TaxTMI 
TaxTMI 
2022 (2) TMI 1057
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....me on 22.11.2014 declaring a loss of Rs. 3,30,19,180/- under the normal provisions and at book loss of Rs. 3,31,15,818/-. During the course of assessment proceedings, the AO asked the assessee to explain as to why disallowance u/s. 14A r.w. Rule 8D should not be made in respect of the investment made.. It was explained by the assessee company that it has earned dividend income of Rs. 62,28,673/- only and has not incurred any expenditure in the current year for earning such exempt income. 3. However, the AO was not satisfied with the arguments made by the assessee. Relying on various decisions, the AO computed the disallowance at Rs. 12,51,461/- u/s. 14A r.w. Rule 8D and, accordingly, made the addition of the same to the total income of t....
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....ring the year but were not there on the opening day and the closing day. Appellant is choosing to rely on various judgments where it was held that in the absence of exempt income no disallowance was possible. In the appellant's case, however, this is not so. In the appellants case there were investments which were held during the year and the same were giving exempt income. It cannot be denied that the funds and non allocable expenses of the appellant were utilized for the purpose of earning exempt income. 4.4 Logically therefore there is no infirmity in invoking section 14A. Therefore, the disallowance in the present case is certainly required to be made it is however seen that the mechanism and the rule 8D does not envisage s....
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....A(1) of the Act, no disallowance could be validly upheld by mechanically applying Rule 8D of the Income Tax Rules '1962. 1.2 That without prejudice computation of disallowance under Rule 8D of Income Tax Rules' 1962 is not in accordance with law and in any case, excessive. 1.3. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the submission furnished by the appellant and evidence placed on record and, therefore the disallowance upheld is not in accordance with law. It is therefore, prayed that disallowance made and upheld by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant company be allowed." 6. The ld. Counsel for the....
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....d by the CIT(A), the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that in absence of recording of proper satisfaction, the disallowance made by the AO and sustained by the CIT(A) is not correct. It is his alternate contention that for the purpose of computing the average investment, the investments which has actually yielded dividend income should be considered. Since the assessee has received dividend income only in respect of one scrip and the average investment of which comes to Rs. 55,17,694/-, therefore, the disallowance u/s. 14A r.w.r. 8D comes to Rs. 27,588/-. We find, the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment Pvt. ....