TaxTMI 
TaxTMI 
2019 (1) TMI 1555
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....in the business of manufacture of automobile leaf springs. In the course of assessment proceedings, for both Assessment Years 2012-13 and 2013-14, the Assessing Officer ('AO') noticed that the assessee had earned dividend income of Rs. 51,000/- in each of these years, which was claimed exempt u/s 10(34) of the Income Tax Act, 1961 (in short 'the Act'). In terms of section 14A of the Act, the AO wanted to disallow expenses incurred in earning exempt income. The dispute before the AO was with regard to disallowance of other expenses in terms of Rule 8D(2)(ii) and (iii) of the Income-Tax Rules, 1962 ["the Rules"] r.w.s. 14A of the Act. According to the assessee, no expenses were incurred for earning the exempt income. The assessee pleaded that....
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....ustified in sustaining the disallowance of Rs. 17,83,925/- u/s. 14A of the Act computed as per Rule 8D of Income-tax Rules, without appreciating * that the appellant has not incurred any expenditure to earn exempt income and hence, the provisions of sec. 14A of the Act are not attracted under the facts and in the circumstances of the appellant's case. 3. Without prejudice to the above, the learned CIT[A] failed to appreciate the fact that the appellant's investment in shares was only to the tune of Rs. 173.77 lakhs (of which more than 95% relates to investment in the shares of subsidiary company i.e. M/s.Lamina Foundries Ltd.) and these investments were made by the appellant from of its own funds represented by share capital and r....
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....ves to be. cancelled. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 4. The grounds at Sl. Nos. 1 and 6 being general in nature, no adjudication is called for thereon. 5. Grounds 2 to 4 - Disallowance u/s 14A r.w.r. 8D 5.1 We have heard the rival submissions. The Hon'ble Delhi High Court in the case of Joint Investments (P) Ltd. v. CIT, 372 ITR 694 has taken the view that disallowance u/s. 14A of the Act cannot exceed the exempt income. Similar view was expressed by th....