2012 (8) TMI 980 - AT - Income Tax

Summary

Issues:
The appeal concerns the deletion of disallowance made by the Assessing Officer under section 14A read with Rule 8D of the Income Tax Rules amounting to Rs. 15,74,023 for the assessment year 2008-09.

Summary:

Issue 1: Disallowance under section 14A r.w. Rule 8D
During the assessment proceedings, the Assessing Officer (AO) disallowed Rs. 15,74,023 under Rule 8D r.w. Section 14A, despite the assessee's explanation that no expenditure was incurred in relation to exempt income. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the disallowance, emphasizing that the AO did not establish any expenditure incurred by the assessee in relation to exempt income. The CIT(A) held that as the assessee did not claim any expenditure in relation to exempt income and the exempt income was directly credited to the bank, the provisions of section 14A were not attracted. The Tribunal upheld the CIT(A)'s order, noting that the AO did not find any expenses related to income not forming part of the total income, thus ruling out the application of Rule 8D for disallowance.

Conclusion:
The Tribunal dismissed the appeal, affirming the deletion of the disallowance made by the AO under section 14A read with Rule 8D. The decision was based on the absence of any claim of expenditure by the assessee in relation to income not forming part of the total income, thereby negating the need for invoking Rule 8D for disallowance.