2018 (7) TMI 2187

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....in the business of providing professional advisory services and financial consultancy services, e-filed its return of income on 30-09-2013, declaring a total income of Rs. 4,78,44,565/-. During the course of assessment AO noticed that assessee had investments of Rs. 8.60 Crores and received dividend of Rs. 1,119/- during the year. Invoking the provisions of Section 14A, AO disallowed an amount of Rs. 8,87,114/- under Rule 8D(2)(ii) and Rs. 18,20,728/- under Rule 8D(2)(iii) being administrative expenditure. Assessee objections were negatived by AO. Aggrieved, assessee filed an appeal before the CIT(A). 3. Before the Ld.CIT(A), assessee contended the addition made by the AO. It was contended that no part of the borrowed funds were diverted....

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....54 SOT 19]; g. CIT Vs. Oriental Structural Engineers P. Ltd., [35 taxmann.com 210 (Delhi-HC); h. CIT Vs. Holcim India (P) Ltd., [57 taxmann.com 28) (Delhi)]; i. M/s. Kamadhenu Sukrit Pvt. Ltd., Vs. ITO, ITAT Hyderabad Bench, dated 22-11-2017; 5. Ld.DR, however, relied on the orders of the CIT(A). 6. We have considered the rival contentions and perused the facts on record and the case law relied upon. As seen from the order of the AO as well as the CIT(A), there is no finding that assessee has incurred any expenditure for earning the said dividend income. There was finding on diversion of borrowed funds, hence the disallowance of interest under Rule 8D(2)(ii) does not arise. Assessee had own fund more that th....

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....ry reason, just invoked Rule 8D(iii) and disallowed the amount. 9. The Co-ordinate Bench in the case of Sahara India Financial Corpn. Ltd., Vs. DCIT (supra) has held in para 81 as under: "We have heard the rival contentions and perused the material available on record. It has not been disputed that the administration, expenses and books of account of investment division are separately carried out and maintained by the assessee. No infirmity has been found by the department in this behalf. One of the main issue is on whom lies the onus to establish nexus of available funds with free and taxable income. Similarly courts have held that a finding in objective terms about assessee working being unsatisfactory is to be recorded ....