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2015 (3) TMI 58 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Held that - As relying on assessee's own case 2015 (2) TMI 481 - ITAT DELHI in the preceding assessment year 2008-09 the incurring of short term loss from mutual funds and earning from long term capital gains on shares proves that assessee was continuously engaged in investment activities both short term and long term which cannot be done without proper human resources and proper infrastructure. Therefore, we are of the considered opinion that the Assessing Officer had rightly disallowed 0.5% of expenditure as disallowance u/s 14A of the Act - Thus direct the AO to disallow 0.5% of the expenditure as disallowance u/s 14A of the Act.- Decided partly in favour of assessee
Issues:
Confirmation of disallowance under section 14A of the Income Tax Act. Analysis: The appeal was against the order of the ld. CIT(A)-XVIII confirming the disallowance of a sum under section 14A of the Act. The grounds raised by the assessee included the incorrect invocation of section 14A, failure to satisfy statutory preconditions for disallowance, and disregard of the appellant company's case law. The AO disallowed the amount after observing the common infrastructure used for earning income under various heads. The ld. CIT(A) upheld the disallowance, emphasizing the absence of a separate bank account for mutual fund investments and the non-coverage of redemption proceeds for fresh investments. She held that Section 14A applied regardless of income earned, citing relevant case laws. The assessee argued that the issue was covered by a previous Tribunal order for the assessment year 2008-09, where a specific disallowance percentage was determined. Following the earlier order, the Tribunal directed the AO to disallow 0.5% of the expenditure under section 14A, partially allowing the appeal. This detailed analysis covers the issues involved in the legal judgment, including the grounds of appeal, observations by the authorities, relevant case laws cited, and the final decision of the Tribunal.
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