2022 (4) TMI 663

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....(A), Kolkata-2/10228/2019- 20 which is arising out of the assessment order framed u/s 143(3) of the Income Tax Act, 1961 (in short the "Act") dated 30.09.2019 by ACIT, Circle- 4(1), Kolkata. 2. The assessee is in appeal before the Tribunal raising the following grounds: "1. That on the facts and in the circumstances of the case, ld. CIT(A), NFAC erred in confirming the addition of Rs. 1,66,609/-. 2. That on the facts and in the circumstances of the case, ld. CIT(A), NFAC erred in confirming the action of the AO when it violates the basic provision of section 14A(1) and 14A(2) of the Income Tax Act, 1961. 3. That the appellant craves leave to add, alter, adduce or amend any ground(s) on or before the date of hea....

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.... 28.07.2017 and the relevant finding of the Tribunal is reproduced below: "6. We have heard both the parties and perused the material available on record. The assessing officer invoked provisions of Rule 8D(2)(iii) and disallowed 0.5% of average value of investments towards expenditure in relation to earning exempt income. According to the assessing officer, from assessment year 2008-09 onwards, in view of specific provisions provided by way of Rule 8D(2) to determine the disallowance of expenditure incurred in relation to exempt income, the assessee cannot take a stand that there is no expenditure incurred to earn exempt income. The assessee claims that she had not incurred any expenditure to earn exempt income and the expenditure....

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....fication of the P&L Account, we find that the assessee has claimed a minimum expenditure of Rs. 3 lakhs against gross receipt of Rs. 28,25,000/- which are in the nature of administrative expenses directly attributable to her professional activity except demat charges of Rs. 574/-. Therefore, we are of the view that in the absence of any direct nexus between expenditure claim to the exempt income, the assessing officer cannot invoke the provisions of section 14A r.w.r. 8D(2) to disallow expenditure. Hence, we direct the assessing officer to delete disallowances made under section 14A r.w.r. 8D except demat charges of Rs. 574/- which is directly incurred in relation to earning exempt income. On further verification of the P&L Account, we find....