TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 493
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....lowance to the extent of Rs. 484,62.000 made under section 14A of the Income-Tax Act. 1961 ('the Act'). 1.1 That the CIT(A) erred on facts and circumstances of the case and in law in holding that the assessing officer had recorded proper satisfaction regarding incorrectness of the claim of the assessee under section 14A of the Act. 1.2 That the CIT(A) failed to appreciate that the assessing officer exceeded his jurisdiction in enhancing disallowance under section 14A while passing order under section 254/143(3) of the Act, in excess of the disallowance made in the first round. 1.3 That the CIT(A)/assessing officer failed to appreciate that no part of administrative expenditure was incurred in relation to exempt income so as to....
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....ion, however, the application of the provisions laid down under sec. 14A of the Act is justifiable when the Assessing Officer is not satisfied that there is proximate cause for disallowance, stating the relationship of expenditure with income which does not form part of the total income. In the present case, the Assessing Officer has simply applied procedure laid down in Rule 8D to compute the amount disallowable under sec. 14A of the Act. The contention of the assessee in the present case remained that it is an operating company engaged in manufacture of automobile. The entire expenditure incurred was in relation to the manufacturing operation of the assessee and the Assessing Officer failed to bring on record any evidence/material to demo....
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....re Ld.CIT(A) who sustained the disallowance to the extent of Rs. 4,84,62,000/-. The Ld.CIT(A) deleted the disallowances related to interest expenditure however, sustained the disallowance of administrative expenses. 6. Now, the assessee is in appeal before this Tribunal. 7. Ld. Counsel for the assessee vehemently argued that the authorities below were not justified in making the disallowance. He submitted that the law is clear and there is no ambiguity under the law. The AO has to record his satisfaction, having regard to the accounts of the assessee qua the correctness of the claim of the assessee in respect of such expenditure incurred in relation to income which does not form part of the total income under the Act. He submitted that th....
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....eard the rival contentions and perused the material available on record and gone through the orders of the authorities below. We find that the Ld. CIT(A) has affirmed the view of the assessing authority by observing as under:- 4.2.4. "In view of the guiding principle laid down by the Hon'ble Apex court in the above judgment, it is imperative that expenditure be apportioned relating to income which does not form part of the total income. Also, according to the above judgment, the contention of the appellant that investments are either strategic or to have controlling power on the group concerns/ subsidiaries is immaterial so far application of section 14A is concerned. It is also apparent that the amount to be disallowed cannot be computed....
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....ssue of proportionate administrative expenses which are to be disallowed since rule 8D is not applicable for the year under consideration, a reasonable basis has to be adopted for computing the proportionate disallowance to be made. The appellant has submitted that the disallowance, without prejudice to the main contention, should be restricted to some reasonable proportion of expenses incurred by the finance Department and an alternative computation has been prepared. The said disallowance has been prepared taking into consideration 5.5% of the total cost of the finance Department which comes to Rs. 60,58,237/-. The computation given by the appellant is reproduced below: CALCULATION OF AMOUNT OF DISALLOWANCE Particulars Amount Salarie....
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....ew of the discussion above, it is held that in view of the fact that the appellant has claimed exempt income of Rs. 1,52,74,13,328/-, disallowance is required to be made under section 14A in light of the decision of the Hon'ble Supreme court in the case of Maxopp investment Ltd. (supra). Further, since it has been held that no disallowance can be made on account of interest expenditure, the disallowance is restricted to 0.6% of the average of the value of investment computed at Rs. 807.7 crores which comes to Rs. 4,84,62,000/-. Grounds of appeal Nos. 2 to 2.7 are partly allowed." 10. There is no dispute with regard to the fact that Rule 8D of Income Tax Rules, 1962 ("the Rules") is not applicable for the Assessment Year under appeal. W....