TaxTMI 
TaxTMI 
2020 (3) TMI 467
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..... Assessee electronically filed its return of income for A.Y. 2013-14 on 14.09.2013 declaring total income of Rs. 17,18,58,098/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 16.03.2016 and the total income was determined at Rs. 17,42,33,750/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dated (in appeal No.PN/CIT(A)-4/DCIT, Circle - 6, Pune/33/2016-17 dated 15.03.2017) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : "1. The learned CIT(A)-4, Pune erred in law and on facts in affirming the disallowance u/s 14A of the ITA, 19....
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....ncome. The assessee was asked to show cause as to why disallowance u/s 14A of the Act not be made, to which assessee interalia submitted that assessee has not earned any exempt income and therefore no disallowance u/s 14A of the Act is called for. It was also submitted that the investments were made out of the own funds and therefore no disallowance is called for. The submissions of the assessee were not found acceptable to the AO. AO was of the view that even when no exempt income has been earned, disallowance u/s 14A of the Act can be made and for this proposition, he relied on the CBDT Circular No.5/2014 dated 11.02.2014. He thereafter proceeded to work out the disallowance with the methodology prescribed under Rule 8D and computed the d....
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.... the Hon'ble Madras High Court, Revenue preferred Special Leave Petition (SLP) before the Hon'ble Apex Court. The Hon'ble Apex Court dismissed the SLP which is reported in (2018) 95 taxmann.com 250 SC. 7. In view of the aforesaid facts, we are of the view that since no exempt income in the form of dividend has been earned by the assessee from the investments made and relying on the aforesaid decision of the Hon'ble Apex Court, no disallowance u/s 14A of the Act is called for in the present case. We therefore direct the AO to delete the disallowance made by the AO. Thus, the ground of assessee is allowed. 8. Since ground No.1 is allowed hereinabove, in view of the submission of Ld.A.R., ground No.2 is dismissed as being academic. 9. Gr....
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....ns of the assessee made to the lower authorities wherein it was mentioned that the rate paid to the aforesaid two ladies were comparable to the rate paid to the outside parties. He further submitted that the Revenue has not brought any material on record to substantiate that the payments were excessive and unreasonable and that disallowance has been made on adhoc basis. He therefore submitted that the no disallowance u/s 40A(2)(b) is called for. Ld. D.R. on the other hand, supported the order of AO and Ld.CIT(A). 11. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to disallowance of expenses u/s 40A(2)(b) of the Act. It is an undisputed fact that assessee has made the....