance of Rs. 1,95,76,640/- u/s 14A r.w. Rule 8....
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....d CIT(A) is contrary to the principles laid down therein that (i) there must be proof led by the department that the expenditure sought to be disallowed has actually been incurred in earning the dividend income, (ii) there must be a basis disclosed to establish a reasonable nexus between the expenditure disallowed and the exempt income, (iii) the disallowance cannot be made unless the above is proved by material and (iv) it is only after the AO is satisfied about the above that he can proceed to invoke Rule 8D. It is further stated that in any event, the disallowance cannot exceed the exempt income of Rs. 34,52,754/-. In this regard the Ld. counsel refers to the decision in Joint Investments (P.) Ltd. v. CIT (2015) 59 taxmann.com 295 (Delh....
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....idering the application of Section 14A of the Act. The aforesaid decision of this Court in HDFC Bank Ltd. (supra) on the above issue has also been accepted by the Revenue in as much as even though they have filed an appeal to the Supreme Court against that order on the other issue therein viz. broken period interest, no appeal has been preferred by the Revenue on the issue of invoking the principles laid down in Reliance Utilities & Power Ltd. (supra) in its application to Section 14A of the Act." In view of the above position of law, the disallowance of Rs. 1,75,18,216/- made by the AO under Rules 8D(2)(ii) is deleted. 7.1 In Godrej & Boyce Mfg. Co. Ltd. (supra), the Hon'ble Bombay High Court has explained Rule 8D as under : "As re....
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....f the Department. 3. He further erred in directing AO to re-examine the AIR data and to add un-reconciled item to the total income of the Appellant, 4. He further erred in putting onus of reconciliation on the Appellant rather than on Department. 5. He failed to appreciate and ought to have held that: a. The Appellant has given reasonable explanation for the exclusion of the same and thus had discharged its onus; b. The revenue has not contravened the submission of the Appellant; c. There may be so many reasons for which the figures as per the AIR may not tally with the appellant records/accounts; d. In absence of any contrary material brought by the Department that the Appellant has received more than the income declared by the....
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....ught to have held that the Appellant has offered income pertaining to TDS Certificate in AY 2010-11 and in accordance with the provisions of Section 199 of the Act, credit should have been granted in the year in which income in respect of the such TDS Certificates are offered to tax. 4. The Appellant prays that the AO be directed to grant additional TDS credit of Rs. 31,93,706. 12. We have perused the records and considered the matter carefully. The dispute is regarding credit for TDS. A similar issue arose before the ITAT 'C' Bench Mumbai in Citicorp Finance (India) Ltd. v. Addl. CIT (ITA No. 8532/Mum/2012) for AY 2007-08 and the Tribunal vide order dated 13.09.2013 held at para 4 as under: "4. We have perused the records and consider....