9911796707
TMI Blog2014 (6) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... est u/s 14A of the Act – Held that:- Following CIT Vs. Deepak Mittal [2013 (9) TMI 764 - PUNJAB & HARYANA HIGH COURT] - the onus is placed upon the assessee to prove the quantum of expenditure incurred on earning of tax free income of dividend - as per the provisions of sub. sec (2) of sec. 14A of the Act, the AO is required to examine the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income and if he is not satisfied with the correctness of claim only, he can proceed to determine the amount of expenditure in terms of sec. 14A(2) of the Act - the AO is required to proceed further to collect materials or evidence to determine expenditure, if any, incurred by the assessee – th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign exchange loss by the learned AO. Moreover, the learned AO has wrongly disallowed unrealized foreign exchange loss of Rs.20,27,115 (including Rs.4,51,010 as stated above) on the grounds that it is a loss of contingent nature and a notional loss. 'The Appellant has been following mercantile basis of accounting since inception. Exchange difference arising on foreign currency transactions have to be considered as income / expense in the period in which they arise. Para 9, of Accounting Standard 11, recognizes exchange rate differences as income or expense. Any difference, loss or gain, arising on conversion of the said liability on the closing rate, should be recognized in the P L account for the reporting period. The Assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also given a finding that the assessee has been following this accounting system consistently and the same is in accordance with the AS-11 issued by the Institute of Chartered Accountants of India. We notice that the learned CIT(A) has taken conscious decision on this issue by bringing on record the authority on which he is placing reliance upon. Under these circumstances, we do not find any reason to interfere with this order on this issue and accordingly affirm the same. 5. We shall now take up the appeal filed by the assessee. The only ground urged by the assessee relates to the disallowance of interest of Rs.99,537/- u/s.14A of the Act. 6. The learned counsel for the assessee submitted that the assessee has made the investment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 131 (P H), has considered the issue of making disallowance u/s 14A of the Act. The assessee before the High Court was contending before the AO that he did not incur any expenditure for earning the dividend income. The Hon ble High Court held as under :- Held : dismissing the appeals, that the onus was upon the assessee to prove the quantum of expenditure incurred on earning of tax free income of dividend. When the consistent case of the assessee, despite the notice given by the Assessing Officer to give details of the expenditure made on earning of exempted income in the nature of dividend, was that he had not made any expenditure on earning such income, the Assessing Officer in terms of sub-section (2) of section 14A had to proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee as under:- 03.1 In this context the appellant has submitted as follows: (i) Total Investments as on 1.4.2007 was Rs. 95,69,430 and as on 31.3.2008 was Rs. 11,79,037. The appellant had interest free funds at it's disposal amounting to Rs. 4,43,83,389 as on 31/3/2007 and Rs. 5,68,13,514 as on 31/3/2008, as shown below :- AS ON 31/3/2007 AS ON 31/3/2008 Share Capital 4,94,000 4,94,000 Reserves and Surplus 3,71,46,360 4,77,33,083 Depreciation Reserves 67,43,029 85,86,431 Total interest free funds 4,43,83,389 5,68,13,514 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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