2025 (4) TMI 721
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....Learned Assistant Commissioner of Income-tax, Circle 14(3)(2), Mumbai passed under section 143(3), date of order 30/11/2018. 2. The Ld.AR argued that the only issue before the Bench is related to disallowance under section 14A read with rule 8D of the Income tax Rule, 1962. The Ld.AR contended that the assessee suo motu disallowed the expenses related disallowance under section 14A read with rule 8D of I.T. Rules, 1962 amount to Rs. 4,06,523/-.The Ld.AO had rejected the calculation of the assessee for disallowance U/s 14A of the Act and calculated the said disallowance to the extent of Rs. 23,88,891/-. The balance amount of Rs. 19,82368/- {Rs.23,88,891/- (-) Rs. 4,06,523/-) was added back with total income. The aggrieved assessee filed app....
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....ceptable. The contention that there are no direct or indirect expenditure incurred for earning exempt income is not correct. The disallowance of expenditure has to be made considering the direct and indirect costs associated with earning exempt income as per rule 8D(2) The assessee ought to have made disallowances of expenditure in relation to the income which does not or shall not form part of total u/s 14A in accordance with the provision of Rule 8D of the Income Tax Rules, 1962, Thus, the accounting treatment of the assesses company is not acceptable as the same is not in tune with the provisions of section 14A r.w.r 8D of the IT Act. It is very clearly that any dividend / exempt income cannot be received without making and expenses. The....
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....he impugned appeal order. The addition amount to Rs. 77,17,358/- is quashed. The appeal of the assessee is succeeded." 6. In the present case, the assessee earned exempt income during the relevant assessment year and also incurred interest expenditure that is not directly attributable to any specific income. In such circumstances, disallowance under Rule 8D(2)(ii) could be applicable. However, the Ld. AO may invoke Rule 8D only upon recording dissatisfaction with the assessee's claim or explanation, as mandated by Section 14A(2).The decision of the Co-ordinate Bench of the ITAT (supra) relied upon the judgment of the Hon'ble Jurisdictional High Court in PCIT-2 vs. Bombay Stock Exchange Ltd. (2020) 113 taxmann.com 303 (Bom).During the proce....
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.... self-serving assertion that no further expenditure was incurred is not backed by evidence. On the contrary, applying the law's formula revealed a substantial expenditure attributable to exempt investments, which the assessee failed to disprove. The burden of proof on this issue rested on the assessee (since facts about its expenses are peculiarly within its knowledge), and that burden was not discharged. * Legislative intent and judicial precedents heavily favor the Revenue's position. The Supreme Court's rulings have upheld the broad applicability of Section 14A and the reasonableness of Rule 8D, while the Finance Act 2022 has resolved any doubt in favor of disallowance even in zero-income scenarios. Any earlier High Court r....