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TMI Blog2013 (6) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT). The submissions made by assessee have not been considered by the AO and it has not been specifically recorded by him that the claim of the assessee that no expenditure has been incurred to earn dividend income is incorrect. Thus this issue be remitted to the file of AO with a direction to re- adjudicate the issue. In favour of assessee for statistical purposes. - ITA No.1733/MUM/2012 - - - Dated:- 28-5-2013 - Shri I. P. Bansal And Shri D. Karunakar Rao,JJ. For the Appellant : Shri Jitendra Jain For the Respondent : Shri O. P. Meena ORDER Per I. P. Bansal, J.M:- This is an appeal filed by the assessee. It is directed against the order passed by Ld. CIT(A)-9 Mumbai dated 07/12/2011 for assessment year 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt u/s 10(34) of the I .T Act and no disallowance u/s 14 A of the I. T. Act has been worked out while calculating the total income. With reference to proposed disallowance u/s 1 4 A of the I.T. Act r.w. Rule 8 D, we submit that the assessee company is engaged in the business of Share broking, Investment in shares and trading in derivatives. The assessee has borrowed interest bearing fund of Rs. 1 8,00,000/- from N.K. Industries in F. Y. 2003- 04 to carry out its broking business. During the year under consideration the assessee has paid interest of Rs. 2,70,738/- on the above loan outstanding as on 31.03.2008. Since the borrowed fund has been utilized for earning the taxable income the same has been claimed as deductible business expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture on funds borrowed, it would not ipso -facto invite the disallowance under section 1 4 A of the I. T. Act unless there is evidence to show that such interest bearing funds have been invested in the investment which have generated the exempt income". The above two judgements has been followed and affirmed by the Hon'ble ITAT of Mumbai Delhi in the case of M/s. Godrej Agrovet Ltd [ITA No. 1692 /M/09 Minda Investment Limited [ITA No. 4046/Del/2009] In view of the above fact and relied upon the judgement / decision no disallowance should be called for under section 1 4A of the Act. Without prejudice to the assessee, we are enclosing herewith working of disallowance u/s 14 A of the IT Act r.w. Rule 8 D." 3.1 He further submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of section 14A(2) the AO has to first satisfy himself regarding the correctness of the claim of the assessee having regard to the accounts of the assessee and such satisfaction of the AO is required to be objectively arrived at on the basis of those accounts and after considering all relevant facts and circumstances. Such interpretation of the provision is supported by the aforementioned decision of Hon'ble Jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT(supra). The submissions made by assessee have not been considered by the AO and it has not been specifically recorded by him that the claim of the assessee that no expenditure has been incurred to earn dividend income is incorrect. In this vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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