2024 (12) TMI 1614

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....f Rs.2,59,78,597/-. The assessment was completed under section 143(3) of the Act declaring total loss of Rs.2,59,76,598/-. Subsequently ld. Assessing Officer has observed that the assessee had earned exempt dividend income of Rs.4,50,239/- on its investment and the same was offered for tax. Thereafter ld. Assessing Officer added back the dividend income which was offered to tax by invoking the provisions of section 14A read with Rule 8D of the Act and proceeded to make disallowance of the entire investment. A notice under section 148 was issued. In response to the notice, the assessee requested to treat the original return filed on 29.09.2011 as the return filed under section 148. The assessment was completed under section 143(3) read with ....

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....ee is that the ld. Assessing Officer as well as ld. Addl./JCIT(Appeals) were wrong in making disallowance of Rs.5,92,707/- under section 14A read with Rule 8D(iii). The assessee company has earned only exempt dividend income of Rs.4,50,239/- for which no expenses were incurred. The addition is unjustified and needs to be deleted. 6. The other grievance of the assessee is that the ld. Assessing Officer as well as ld. Addl./JCIT(Appeals) were wrong in making disallowance under section 14A read with Rule 8D while computing Book Profit of the assessee under section 115JB of the Act. 7. I have heard both the sides and perused the material available on record. With regard to the first issue is concerned, it was the submission of the assesse....

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....022) 145 taxman.com 641 (Del.), wherein it was held that disallowance under section 14A read with Rule 8D is to be in relation to income which does not form part of total income and this can be done only by taking into consideration of investment, which has given rise to this income which does not form part of total income. Therefore, it is clear that for calculation of disallowance under section 14A read with Rule 8D, only those investments are to be considered which yielded exempt income during the year under consideration. Therefore, by applying the decision of Hon'ble Delhi High Court and in view of the facts and circumstances of the case of discussed above, the disallowance made by the ld. Assessing Officer for Rs.5,92,707/- under sect....