2021 (12) TMI 772

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....uash the said notice dated 20/3/2007 and order dated 30/11/2007 rejecting Petitioner's objections to the issuance of notice. 4. Assessment order for Assessment Year 2002-2003 had been passed on 6/12/2004. 5. Reasons for reopening are as under: "Recording of Reasons for initiating proceedings under Section 148 of the Income-Tax Act, 1961. The Great Eastern Shipping Co. Ltd. A. Y. 2002-03 Under the provisions of Section 14A of the Income-tax Act, 1961, no deduction shall be allowed in respect of expenditure incurred in relation to the income which does not form part of the total income. 2. In this case, the assessee has received dividend income of Rs. 3,05,17,219/- on its total investment in shares to the extent of Rs. 108,57 Lakhs.....

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....ny had a separate treasury department engaged in the business of carrying out deals in inter-corporate deposits/ loans and money market operations. This department carried on various financial activities and there was direct cost incurred by the department, specifically for earning dividend income. It was also submitted that no expenses allocation was ever made by the AO in the past. 10.1 I have gone through the facts and I find that in view of the specific provision of Section 14A, certain disallowance is called for. The total cost incurred by the treasury department during the period under consideration was Rs. 36,44,142/- The expenditure relatable to earning of dividend income can reasonably be estimated at 5% of total expenditure incu....