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2018 (6) TMI 1538 - AT - Income TaxAddition u/s 14A - expenditure incurred towards the investment that earns exempt income - Held that - It cannot be inferred that the dividend income would be directly proportional to the expenditure incurred on the investment earning exempt income. No merit in the order of the CIT(A) for having restricted the disallowance U/s.14A of the Act to the extent of exempt income earned by the assessee. Since the assessee has not computed its actual expenditure incurred towards the investment that earns exempt income, in the interest of justice, we remit back the matter to the file of AO for both the assessment years thereby affording one more opportunity to the assessee to work out the actual expenditure incurred by it towards the investment that earn exempt income and disallow the same. We further hereby direct the Ld.AO to verify the computation submitted by the assessee for both the assessment years and thereafter decide the matter in accordance with law and merit. Addition on account of unsecured loans and unexplained sundry creditors - assessee could not discharge its onus with respect to the genuineness of the loan and the genuineness of the sundry creditors - Held that - Though we do not appreciate the lethargic attitude of the assessee in not furnishing the requisite documents and records before the Ld.Revenue Authorities at the appropriate time, in the interest of justice, we hereby remit all these issues back to the file of Ld.AO for de-nova consideration with direction to the Ld.Revenue Authorities to admit any fresh evidence produced by the assessee. We further direct the assessee to promptly cooperate with the Ld.Revenue Authorities in their proceedings failing which the Ld.Revenue Authorities are at liberty to pass appropriate Orders based on the materials on record. Appeals of the Revenue allowed for statistical purposes.
Issues Involved:
1. Disallowance of expenditure for earning exempt income under Section 14A r.w.r. 8D of the Rules. 2. Confirmation of additions made by the Assessing Officer (AO) related to unsecured loans, sundry creditors, administrative expenses, and undisclosed investment. Issue 1: Disallowance of Expenditure for Earning Exempt Income under Section 14A r.w.r. 8D of the Rules: The appeals by the Revenue were against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2011-12 & 2012-13. The main issue was the disallowance of expenditure made by the AO under Section 14A r.w.r. 8D of the Rules concerning the exempt income earned by the assessee. The AO disallowed amounts for both years, which were partly confirmed by the CIT(A) but restricted to the extent of exempt income earned. The Tribunal held that the assessee did not compute the actual expenditure towards earning exempt income, leading to a remittal back to the AO for proper computation. The Tribunal emphasized that the expenditure incurred for earning exempt income cannot be claimed as a deduction from taxable income, and directed the AO to verify the computation submitted by the assessee for both years and make a decision accordingly. Issue 2: Confirmation of Additions Made by the AO: Assessment Year 2011-12: The cross objection raised by the assessee did not survive due to the remittal back of the disallowance issue. Assessment Year 2012-13: The CIT(A) confirmed additions related to unsecured loans, sundry creditors, administrative expenses, and undisclosed investment as the assessee failed to discharge its onus. The Tribunal remitted these issues back to the AO for de-novo consideration, allowing the assessee to present relevant documents. The Tribunal directed the assessee to cooperate with the Revenue Authorities, failing which appropriate orders could be passed based on the materials on record. In conclusion, the Tribunal allowed the Revenue's appeals for statistical purposes, dismissed the cross objection of the assessee for the assessment year 2011-12, and partly allowed the cross objection for the assessment year 2012-13 for statistical purposes. The matter was remitted back to the AO for both assessment years to reevaluate the issues in accordance with the directions provided by the Tribunal.
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