2019 (6) TMI 236

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.... For the Respondent : Shri S. K. Dev, Sr.D.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeals have been filed at the instance of the assessee against the orders of the Commissioner of Income Tax (Appeals), Gandhinagar, ('CIT(A)' in short), dated 18.09.2017 & 19.09.2017 arising in the assessment orders dated 29.03.2016 & 23.12.2016 passed by the Assessing Officer (AO) under s. ....

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....rned AR for the assessee pointed out that the assessee is in receipt of dividend income from certain mutual funds aggregating to Rs. 9,90,090/-. The assessee has considered the above dividend income as exempt income. An amount of Rs. 10,000/- was however suo motto disallowed as expenses attributable to exempt income. The assessee contended that the exempt income is generated from investment in ....

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....at tax free income earned in the form of dividend has arisen entirely out of mutual funds which are one time investments without any proactive involvement of management per se. The surplus funds of the company have been simply parked in the mutual funds. We take cognizance of the arguments advanced on behalf of the assessee that mutual fund investments bear different traits and are different speci....

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....at a bare reading of Section 14A of the Act suggests that its applicability is not automatic. It is hedged by conditions prescribed therein. Section 14A inheres in it the concept of reasonableness. The formidable amount of expenditure as computed by the AO cannot be said to be attributable to tax free income generated from separately administered mutual funds by applying a straight jacket formula ....