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TMI Blog2013 (11) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... having been filed on 29.08.2012 as against the due date of 10.06.2012. The same is accompanied by a condonation application explaining the reasons for the delay, which is ascribed to an omission on the part of the assessee's counsel before the first appellate authority, Shri Brijmohan L. Sarda, who has also deposed vide an affidavit dated 29.08.2012. Upon hearing the parties and going through the averments made therein, which stand exhibited, we find the delay as suitably explained. The appeal was accordingly admitted, and the hearing is proceeded with. 3. The only issue arising in the instant appeal is the disallowance u/s.14A, effected in assessment at Rs.39,94,365/-, since restricted by the ld. CIT(A) to Rs.4,41,686/-. 4. We have heard the parties, and perused the material on record. 4.1 While the basis of the Assessing Officer's (A.O.'s) disallowance was Rule 8D, mandatory w.e.f. the current year, the ld. CIT(A) allowed relief on the basis that the assessee had incurred interest expenditure at Rs.1,93,500/-, and the indirect expenditure, which could be considered as relevant for the purposes of dividend income, i.e., on the assessee providing the details of the total adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise. It is only on doing so, as explained thereunder, that the onus shifts to the A.O. to comment upon the correctness or the infirmity, as the case may be, attending the assessee's claim. Reference in this regard may be made to para 6.3 of the said order, which we reproduce for the sake of ready reference: '6.3 It is, therefore, clear that the initial onus, even as stated by the ld. CIT(A), to make a claim in respect of the expenditure incurred in relation to the income that does not form part of the total income, is on the assessee. Once the assessee makes such a claim with reference to its accounts, the A.O. is bound to examine the same for the purpose of satisfying himself with regard to its correctness or otherwise, and where not satisfied, determine the same in accordance with the prescribed method. Further, therefore, though there is no specific requirement of recording dissatisfaction, it is incumbent on A.O. to do so, as in its absence it cannot be ascertained if he had actually examined the assessee's claim or proceeded mechanically. Two, his order being appealable, it is only where it bears his reasons, could the validity thereof and, thus, of his action of disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, could reasonably be considered as incurred in the proportion of the principal or the major activities undertaken, or on some other reasonable basis. The assessee has nowhere explained its stand in the matter. The paltry disallowance of Rs.39/- made by it is for de-mat charges, and which is only a direct expenditure, qua which no disallowance has in fact been made by the Revenue, but only qua indirect expenditure. 4.5 The Revenue's case, on the other hand, is also not without blemish. The ld. CIT(A) has confirmed the interest disallowance at Rs.1,93,500/-, even as the A.O. himself, following the prescription of rule 8D, worked out the same at Rs.1,72,890/-. The ld. CIT(A) has also considered the total administrative expenditure, i.e., which is not solely in relation to income forming part of the total income, as toward the tax-exempt income. He has, as it appears, in doing so, been guided by the fact of the dividend income being at Rs.101.10 lacs, and profit on sale of investments at Rs.70.42 lacs, besides perhaps by the disallowance u/r. 8D per se working out to a much higher figure (Rs.39.94 lacs). The volume of the tax-exempt income is an irrelevant consideration. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Estates Finance Pvt. Ltd. (in ITA No.3029/Mum/2012 dated 17.07.2013), wherein, while upholding the statutory disallowance u/s. 14A(1) qua dividend income, following the hon'ble jurisdictional high court in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom) and the hon'ble Calcutta high court in Dhanuka Sons vs. CIT [2011] 339 ITR 319 (Cal), following it, the tribunal directed the restriction of the disallowance workable with reference to rule 8D(2)(ii) to 20% thereof. It was explained that shares, which yield the tax-exempt dividend income, interest qua which is to be disallowed, being held as stock-in-trade, also yield share trading income, which is taxable. Therefore, to say that the entire interest relatable to the average share holding is to be attributed to the tax-exempt dividend income would be patently incorrect on facts. Further, that the shares are in fact bought and held primarily for trading purposes, further accentuates the apparent incongruity of the situation that would arise on a mechanical application of r. 8D(2), so that the amount as per r. 8D(2)(ii) would need to be scaled down, bifurcating the expenditure so arrived at between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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