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TMI Blog2014 (2) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... penses claimed by the Assessee was in respect of Audit fees, Conveyance, Bank Commission, Office maintenance etc. – Relying upon CIT vs. New Savan Sugar and Gur Refining Company Ltd. [1989 (4) TMI 12 - CALCUTTA High Court] – the expenditure was allowable in view of the fact that the company had to incur various expenditure as it has to maintain its establishment so long as it is in operation and its name is not struck off from the register of the Registrar of Companies - the expenditure made by the AO u/s 14A was already confirmed and the remaining expenditure on depreciation - the Revenue could not controvert the findings of CIT(A) nor has brought any material on records in support of its contention – thus, there is no reason to interfere in the findings of CIT(A) – Decided against Revenue. - I.T. A. Nos. 2647 & 2825/AHD/2012 - - - Dated:- 9-10-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri S. N. Soparkar For the Respondent : Shri J. P. Jhangid, Sr. D.R. ORDER Per Shri Anil Chaturvedi, A.M. 1. These two appeals, one filed by the Revenue and the other filed by the Assessee are against the order of CIT(A)-VIII Ahmedabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculiar facts of the appellant's case, it was not open to the learned Assessing Officer to assume jurisdiction u/s.14A, and showing further that in any case, there was absolutely no case for the learned Assessing Officer to make any disallowance either on account of interest expenditure or administrative expenditure u/s.14A), he had upheld both the disallowances without at all considering and/or dealing with those merits (emphasis supplied) 3.2 I have carefully considered the assessment order and the above contentions. In my view when the appellant has made investment in shares and earned income by way of dividend which is not includible in total income of the appellant, THE DISALLOWANCE HAS TO BE MADE. The appellant's claim that there is no expenditure incurred in this regard is totally baseless. For earning of such income and maintaining investment the appellant has to incur certain expenditure. The provisions of section 14A(2) and Rule 8D clearly provide that when the appellant has not been able to establish its claim that there is no such expenditure incurred for earning tax free income, the disallowance has to be worked out on the basis of the provisions of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the contention of the Assessee and upheld the order of A.O. by holding as under:- 3.2 I have carefully considered the assessment order and the above contentions. In my view when the appellant has made investment in shares and earned income by way of dividend which is not includible in total income of the appellant, the disallowance has to be made. The appellant's claim that there is no expenditure incurred in this regard is totally baseless. For earning of such income and maintaining investment the appellant has to incur certain expenditure. The provisions of section 14A(2) and Rule 8D clearly provide that when the appellant has not been able to establish its claim that there is no such expenditure incurred for earning tax free income, the disallowance has to be worked out on the basis of the provisions of Rule 8D(2). Accordingly, the A.O. was justified in making the above disallowance. It is to be noted that the working of disallowance made by the A.O. is not in dispute. Accordingly, this ground of appeal is rejected. 8. Aggrieved by the order of CIT(A), the Assessee is now in appeal before us. Before us, the ld. A.R. submitted that the investments which were held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.73 crore. Before us, however no details are available as to the days on which the dividend was received the amount of dividends, the number of companies in which the Assessee holds investments. Considering the totality of the facts, we are of the view that the disallowance of ₹ 13.86 lacs made by the A.O. is not warranted but however a disallowance of Rs. one lac made under section 14A would meet the ends of justice. We therefore direct to disallow the disallowance under 14A of Rs. One lac as against ₹ 13,48,680/- made by the A.O. Thus this ground of Assessee is partly allowed. 11. 3rd ground is with respect of disallowance of depreciation of ₹ 2,35,848/- This ground was not pressed on account of smallness of amount and therefore this ground is dismissed. 12. In the result the appeal of Assessee is partly allowed. ITA No. 2825/AHD/2010 ( Revenue's appeal ) Disallowance of expenses of ₹ 33,08,407/-. 13. During the course of assessment proceedings, A.O. noticed that Assessee had no business during the year but has claimed various expenditure aggregating to ₹ 46,61,807/-. He also noticed that even in the immediately preceding year th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 6,02,761 ii) Depreciation ₹ 2,35,848 iii) Employees cost ₹ 10,25,500 Total ₹ 18,64,109/- 4.3. The appellant has not established as to how the depreciation can be said to be incurred for the purpose of earning income from other source. Accordingly, the disallowance of depreciation was justified. Further, I find that the employees cost of ₹ 10,25,500 and the general administrative expenditure are claimed to be admissible relying upon the decision of the Calcutta High Court in the case of CIT vs. New Savan Sugar Gur Refining Co. Ltd. 185 ITR 564 wherein it is held that that a limited company, even if it does not carry on any business and it derives income only from other sources, has to maintain its establishment so long as it is in operation and its name is not struck off the register of the Registrar of Companies. For that purpose the company has to incur various expenditures and the amount paid by the appellant for secretarial work and other services is one of such expenditure. Such expenditure is expenditure in conn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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