9911796707
TMI Blog2014 (1) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in invoking the provisions of Section 263 of IT Act - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... h "expenditure incurred" is quantified. The method has been prescribed in Rule 8D, and comprises three links. The firs link relates to expenditure directly attributable to the earning of exempt income. On this account, the assessee has itself already disallowed Rs.4,88,96,471/-. The second link relating to disallowance of interest expenses not directly attributable to earning the exempt income is to be determined in terms of the formula given in the Rule. As per this formula, disallowance would be NIL, since the entire interest expense has been disallowed suo moto by the assessee treating the same as directly attributable to earning of exempt income. The third link relates to of 0.5% of the average of the value of investment income from which does not form part of the total income. Neither the provisions of the Act nor the provisions of the Rule mandate the restriction of the disallowance worked out under Rule 8D(2)(iii) to the amount of actual expenditure incurred. Whatever is the quantum worked out as per formula prescribed in the Rule, the same would represent the quantum of disallowance. Hence, the AO in restricting the disallowance to the amount of expenses claimed, has depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenditure debited to P&L A/c was only Rs.6,08,524/-, therefore, the AO had correctly restricted the disallowance to that extent, i.e., Rs.6,08,524/-. Learned AR has pleaded that a disallowance u/s. 14A could be made out of the total expenditure claimed in the P&L A/c and nothing should be disallowed in excess of that figure. In support of this argument reliance has been placed on the case of Gillete Group India Pvt. Ltd., 22 Taxman.com 61 (Del). 4. From the side of the Revenue, learned CIT-DR, Mr. O.P. Vaishnav appeared and supported the order passed u/s. 263 of IT Act by learned Commissioner. He has argued that prima facie, the learned Commissioner was of the opinion that the order passed by the AO was erroneous; hence, he has rightly considered to annul that order. He has pleaded that the learned Commissioner was of the opinion that the computation of disallowance u/s. 14A read with Rule 8D was incorrectly made by the AO, therefore, it was within his jurisdiction to invoke the provisions of Section 263 of IT Act. According to him, the scope of Section 263 is very wide as held in the case of Malabar Industrial Co., 243 ITR 83 (SC). 5. We have heard both the sides at some le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture in respect of filing fees, Demat charges, finance charges, etc, as follows: Filing fees 126950 Demate charges 657548 Legal Expenses 48236 Miscellaneous Expenses ---- Finance charges 48182348 Preliminary expenses written off 429254 49619556 5.2 As against that the income of the assessee was earned from professional fees of Rs.6,75,000/-. The assessee had disallowed the aforelisted expenditure as we have noted from the computation of income furnished along with return. On those very facts, the respected coordinate Bench Delhi in the case of Gillete Group India (supra) has opined as under:- "5. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 14A reads as under:- "Expenditure incurred in relation to income not includible in total income. 14A. [(1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] [(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
