TaxTMI 
TaxTMI 
2019 (11) TMI 911
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....the learned CIT - A with respect to disallowance u/s 14 A read with rule 8D of Rs. 2852029/- and ad hoc disallowance at the rate of 10% out of the vehicle repair and maintenance expenditure of Rs. 400449/- and consequent depreciation on the car of INR 293603/-. 2. Brief facts of the case shows that assessee is a company who filed its return of income of Rs. 110636480/- . It has earned dividend income of Rs. 55564000/- which is shown as exempt income u/s 10 (38) of The Income Tax Act. The assessment u/s 143 (3) of the act was passed on 30/3/2016 by The Assistant Commissioner Of Income Tax, Central Circle - 13, New Delhi (the learned AO) determining the total income of the assessee at Rs. 114182561/-. The learned assessing officer disallowed....
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.....5% of the average value of the investment of Rs. 2852029/- as the investment as at the beginning of the year was Rs. 114992691/- and at the end of the year of INR 1 22320663/-. Accordingly, he worked out the disallowance under rule 8D with respect to section 14 A of the act of Rs. 2852029/-. On appeal before the learned CIT - A, assessee contested that learned assessing officer while working out the disallowance has also considered the investment in equity shares, share application money and investment in mutual funds. It was further stated that assessee has the interest-free fund of INR 104,21,22,967/- and therefore no disallowance is called for on account of interest. Assessee also contested before the learned CIT - A that for working ou....
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....s. Undoubtedly the assessee has earned any exempt income of RS . 55564000/-. Claim of the assessee is that it is received on investments of Rs. 8,00,000/- in an Group Real Estate Company. However the assessee has made total investment as per balance sheet, at the beginning of the year of Rs. 114992691/- and at the close of the year of INR 127320663/-. Therefore it is apparent that assessee has huge non-interest-bearing funds available with it for the purpose of making an investment. Thus, we do not find any reason to uphold the disallowance u/s 14 A of the income tax act on account of interest. 8. Further with respect to the disallowance of expenditure at the rate of 0.5% assessee has received dividend only on the investment of INR 800,00....
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....ands on account of personal use of vehicles owned by the assessee company and therefore 10% of the expenditure and the depreciation on the motor car amounting in all INR 2 694052/- is disallowed on account of personal expenses incurred. The learned CIT - A confirmed the 10% disallowance with respect to vehicle repairs and maintenance expenditure however he deleted the disallowance on account of depreciation. The assessee aggrieved with that order has preferred ground number 3 of the appeal. 10. The learned authorised representative submitted that assessee is a company and there cannot be any personal expenditure. He further submitted that mere ad hoc disallowance cannot be disallowed. 11. The learned departmental representative vehemently....