TaxTMI 
TaxTMI 
2026 (5) TMI 1006
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....t, 1961. 2. The assessee has raised the following grounds of appeal: "1. That on the facts and circumstances of the case, the appellate order passed by the learned Commissioner of Income Tax (Appeals) (hereinafter referred as "Ld. CIT(A)"), by arbitrarily confirming addition of Rs. 7,54,396/- is bad both in the eyes of law and on facts. 2. That on the facts and in the circumstances of the appellant's case, the Ld. CIT(A) erred both in law and facts in confirming the disallowance of expenses of Rs. 7,54,396/- under section 14A of the Act only on the assumption that application of provisions of section 14A read with Rule 8D is automatic and mandatory without appreciating the fact that no expenses were incurred in rela....
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....se of assessment proceedings. The assessee participated in the assessment proceedings, and submitted its replies/responses before the AO. The assessee company is stated to be engaged in the business of automotive engineers, dealers in all kind of automobiles etc.. During the year under consideration, the assessee has earned income from interest and profit on sale of shares. The AO observed that the assessee has earned exempt income to the tune of Rs. 2,07,642/-, while the assessee has not made any disallowance of the corresponding expenses u/s 14A of the 1961 Act. The assessee was asked by the AO to explain the same. The assessee submitted that it earned exempt income of Rs. 2,63,115/-, being Rs 2,07,642/- as dividend income and Rs. 55,473/....
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....AILS OF NON CURRENT INVESTMENTS PARTICULARS AS ON 31-03-17 AS ON 31-03-16 QUOTED SHARES 4,39,01,956 4,43,68,987 UNQUOTED SHARES 14,30,40,000 19,60,00,000 PROPERTY 66,00,000 66,00,000 FDR 1,85,00,000 ---- TOTAL 21,20,41,956 24,69,68,987 DETAILS OF TOTAL ASSETS AS APPEARING THE BALANCE SHEET PARTICULARS AS ON 31-03-17 AS ON 31-3-16 ALL ASSETS EXCEPT DEFFERED TAX ASSETS 22,71,48,612.00 26,57,30,500.00 AVERAGE OF TOTAL ASSETS 24,64,39,556.00 &nbs....
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....sessee filed first appeal with ld. CIT(A). The assessee contended before ld. CIT(A) that no expenditure has been incurred by the assessee company to earn exempt income of Rs. 2,63,115/- as the expenses claimed in the Profit and Loss Account are primarily salaries and routine administrative expenses which were wholly for taxable business operations. The assessee contended that the AO mechanically applied Rule 8D without recording mandatory satisfaction or establishing nexus between the expenses and exempt income. The assessee contended that even FDR on which no exempt income are earned are included while computing disallowance u/s 14A read with Rule 8D. The Ld. CIT(A) dismissed the appeal of the assessee by confirming the addition made by th....
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....95) and Judgment and order dated 22.12.2023 of Hon'ble Delhi High Court in the case of CIT-Central-1 v. RRPR Holding Pvt. Ltd. in ITA No. 808/2023, and submitted that the disallowance u/s 14A read with Rule 8D cannot exceed the exempt income. Thus, prayers were made to restrict disallowance u/s 14A to the exempt income earned by the assessee. 5.2 The Ld. Sr. DR on the other hand, relied upon the decisions of the authorities below. 6. I have considered rival submissions and perused the materials available on record. I have enumerated facts in brief and contentions of both the parties in the preceding para's of this order, and the same are not repeated. Short question which has arisen in this appeal is with respect to disallowance u/s 1....