TaxTMI 
TaxTMI 
2016 (9) TMI 1624
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....d its return of income on 16.9.2011 declaring total income of Rs. 1,71,17,350/- which was revised on 29.11.2012 declaring the same income which was duly processed u/s 143(1) of the Act. The case was selected for scrutiny and the proceedings u/s 143(2) and 142(1) were followed. During the course of assessment proceedings, the AO noticed that the assessee has earned tax free income amounting to Rs. 60,13,150/- and asked the assessee vide letter dated 26.8.2013 to furnish the working of disallowances u/s 14A of the Act read with rule 8D and also asked as to why the same should not be disallowed while computing the income of the assessee. The assessee replied that disallowance u/s 14A r.w.r 8D was not applicable. The reply of the assessee was n....
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....ll be disallowed u/s 14A even if there is no corresponding exempt income. 3.6.1 Reference is invited to the decision of Hon'ble Mumbai ITAT in the case of M/s .J.K. Industries Ltd. for AY.2008-09 ITA NO. 7088/Mum/2011 dated 21.11.2012. In the said case the assessee was having investment of Rs.'19.43 Cr. on which he has earned exempt-income and assessee had claimed that he has not incurred any expenditure for earning that income on these facts the Hon'ble ITAT interalia held, "We have heard the rival contentions and we are of the view that on both the counts, i.e. the' application of the ratio laid down by the Bombay High Court in the case of Godrej & Boyce Mft. Co. Ltd reported in 328 ITR 81(Bom) where the Hon'ble ju....
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....vant judicial pronouncement, the claim of the appellant, that, no expenses are incurred to earn exempt income, so no disallowance u/s 14A r.w. rule 8D can be made, is rejected." Aggrieved by the order of ld. CIT(A) the assessee is in appeal before us. 4. Before us, the ld. AR vehemently submitted that the disallowance as worked out by the AO u/s 14A r.w. 8D amounting to Rs. 40,43,307/- was totally wrong and was also confirmed by the ld. CIT(A). The ld. AR filed during the course of hearing the complete working of disallowance. The Ld. AR submitted that no disallowance under rule 8D was called for as the assessee has not made any investments out of interest bearing funds. By drawing out attention to page 3 of the paper book which is audite....