TaxTMI 
TaxTMI 
2021 (1) TMI 601
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....together and are being disposed of by this consolidated order. 2. The assessee has more or less raised common grounds of appeal for both the assessment years. Therefore for the sake of brevity, grounds of appeal filed for assessment year 2013-14 are reproduced as under:- 1. The learned Commissioner of Income-tax (Appeals) erred in sustaining the disallowance made u/s 14A read with Rule 8D(2)(iii) of the Income-tax Rules in the appellant's case. 2. The learned Commissioner of Income-tax (Appeals) is not justified in relying on the order of the ITAT in the appellant's case for the assessment year 2012-13 as the same has not become final and is subjected to further appeal under section 260A before the Hon'ble High Court at Chennai. 3. T....
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.... AO called upon the assessee to explain as to why expenses in relation to exempt income shall not be computed u/s.14A r.w.rule 8D of the Income Tax Rules 1962 (hereinafter the 'Rules). In response, the assessee submitted that he has not incurred any expenditure for earning dividend income. The expenditure claimed against professional income was related to his professional activity and no part of expenditure is attributable to earning of exempt income. Therefore, no disallowance can be made towards expenses in relation to exempt income u/s.14A of the Act. The AO however was not convinced with the explanation of the assessee and according to him as per Section 14A of the Act, no deduction should be allowed in respect of expenditure incurred ....
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....e directed the AO to exclude investments which do not yield exempt income for the purpose of computation of average value of investments, however rejected the arguments of the assessee that he did not incur any expenditure for earning exempt income. Accordingly directed the AO to verify the computation filed by the assessee and delete excess disallowance made u/s.8D(2)(iii) of the Rules. Aggrieved against the CIT(A) order, the assessee is in appeal before us. 6. The ld.AR for the assessee submitted that the ld.CIT(A) has erred in sustaining the disallowance made u/s.14A r.w.r.8D(2)(iii) of the Rules without appreciating that there is no direct nexus between the expenses debited in to the profit & loss account and dividend income earned for....
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.... Tribunal has rejected arguments of the assessee that no expenditure has been incurred in relation to exempt income in light of the provisions of Section 14A of the Act, that disallowance contemplated u/s.14A of the Act is a deeming fiction where a question of incurring actual expenses does not arise and what is relevant is income which do not form part of total income and total expenses claimed by the assessee. Therefore, he submitted that there is no merit in the arguments of the assessee that no disallowance can be made u/s.14A r.w.r.8D of the Rules unless there is a direct nexus between expenditure incurred in relation to exempt income. 8. We have heard both the parties, perused the materials on record and gone through the orders of th....
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....cord, we find that the AO has recorded satisfaction as required u/s.14A(2) of the Act and applied Rule 8D(2) of the Rules to compute disallowance. Therefore the arguments taken by the assessee that no satisfaction is recorded by the AO is rejected. We further note that the Tribunal had already considered the issue for earlier assessment year in assessee's own case in ITA No.3280/Mds/2016 vide order dated 03.04.2017 and hence the arguments once again taken by the assessee in light of Hon'ble Supreme Court decision in the case of Maxopp Investment Ltd vs. CIT, supra is rejected. In so far as, disallowance computed by the AO and modified by the ld.CIT(A) on the basis of revised computation filed by the assessee during appellate proceedings, we....