TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 959
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....3. We have heard the rival submissions and perused the material available on record. During the year, the assessee company was engaged in the business of project management, investment advisory, project marketing, maintenance of completed projects, engineering, industrial and technical consultancy, construction and development of real estate properties and other related and ancillary activities. During the year under consideration, the assessee claimed exempt income of Rs.76,58,05,673/- in the return of income in the form of dividend. The assessee made suo moto disallowance of expenditure of Rs. 7,46,680/- u/s 14A of the Act as expenses incurred for the purpose of earning exempt income . Basis of the said disallowance is given as under:- Nature of Administrative Expense Amount (in INR) Salary cost of employees engaged in the activity of co-ordination with Mutual Funds from where dividend income has been earned by the assessee 373,340/- Other Administrative expenses incurred by the assessee towards rental value of their workstations space towards this activity, telephone cost towards this activity, conveyance cost towards this activity, Depreciation on the assets (laptop, fur....
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.... proper satisfaction was recorded by the ld CIT(A). The ld CIT(A) while addressing the issue in dispute for the year under consideration, sought to ignore the decision of his predecessor for AY 2012-13 and held that the ld AO had indeed recorded proper satisfaction. Although, the ld DR before us vehemently argued that sufficiency of recording of satisfaction cannot be looked into by this tribunal and that what is required to be seen is only the existence of the satisfaction by the ld AO. The ld. DR argued that the Tribunal decision relied upon by the ld AR in assessee's own case should not be followed for the issue in dispute. We are unable to accept this line of argument of the ld DR in as much as law mandated in section 14A(2) of the Act and Rule 8D(1) of the Rules requires the ld AO to record an objective satisfaction having regard to the accounts of the assessee with specific linkage of the expenditure debited by the assessee with the investment activity. The satisfaction for rejecting the assessee's disallowance should be made in an objective manner with cogent reasons. We find that the very same observations were made by the ld AO for AY 2012-13 also, and the tribunal on appe....
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.... of disallowance has been provided in sub-sections (2) and (3) of section 14A of the IT Act. The Hon'ble ITAT, Special Bench, New Delhi in the case of M/s Cheminvest Ltd. ITA no 87/Del/2008 has also held that the disallowance u/s 14A is to be made even if no exempt income has resulted or earned by the assessee in the year under consideration Therefore in view of the specific provisions for quantification of disallowance as contained in sub-sections (2) and (3) of section 14A, which are procedural, the disallowance is strictly to be made in terms of the specific provisions of Rule 8D. B Attention is also invited to the language of Rule 8D(2)(ii) wherein it has been dearly mentioned that the average value of assets shall be computed in respect of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. Rule 8D(1) of Income Tax Rules, 1962 prescribed the applicability of the procedure. In case, the Assessing Officer is not satisfied with the correctness of the claim of the expenditure made by the assessee, the procedural provisions of Rule 8D are....
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....ompany Ltd. Vs DCIT [2017] 81 taxmann.com 111 (SC)/[2017] 247 Taxman 361 (SC)/[2017] 394 ITR 449 (SC)/[2017] 295 CTR 121 (SC) where Hon'ble Supreme Court held that where Assessing Officer after carrying out elaborate analysis and following steps enacted in statute, had determined amount of expenditure incurred for earning tax exempt income, merely because he did not expressly record his dissatisfaction about assessee's calculation, his conclusion could not be rejected. 6. Punjab Tractors Ltd Vs CIT [2017] 78 taxmann.com 65 (Punjab & Haryana)/[2017] 246 Taxman 31 (Punjab & Haryana)/[2017] 393 ITR 223 (Punjab & Harvana)/[2017] 293 CTR 50 (Punjab & Haryana), 2017-TIQL- 353- HC-P&H-IT where Hon'ble Punjab & Haryana High Court held that AO is bound to apply provisions of Rule 8D where he is not satisfied with the correctness of the claim of assessee in respect of expenditures incurred to earn exempt income. 7. Avon Cycles Ltd Vs CIT [2015] 53 taxmann.com 297 (Punjab & Haryana)/[2015] 228 Taxman 368 (Punjab & Haryana HMAG.) where Hon'ble Punjab & Haryana High Court held that where funds utilized by assessee was mixed funds and, hence, interest paid on borrowed fund wa....