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TMI Blog2015 (2) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A r.w. Rule 8D, ignoring the fact that the appellant has voluntarily disallowed a sum of Rs. 1,03,915/- as worked out U/R 8D at ½ % of the average value of investment on which dividend is received. 1.2 The Ld. CIT (A) erred in not considering the fact that disallowance U/R 8D cane be made on value of investments from where tax-free dividend income is received and not on the total value of investments. Therefore the further addition of Rs. 7,79,654/- is not warranted for. 2. Addition u/s 14A of Rs. 8,83,569/- to the Book Profit u/s 115JB: 2.1 The Ld. CIT(A) erred in confirming the addition u/s 14A of Rs. 8,83,569/- to the Book Profit u/s 115JB ignoring the Explanation 1 to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm loans, therefore, there is no nexus between the interest expenditure and the investment in shares. The AO did not accept the contention of the assessee and disallowed the administrative expenses by applying Rule 8D. The AO accordingly worked out the disallowance at Rs. 8,83,569/- on administrative expenses. 2.1 On appeal, CIT(A) has confirmed the disallowance made by the AO. 2.2 Before us at the very outset the Ld. AR of the assessee pointed out that though the issue of disallowance u/s 14A has been decided by this Tribunal against the assessee for the assessment year 2008-09 vide order dated 21.12.2012 in ITA no. 7599/mum/2011. However the Ld. AR of the assessee has submitted that the crucial fact that the assessee has not incurred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning the exempt income then no disallowance can be made under the provisions of section 14A. Rule 8D cannot expand the scope of section 14A in which disallowance can be made only with respect to the expenditure which has been incurred for earning the exempt income and claimed by the assessee. 2.3 Ld. DR on the other hand has submitted that the issue is now covered against the assessee by the decision of the Tribunal in the assessee's own case in assessment year 2008-09. 2.4. We have considered the rival submission and carefully perused the relevant records. So far as the issue regarding disallowance u/s 14A in the case where no dividend has been received, the same is covered against the assessee by the order of Tribunal in assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple of apportionment embedded in section 14A has no application. The object of section 14A is not allowing to reduce tax payable on the non exempt income by deducting the expenditure incurred to earn the exempt income. In the case in hand it is not the case of the revenue that the assessee has incurred any direct expenditure or any interest expenditure for earning the exempt income or keeping the investment in question. If there is expenditure directly or indirectly incurred in relation to exempt income the same cannot be claimed against the income which is taxable. For attracting the provisions of section 14A- "there should be proximate cause for disallowance which has relationship with the tax exempt income as held by the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case in assessment year 2008-09. 3.2 The Ld. DR on the other hand relied upon the decision of this Tribunal in case of ITO Vs. RBK Share Broking (P). Ltd. (37 taxmann.com 128) and submitted tat the Tribunal held that the adjustment/disallowance can be made while computing the book profit u/s 115Jb in respect of the amount disallowed u/s 14A. 3.3. Having considered the rival submissions carefully and gone through the various decisions relied upon by both the parties we note that there are divergent views of the Tribunal on this point. Without going into the controversy of the quantum of adjustment, we find that in view of our finding in respect of disallowance u/s 14A in ground no. 1, the ground no. 2 of the assessee's appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's own case held that depreciation cannot be thrust upon the assessee. This decision of the coordinate Bench was later on sustained by the Hon'ble Bombay High court as well, dismissing revenue's appeal on this issue. From assessment year 2001-02 to 2007-08, the AO allowed the depreciation as claimed by the assessee, without giving effect to the order of the ITAT, which resulted in the difference in the opening WDV, which has been added by the AO in the instant case. This addition on account of difference has been deleted by the CIT(A), directing the AO to give effect to the orders of the higher authorities. Since the issue is travelling from the preceding years, we confirm the direction of the CIT(A) to rework the WDV, after giving effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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