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TMI Blog2013 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee also has income from Wind Mill. The assessee electronically filed its return of income on 29-9-2009 declaring total income of Rs.4,08,645/-. The case was selected for scrutiny and thereafter the assessment was framed u./s. 143(3) vide order dated 26-12- 2011 and the total income was determined at Rs.27,76,930/- by making various additions/disallowances. Aggrieved by the order of A.O., assessee carried the matter before the CIT (A). 4. CIT (A) vide his order dated 10-7-2012, partly allowed the appeal of the assessee. Aggrieved by the order of CIT (A), the assessee is now in appeal before us. 5. Before us the effective grounds taken by the assessee read as under:- "1. The Ld. CIT (A) has grievously erred in law as well as on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment u/s. 69C of the Act. In view of the facts and submissions filed, the impugned addition of Rs.1,24,844/- requires to be deleted." 6. Ground No.2 and 3 are argumentative in nature and therefore not considered. 7. At the outset, the Ld. A.R. submitted that he is not pressing ground No.4 and therefore the same is not adjudicated and dismissed as not pressed. Ground No.1 is with respect to disallowance made u/s. 14A of the Act. 8. During the course of assessment proceedings the A.O. noticed that assessee has shown investment in shares and securities of Rs.19,49,122/- as at the end of the year. He also observed that assessee has claimed financial charges of Rs.78,13,332/-.A.O.was of the view that the assessee has made investments for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accepted in view of the amended provisions of Section 14A of the I.T. Act. As per the provisions of Section 14A (3) of the I.T. Act, the provisions of Sec. 14A (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. The appellant is also claiming that no expenditure had been incurred in investing in shares/units. In such a case, the A.O. is supposed to make necessary disallowance as per the provisions of Sec. 14A (2) r.w.r. 8D of the I.T. Rules, 1962. The A.O. has followed the same procedure and accordingly application of Rule 8D is upheld. During the appellate proceedings, the appellant has not chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the material on record. From the copy of the computation of income and balance sheet placed before us we find that the assessee has earned dividend income and the same has been considered as part of the total income for the purpose of tax. As per the provisions of Sec.10 (38) dividend income is exempt. It is a settled law that income can only be taxed as per the provisions of Income Tax Act if an income is specifically excluded for the purpose of taxation; the same cannot be considered while computing the tax. Our view also is supported by the decision of Hon'ble Gujarat High Court in the case of Chokshi Metal Refinery vs. CIT (1977) 107 ITR 63 (Guj.) wherein the Hon'ble High Court relying on the decision of Hon'ble Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record. The proceedings for A.Y. 2002-03 would stand remanded to the A.O. The A.O. should determine as to whether the assessee had incurred any expenditure (direct or indirect) in relation to dividend income/ income from mutual funds which does not form part of the total income as contemplated under sec. 14A. The Assessing Officer can adopt a reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer should provide a reasonable opportunity to the assessee of producing its accounts and relevant or germane material having a bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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