2016 (2) TMI 1220

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.... Rs. 7,78,596/-out of Rs. 8,41,256/- made by the AO on investment in shares claiming the entire administrative expenses was incurred by the assessee for the purpose of investment in shares. 2.1 Brief facts of the case are that the assessee, a private limited company is engaged in the business of real estate development, trading and investment related activities. It filed its return of income for A.Y. 2010-11 declaring the total income of Rs. 1,39,92,884/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short 'the Act'). The case was selected for scrutiny and after assessment proceedings the assessment order was passed. 2.2 During the assessment proceedings, the Assessing Officer noted that the assessee had shown i....

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....13 vide which the identical issue was decided in favour of the assessee and in view of the aforesaid order the impugned order passed by the Ld. CIT(A) is liable to be set aside. 2.6. On the other hand the Ld. DR heavily relying upon the concurrent orders passed by the Assessing Officer and Ld. CIT(A) submitted that since Rule 8D is applicable for the year under consideration the disallowance has rightly been worked out as per Rule 8D. 3. We have heard the rival submissions and gone through the material placed before us including the decision of the ITAT Mumbai relied upon by the assessee. The co-ordinate bench of Mumbai Tribunal in the case of Cape Trading Pvt. Ltd. vs. ACIT, Mumbai ITA No 3772/M/2013, has decided the identical issue ....

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....y shows that it exceeds not only the expenses debited and claimed by the assessee which could have a proximate nexus with the earning of exempt income but also to the total expenditure debited by the assessee in the P&L account under the head administrative and other expenses. Therefore, it turns out to be contradictory to the actual facts and gives absurd results in complete disregard to the scheme of disallowance u/s 14A. Therefore, the provisions of Rule 8D(2)(iii) cannot be applied in the case of the assessee as it becomes unworkable and unrealistic. In the facts and circumstances of the case, we find that when the provisions of Rule 8D(2)(iii) becomes unworkable then in the absence of any finding as well as any specific expenses debite....