2020 (2) TMI 1647

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....ed in upholding the additional disallowance of a sum of Rs.5,92,587/- made by the Assessing Officer [Ld. AO] u/s 14A of the Act read with the Rule 8D. 2. That the Ld. CIT (A) erred in upholding disallowance of prorate interest expenses of Rs. 1,87,028/- under section 14A estimated to have been incurred to earn tax-free dividend income though the assesses has huge owned funds and huge cash profits far in excess of tax-free investments. 3. The Ld. CIT(A) erred in upholding disallowance of prorate administrative expenses worked out as per Rule 8D at Rs. 5,25,559/- estimated to have been incurred to earn the tax-free dividend income. 4. The Ld. CIT(A) erred in note directing the Ld. A.O. to exclude the amount of inves....

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.... by applying sub-Rule (i), (ii) & (iii) of Rule 8D, after allowing credit for Rs.1,48,140/- disallowed by the assessee as per its own computation. 6. The disallowance of Rs. 5,92,587/- u/s 14A as made by the Assessing Officer is bifurcated as under: a. Disallowance of proportionate interest (out of interest on Working Capital Loan) Rs.187,028/-; b. Additional Disallowance of indirect admin expenses - Rs.3,38,531/-. 7. Regarding the Disallowance of interest, it was submitted that investments in shares and mutual funds was made by the assessee out of its own funds. There is no increase in investments yielding tax free income. Rather there is decrease in total investments in mutual funds and shares by Rs. 3.47 Crores an....

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.... v Sintex Industries Ltd. (2017) 82 taxmann.com 171 (Gujarat) • HT Media Ltd. v PCIT (2017) 85 taxmann.com 113 (Delhi) • CIT v. HDFC Bank Limited (2014) 49 taxmann.com 335 (Bom.) 10. In view of above, the al location of interest of Rs.1,87,028/- is not warranted and the Disallowance deserves to be deleted. 11. Regarding the Disallowance of expenses, the assessee has disallowed the same as under: DP charges & STT - Rs.28,140 Indirect expenses - Rs.1,20,000 12. The total investments as considered by AO for calculation of Disallowance u/s 14A r.w. Rule 8D include investments in partnership firm of Rs 1 lakh as on 31.3.2012 (Note No. 11) on which no exempt income was received during the year.....

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....en the Assessing Officer is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. v) In the event the Assessing Officer is not satisfied with the correction of the claim made by the assessee, he must record reasons for his conclusion. vi) The effect of Section 14A is to widen the theory of the appointment of expenditure. vii) Sub section (2) and (3) of Section 14A are intended to enforce and implement the provisions of Sub section (1). viii) Even in the absence of sub-section (2) of Section 14A, the Assessing Officer would have to apportion the expenditure after following a reasonable method consistent with what the circumstances of the....