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TMI Blog2014 (1) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case and in law upholding disallowance of expenses of Rs. 7,99,580/- mechanically disallowed by AO u/s 14 A of the Act out of expenses as per Rule 8D (2) (iii) calculated at the rate of 0.5% of the average investments. The reasons given by him for doing so are wrong and contrary to the facts and against the provisions of law. 2. The Ld. CIT (A)/ AO failed to consider that none of the expenses claimed are incurred, related or attributed to investments or exempt income and whatever expenses are incurred for its business and corporate structure which are also far less than the expenses disallowed. 3. The Ld. CIT (A) failed to consider that AO has not noted his dissatisfaction as required by Rule 8D (1) as to disallowance u/s 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,55,600, however, he confirmed the balance disallowance after observing and holding as under:- "3.5 I have considered the A.O.'s order as well .as appellant AR's submission. Having considered both, I find that Rule 8D is applicable in the case of the appellant company the year under consideration as held by the decision of jurisdictional High Court in case of Godrej & Boyce Manufacturing Co. Ltd. vs. DCIT reported in 328 ITR page 81. However, I find that the appellant was having sufficient interest free funds available for making investments. I also find that the appellant company had suo moto disallowed Rs.46,309/- i.e. Rs.21,954/- being depository charges and Rs.24,355/- being miscellaneous expenses under section 14A of the Act as these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceed the expenditure claimed. Regarding expenditure relating to depository charges of Rs. 22,497, he submitted that the assessee has debited only Rs. 21,954 which forms part of the disallowance offered by the assessee at Rs. 46,309. The Assessing Officer has disallowed the said sum again even though the assessee has itself disallowed it, which has resulted into double disallowance. 5. On the other hand, the learned Departmental Representative submitted that once the provisions of rule 8D are triggered, then the disallowance has to be calculated @ 0.5% of the average investment. Therefore, the disallowance of Rs. 7,99,580, as made by the Assessing Officer and sustained by the learned Commissioner (Appeals), has to be confirmed. He, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to legal and professional charges, auditor's remuneration, depreciation and bank charges and rates and taxes. These expenses are, any way, required to be incurred for the maintenance and running of corporate office and other business of the assessee. The entire expenditure cannot be said to be attributable to earning of exempt income. Provisions of section 14A provide that any 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. The expenditure which has to be disallowed has to be in relation to the exempt income only. Sub- section (2) of section 14A, provides that the Assessing Officer has to determine the amount of expenditure incurred in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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