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TMI Blog2014 (1) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi [2013 (5) TMI 17 - ITAT DELHI] - When the expenditure has not been incurred by the assessee then there is no scope for any disallowance under section 14A as there is no expenditure incurred by the assessee which is relatable to the income which does not form part of the total income - Decided in favour of assessee. - ITA No. 2306/DEL/ 2013, ITA No. 2395/DEL/ 2013 - - - Dated:- 29-10-2013 - Shri A. D. Jain And Shri B. C. Meena,JJ. For the Petitioner : Shri K. Sampath, Advocate For the Respondent : Mrs. Renuka Jain Gupta, Senior DR ORDER Per B. C. Meena, Accountant Member : Both these cross appeals emanate from the order of the CIT (Appeals)-IX, New Delhi dated 07.02.2013. 2. The grounds in assessee s appeal rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) erred in directing the A.O. to compute disallowance u/s 14A read with Rule 8D in accordance with the formula laid down under Rule 8D(2)(i) under which disallowance has been computed by the A.O. 2. Whether in the facts and circumstances of the case, the CIT(A) erred in holding that the interest expenses are not directly attributable as the A.O. worked out the above expenses after adopting elaborate computation. 3. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 4. That the grounds of appeal are without prejudice to each other. 5. The appellant craves leave to add, to alter, or amend any ground of the appeal raised above at the time of the hearing. 3. The assessee is a Non Banking F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.3,57,89,023/- on account of expenses incurred in relation to the earning of dividend income u/s 14A. The Assessing Officer worked out disallowance at Rs.4,03,84,700/- and thus increased the same by Rs.45,95,677/-. The Assessing Officer was not justified in holding that interest expenses directly relatable to investments only. The investments were from a common pool of funds. Ld. AR submitted that since there was a common pool of funds resulted into two types of income, therefore, it cannot be said that whole of the interest expenditure was incurred for investment purposes only. Therefore, the disallowable interest under rule 8D is to be calculated as per the ratio given in the Rule where interest is not directly attributable any particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer shall work out which expenditure was directly relating to such income and which interest paid was not directly attributable to any particular income or receipt. For this purpose, this issue is restored back to the file of the Assessing Officer. 9. In the ground nos.3, 4 5, the issue raised by assessee is computation of disallowance u/s 14A of the Income-tax Act, 1961 read with Rule 8D(2)(iii) at Rs.35,45,959/- wherein the assessee has disallowed Rs.19,81,276/-. The total expenditure debited under the head Administrative expenses were Rs.23,19,542/-. Thus, the assessee has claimed only a sum of Rs.3,38,266/-. It was submitted by ld. AR that the assessee has taxable income of Rs.76,89,000/-, therefore, the claim of Rs.3,38,266/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal and professional charges are necessary. After hearing, we find that the disallowance of expenditure cannot exceed the total expenditure incurred and claimed by the assessee because section 14A provides that expenditure incurred in relation to income not includible in the total income shall not be allowed. So there is first condition that the assessee should have incurred certain expenditure in relation to the income which does not form part of the total income under the Income-tax Act, 1961. When the expenditure has not been incurred by the assessee then we hold that there is no scope for any disallowance under section 14A as there is not expenditure incurred by the assessee which is relatable to the income which does not form part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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