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TMI Blog2014 (1) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the foreign companies and the dividend of which is taxable as well as the investment which are not yielding dividend income - but some fixed maturity plans of mutual funds, then the same would be excluded while considering apportionment of the expenses incurred for earning the dividend income – Decided partly in favour of Assessee. - ITA No.198/Mum/2012 - - - Dated:- 15-5-2013 - Vijay Pal Rao and Rajendra, JJ. For the Appellant : Shri Percy J Pardiwalla For the Respondent : Sh Om Prakash Meena ORDER:- PER : Vijay Pal Rao This appeal by the assessee is directed against the order dated 21.10,2011 of the Commissioner of Income Tax(Appeals) for the Assessment Year 2007-08. 2. The only issue arises in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income Tax(Appeals), though accepted that Rule 8D is not applicable for the year under consideration; however, after excluding the investment in the foreign companies as well as the investments in the fixed maturity plans of Mutual Funds has taken 0.5% of the average value of the investments for disallowance of expenses attributable to the exempt income. 4. Before us, the ld Sr counsel for the assessee has submitted that though in principle the Commissioner of Income Tax (Appeals) has accepted that Rule 8D is not applicable for the year under consideration; however, while deciding the issue, he has taken the average value of the investments and applied 0.5% of the same for the purpose of disallowance of the expenses u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formula as provided u/r 8D. He has further submitted that even otherwise in the earlier years, the department has not made any disallowance u/s 14A on account of administrative expenses. In support of his contention, he has referred the order of the Tribunal in the case of the assessee for the Assessment Years 1999-00 to 2003-04. Therefore, the department in the earlier year has accepted that the assessee has not incurred any expenses for earning the dividend income. 4.2 On the other hand, the ld DR has submitted that though Rule 8D is not applicable for the year under consideration; however, the disallowance u/s 14A should be made on some reasonable basis and therefore, estimation has to be examined whether the disallowance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the earlier years. 6 Having considered the relevant facts, we find that the assessee has incurred a total expenses of Rs.49,85,000/- towards staff cost, operating and administrative expense; establishment/general expenses of MIS department which is handling the investment apart from the activity of accounts and banking operations. Accordingly, in our view a reasonable estimate and allocation of expenses for the purposes of investment activity would be the 1/3 of the total expenses incurred on MIS department. Further, since the investment activity also includes investment in the foreign companies and the dividend of which is taxable as well as the investment which are not yielding dividend income; but some fixed maturity plans of mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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