2021 (3) TMI 620

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....f the assessing officer ['AO'] in disallowing expenditure of Rs. 6,50,090/- under section 14A of the Income-tax Act, 1961 ['the Act'] read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 ['the Rules'] 1.1 That the CIT(A) erred on facts and in law in confirming the aforesaid disallowance without appreciating that no expenditure was actually incurred in earning the exempt dividend income. 1.2 That the CIT(A) erred on facts and in law in not appreciating that no satisfaction as required by law was recorded by the AO before resorting to Rule 8D of the Rules for purposes of making disallowance under section 14A of the Act. 1.3 That the CIT(A) erred on facts and in law in not appreciating that under section 14A....

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.... forward business losses/unabsorbed depreciation. In the scrutiny, assessment was completed under Section 143(3) of the Income-tax Act, 1961 (in short 'the Act'), the Assessing Officer made disallowance under Section 14A of the Act and also disallowed the adjustment of business losses/unabsorbed depreciation. Aggrieved, the assessee filed an appeal before the learned CIT(A), however, it did not get any relief and thus the assessee is before the Income Tax Appellate Tribunal (in short 'the Tribunal'), raising the grounds as reproduced above. 4. Before us, the learned DR appeared through Video Conferencing facility and relied on the orders of the lower authorities. 5. We have heard the submission of the learned DR and perused the relevant m....

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...."5.4 Thus the threshold criteria of recording satisfaction, in humble opinion of this office has been met by AO as captured supra at para 5. Now comes the quantum of disallowance. Since, a formulae has been prescribed precisely to obliterate disputes relating thereto as held in apex court decision of Godrej Boyce which has been applied by AO, in instant case. Thus, after rendering of Apex Court decision, in. humble opinion of this office, the disallowance made by AO is in order, more so as the dividend income has been earned by appellant. Even a cursory look at the annual report, and attendant notes to accounts and details of other expenses will belie the claim of appellant that no expenditure has been incurred w.r.t earning of dividend inc....

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.... 8D. The findings given for GOA no 2 subsume GOA no 2.1 & GOA no 2.2 and hence the said GOAs no 2, 2.1&2.2 are also dismissed. It's pertinent to add that in succeeding year too (i.e. AY 13-14) the AO has made disallowance, during which year too, the appellant has earned dividend income; nowhere the appellant has submitted detailed activity sheet of its employees to support its (illogical bizarre) hypothesis that none of its employees at any point of time has anything to do with investment decision making aspect relating to MF-Foremost of all to decide to invest in MF or otherwise is itself an application of time / money/ employee cost on decision making activity related to investments per se, of which investment in MF is a subset thereof. A....