TaxTMI 
TaxTMI 
2025 (9) TMI 1727
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....ficer. 2. Briefly the facts of the case are that the Assessing Officer disallowed Rs. 35,29,150/- under section 14A of the Income Tax Act. During the course of assessment proceedings, it was observed that the assessee has made total investments to the extent of Rs. 70,58,30,000/- out of which investment in shares of Lakshmi Energy & Foods Ltd. to the tune of Rs. 70,13,50,000/-, Ganeshaya Overseas Ind. Ltd. To the tune of Rs. 39,90,000/- and Loil Overseas Foods Ltd. to the tune of Rs. 4,90,000/-. It was submitted that above investments have been made out of own funds which is very much evident from the fact that there is no interest expenditure claimed by assessee during the year under consideration but the Assessing Officer applied the p....
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....rved that the assessee made investments to the tune of Rs. 70,58,30,000 /- in the previous year which was shown in the balance sheet for the period ending 31.03.2010. However he has not shown any income on this, except a dividend income of Rs. 28,02,500/- which has been claimed as exempt u/s 10(34) of the Income Tax Act in the computation of income. So the assessee was asked why not disallowance of proportionate expenses as per Rule 8D be made. As the assessee did not submit any counter reply, the AO applied Rule 8D(2) r.w.s 14A to make the disallowance of Rs. 35,29,150/-. The assessee has contended that the investments were out of its own funds and that no borrowed funds were involved. It was also stated that the investments were ....
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.... total expenditure debited. Hence at most this would be the sum to be disallowed. The AO is therefore directed to restrict the disallowance to this amount. 6. In the result the appeal of the assessee is partly allowed." 4. We have heard ld. Representatives of both the parties. The ld. DR relied upon order of the Assessing Officer as well as order of ITAT Chandigarh Bench in the case of M/s Munjal Sales Corporation V ACIT in ITA 274/2015 dated 07.07.2015. 5. On the other hand, ld. counsel for the assessee reiterated the submissions made before authorities below and referred to PB- 4 & 5 which is balance sheet as on 31.03.2010 to show that assessee has only dividend income of Rs. 28,02,500/- and spent miscellaneous expens....
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.... Court in the cases of; a) CIT Vs Deepak Mittal 86 CCH 51 in which it was held as under : "Before any disallowance under section 14A is made, essentially there has to be certain expenditure which must have been incurred by the assessee to earn exempt income." b) CIT Vs Avon Cycles Ltd. 81 CCH 188 (P&H), in which it was held as under : "Disallowance under s. 14A requires finding of expenditure. Where no expenditure incurred for earning exempted income, disallowance under s. 14A cannot stand." c) CIT Vs Winsome Textile Industries Ltd. 319 ITR 204 (P&H) in which it was held as under : "Where in relation to the investment in shares, no claim for exemption was made by the assessee, s. 14A can....
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.... which is carried forward from preceding assessment years 2009-10 and 2008-09 because the same amount was shown as investment in preceding assessment years as well. Thus, investments have been brought forward from the preceding earlier years and no new investments have been made in the assessment year under appeal. No borrowed funds have been used in this case for any investments and assessee was having sufficient funds to make investments in earlier years. The Assessing Officer in the assessment order has not recorded his satisfaction as is required under section 14A(2) of the Income Tax Act that he was not satisfied with the correctness of the claim of the assessee. He has merely applying the provisions of Rule 14A, made the disallowance.....