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TMI Blog2012 (4) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.13,57,50,000/- and not as Rs.18,57,50,000/- after inter alia holding that the investment of Rs.5,00,00,000/- in bonds of ICICI Bank had not resulted in tax-free income - It is clear from the observations made by the Assessing Officer, in the assessment order, that his intention was to segregate and compute the disallowance to be made of expenses under Section 14A - Held that: the disallowance, if any, to be made by the Assessing Officer will not exceed the disallowance which was made in the original assessment order as reduced by the CIT(Appeals) - Decided in favor of the assessee by way of remand to AO X X X X Extracts X X X X X X X X Extracts X X X X ..... 01,671 -- Total Investment 18,57,50,000 1,12,89,548 59,83,562 3. At the outset, we may note that the interest earned on bonds issued by the ICICI Bank were taxable and therefore in respect of the said bonds, Section 14A was not applicable. The aforesaid findings recorded by the CIT(Appeals), were not challenged by the Revenue before the Income Tax Appellate Tribunal („tribunal‟, for short). Therefore, we are concerned only with the items at serial nos.1 to 3 and 5 of the aforesaid table. 4. The tribunal in the impugned order has examined the factual matrix relating to acquisition/purchase of the equity shares mentioned at serial nos.1 to 3 and the investment in mutual funds. It has reached a categorical and a firm conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ratio of investments. Assessee has not discharged the onus to identify fund invested in assets yielding exempt income." XXXXXXXXXXX "The provisions of sec. 14A have been placed after section 14 classifying various heads of income and in the chapter-iv relating to computation of total income. This means that provisions of section 14-A are clearly applicable to all heads of income mentioned in section 14 under chapter IV including Business Income. The reply of the assessee has been considered and as per provisions of sec. 14A as mentioned above, the expense relatable to earning of exempt income are not allowable. Scope of Section 14A is wide. Section 14A does not specify that expenditure incurred by the assessee for earning income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), as observed above, held that the investment with reference to the applicability of section 14A should be taken as Rs.13,57,50,000/- and not as Rs.18,57,50,000/- after inter alia holding that the investment of Rs.5,00,00,000/- in bonds of ICICI Bank had not resulted in tax-free income. Accordingly, the disallowance was proportionately reduced. 6. However, the Tribunal in the impugned order has completely deleted the disallowance. In the case of Maxopp Investment Ltd. Vs. Commissioner of Income Tax, New Delhi, ITA No.687/2009 (delivered on 18.11.2011), a Division Bench of this Court has held as under : "41. Sub-section (2) of section 14A, as we have seen, stipulates that the Assessing Officer shall determine the amount of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with regard to such expenditure. If he is satisfied that the assessee has correctly reflected the amount of such expenditure, he has to do nothing further. On the other hand, if he is satisfied on an objective analysis and for cogent reasons that the amount of such expenditure as claimed by the assessee is not correct, he is required to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment. It would be appropriate to recall the words of the Supreme Court in Walfort (supra) to the following effect:- "The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14 A." So, even for the pre-Rule8D period, whenever the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee, has submitted that there is no need to remit the matter to the Assessing Officer as the Assessing Officer had not made any disallowance under Section 14A, except in respect of interest expenditure. He further says that the contention now raised by the revenue does not emanate from the order of the Tribunal. We are not inclined to accept the said contention. We have noted the observations made by the Assessing Officer while making disallowance under Section 14A. The Assessing Officer was handicapped, because of failure of the assessee to furnish relevant details and particulars while making the disallowance. It is clear from the observations made by the Assessing Officer, in the assessment order, that his intention was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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