2022 (1) TMI 733

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....e order of the learned CIT(A) not only is erroneous both on facts and in law but is contrary to the settled principles of law and is passed without application of mind. 2. The learned CIT(A) erred in confirming the action of the AO in disallowing ujs.14A of Rs. 53,56,654 contrary to the decision of the Supreme Court in the case of M/s.Godrej & Boyce Mfg., Ltd., without appreciating that the AO has not made such disallowance for the immediately preceding assessment year and has not recorded any satisfaction that there was any expenditure for earning dividend income. 3. The learned CIT(A) erred in dismissing the ground against taxing of capital loss as capital gains and taxing it at 30% on the ground that no documentary evid....

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.... of Rs. 53,56,654/- u/s 14A of the Act, during the assessment proceedings, the Assessing Officer noticed that the assessee had made investments in the shares of other companies amounting to Rs. 91,96,90,136/- and earned dividend of Rs. 3,30,08,537/-. The AO noted that the assessee company had capital of Rs. 1,09,22,89,OOO/- & reserves of Rs. 71,55,02,458/-. The borrowings during the year were Rs. 9,06,46,007/-. Further the interest paid during the year is Rs. 22,12,500/-. The Assessing Officer asked the assessee as to why the disallowance u/s.14A should not be made. The assessee submitted that the corporation had earned dividend income of Rs. 3,30,08,537/- during the year. No expenditure had been incurred to earn the dividend income as the ....

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....itted that in the earlier AYs i.e., AY 2011-12 and AY 2012-13, no such disallowance was made. 5.3 The CIT(A) after considering the submissions of the assessee, confirmed the disallowance by holding that the assessee having earned dividend income, cannot claim that section 14A is not applicable. 5.4 Before us, the ld. AR of the assessee besides reiterating the submissions made before the lower authorities submitted that the assessee had sufficient own funds, out of which, investments were made and no interest bearing funds were utilized by the assessee for making investments. He further submitted that no exemptions can be disallowed under rule 8D(2)(iii) because the incomes are directly credited into the bank account and, therefore, no....

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....inate bench for AYs quoted supra wherein the coordinate bench held that the assessee had made the investments out of own funds of the assessee company, we direct the AO to delete the addition of Rs. 8,17,998/- made under rule 8D(2)(ii) of the Act. 5.6.2 With regard to the disallowance of Rs. 45,38,656/- under rule 8D(2)(iii), to arrive the said figure, the AO has taken average value of the entire investments as on the date of the balance sheet, which is not correct, because the assessee has earned exempt income of Rs. 3,30,08,537/- from some of the value of investments, but, not from the entire value of investments. The contention of the assessee is that it has not incurred any expenditure for earning exempt income is also not tenable be....