2018 (11) TMI 1785

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....r of the ld. Commissioner of Income Tax (Appeals) 6, Chennai dated 16.12.2015 relevant to the assessment year 2012-13. Vide order in M.P. Nos. 170 & 177/Chny/2017 dated 07-09-2018, the Tribunal has recalled both the appeals. 2. The common ground raised in both the appeals, viz., the Revenue challenged the restriction of disallowance under section 14A of the Income Tax Act, whereas, the assessee challenged disallowance under section 14A of the Act r.w. Rule 8D of Rs..27,22,973/-. 3. By relying on the CBDT Circular No. 5/2014, the ld. DR has submitted that the disallowance under section 14A r.w. Rule 8D has to be made even if the assessee, in a particular year, has not earned any exempt income. He further submitted that there is no prov....

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....ot demonstrated that the investments have been made out of only its surplus funds and moreover, the assessee has not established that the borrowed funds have been utilized for the purpose of investments at any stage. Admittedly, in this case, the dividend income earned by the assessee was Rs..27,22,973/- whereas, the disallowance of expenditure worked out by the Assessing Officer goes manifold to the extent of Rs..1,08,15,631/-. The window for disallowance indicated in section 14A of the Act was only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income. 5.1 In a recent judgement in the case of Maxopp Investment Ltd. & Ors. v. CIT in Civil Appeal Nos. 104-109 of 2015 dated12.02.2018, the H....