2020 (4) TMI 113

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....on facts of the case in law in confirming the disallowance deduction of Rs. 332629/- out of Rs. 607354/- in respect of sale of seeds claimed u/s 80P(2)(IV)of the I.T. Act, 1961. (607354-274725) On the facts of the case the learned C.I.T(A) failed to appreciate the facts that the said disallowance is uncalled and unwarranted Your appellant therefore prays in the interest of justice to delete the above disallowance of Rs. 332629/- out of Rs. 607354/- in respect of sale of seeds claimed u/s 80P(2)(IV)of the I.T. Act, 1961. 2. On the facts of the case the learned C.I.T.(A)on law as well as on facts of the case in law in disallowing a deduction of Rs. 440120/- u/s 14A of the I.T. Act, 1961. The learned C.I.T.(A) has wrongly invoked the pro....

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....penses, and therefore, deduction under section 80P(2) should be allowed on net profits after debiting expenses and not gross profit. Accordingly, the ld.AO restricted the deduction by estimating indirect expenditure at the rate of 40%, which worked out to Rs. 2,74,725/- i.e. [Rs. 6,07,754/- minus Rs. 1,49,749/- (excess amount claimed by the assessee) minus Rs. 1,83,150/- being 40% of Rs. 4,57,875/- shown by the assessee as gross profit). Against this disallowance of Rs. 3,32,629/- i.e. [Rs. 1,49,749/- plus Rs. 1,83,150/-] assessee went in appeal before the first appellate authority, but the assessee could not get any relief, hence, before us. 4. Before us the ld.counsel for the assessee reiterated submissions as were made before the lowe....

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....round partly. 6. In the second ground, the assessee has challenged confirmation of disallowance of Rs. 4,40,120/- under section 14A of the Income Tax Act, 1961. 7. As the facts emerge from the record, during the course of assessment proceedings, the AO noted that the assessee had earned dividend income of Rs. 16,362/- which is exempt under section 10(34) of the Income Tax act. The assessee did not make any disallowance under section 14A r.w. rule 8D. It was explained by the assessee that the investments had been made out of own funds and the provisions of section 14A were not applicable to the case of the assessee. The AO did not convince with the contentions of the assessee, he calculated disallowance as per the formula given in Rule....

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.... r.w.rule 8D was not applicable to the assessee's case. The assessee has claimed exempt income of Rs. 16,362/- only, and therefore, presumption of expenditure calculated on the basis of formula given in Rule 8D is not justified. Hon'ble Gujarat High Court decision in the case of CIT Vs. Corrtech Energy P.Ltd., 45 taxmann.com 116 (Guj) has held that if there is no exempt income claimed by the assessee, then there could not be any disallowance under section 14A of the Income Tax Act. We find that the assessee has not debited any expenditure or has not claimed any expenditure for earning exempt income, then on presumptive basis expenditure cannot be calculated for disallowance. By applying formula given in Rule 8D read with section 14A of t....