TaxTMI 
TaxTMI 
2020 (2) TMI 560
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....um of Rs. 37,47,358/-, being 5% of the exempt dividend income earned by the appellant during the relevant previous year was disallowable under section 14A of the Income-tax Act, 1961 [The Act']. 1.1 That the CIT (A) erred on facts and in law in holding as aforesaid without establishing any proximate relationship between the expenditure incurred and the dividend income earned and not appreciating that no expenditure was actually incurred in earning the exempt dividend income. 1.2 Without prejudice, that the disallowance if any should have been restricted to Rs. 5,83,685/- as per calculation provided by the appellant. 2. That, without prejudice, the CIT(A) erred on facts and in law in not restricting the disallowance under section 14....
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....direction of the Tribunal, the Assessing Officer allowed various opportunities to the assessee. Though initially no compliance was made by the assessee of the opportunity granted by the Assessing Officer vide his letter dated 23.07.2014 and 20.01.2015, however, at the end of the proceedings representative of the assessee attended and filed submission. He identified the expenses of Rs. 5,83,685/- by apportioning cost of running the treasury operations of the assessee for disallowance u/s 14A of the Act. The suo motu disallowances of Rs. 5,83,685/- proposed by the asessee was not accepted by the Assessing Officer and he proposed the disallowance in proportion of the exempt income to the total income plus exempt income. The ld. Assessing Offic....
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.... 0.24% of the treasure staff cost of Rs. 38,31,879/-. However, the figure of treasury staff cost is not verifiable. As regards the figure of Rs. 8283/- the administrative expenses have been mentioned in the above table as Rs. 107,66,48,000/- and Rs. 8283/- is only .0008% of the same. 2.3 Being not satisfied with the computation of disallowance of administrative expenses, the CIT(A) estimated 5% of the dividend income of Rs. 7,49,47,159/- which was worked out to Rs. 37,47,358/- towards the earning of exempt income. The relevant para of the impugned order is reproduced as under: "5.2 Considering the above factual background and the argument of the appellant that the total administrative expenses of Rs. 107,66,48,000/- also included variou....
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....ed time spent by officer, 18.75% is treated towards mutual fund activity whereas in case of the other treasury staff time is estimated at 6.75% towards mutual fund activity. He further submitted that other expenses have also been estimated in respect of the staff cost. According to him, the assessment year being prior to assessment year 2008-09, the disallowance is to be computed on reasonable basis rather than under Rule 8D. He submitted that the disallowance made by the assessee on scientific basis must be accepted. 4. On the other hand, ld. DR submitted that the Assessing Officer has provided ample opportunity to the assessee, however, the assessee only at the fag end of the proceeding, provided the calculation of disallowance of Rs. 5,....
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....the paper-book is reproduced as under: Treasury Staff Staff Cost Whether involved in MF activity (Y/N) Estimated Time spent for MF Activity * * Proportionate Expenses Treasurer Manager Executive Officer Officer 1,653,196 717,034 789,572 579,057 93,020 y y y y N 6.25% 6.25% 6.25% 18.75% NA 103,325 44,815 49,348 108,573 NA 3,831,879 306,061 Other Expenses Other Staff related expenses 2,070.021 Preparation Expense 214,515 Electricity Expense 27,505 Rent Expense 49,132 Profession and legal Expenses 510.472 Building Maintenance 100,524 Telecommunication Expenses 90,915 Postage Expense 55,323 Office Expenses 54,850 Travelling Expense 164,689 Training & Meeting Expenses 116,498....