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TMI Blog2015 (3) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 8D(2)(iii), being an amount equal to ½% of the average of the value of investment. Since the assessment year under consideration is 2009-10, the mandate contained in Rule 8D applies as per the judgment Maxopp Investments Ltd. Vs. CIT (2011 (11) TMI 267 - Delhi High Court), therefore, sustain the disallowance u/s 14A at ₹ 1,23,503/-. - Decided partly in favour of assessee. Disallowance of prior period expenses - Held that:- Commissioner of Industries, Government of NCT of Delhi, vide notice of demand dated 19.6.08, raised a demand of ₹ 42,000/- towards apportioned cost of common Effluent treatment plant. From a copy of this notice, which has been placed on record, it can be seen that the assessee was directed to pay ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009-10. 2. The first ground is general which does not require any separate adjudication. 3. Ground Nos.2-4 are against the confirmation of disallowance of ₹ 9,46,228/- u/s 14A of the Act. Briefly stated, the facts of these grounds are that the assessee received a sum of ₹ 2,02,531/- as dividend income from shares and mutual funds, which was claimed and allowed as exempt u/s 10 of the Act. No expenditure was disallowed against this amount. On being called upon to explain as to why no disallowance was made u/s 14A read with Rule 8D, the assessee submitted its explanation which has been reproduced in the assessment order. Rejecting such submission advanced on behalf of the assessee, the AO held that the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question before it subject to the restrictions or limitation, if any, prescribed by the statutory provisions. In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the sub-ordinate authority may have in the matter. In view of this legal position emanating from the above discussed judgments of the Hon'ble Summit court, it is patent that the argument about the non-recording of satisfaction about the incurring of expenses in relation to exempt income does not hold water. 5. Now coming to the merits of the addition, it is observed that the first amount of disallowance is ₹ 8,22,725/- being the interest towards investment in shares and mutual funds yielding exempt income. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning part of disallowance at ₹ 1,23,503/-, we find that the same is in accordance with law as per Rule 8D(2)(iii), being an amount equal to % of the average of the value of investment. Since the assessment year under consideration is 2009-10, the mandate contained in Rule 8D applies as per the judgment of the Hon ble jurisdictional High Court in the case of Maxopp Investments Ltd. Vs. CIT (2012) 347 ITR 272 (Del). We, therefore, sustain the disallowance u/s 14A at ₹ 1,23,503/-. These grounds are partly allowed. 7. Ground No.5 is against confirmation of disallowance of ₹ 42,000/- on account of prior period expenses. The assessee had shown Prior period expenses in its tax audit report at ₹ 5,45,791/-. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,500/- out of legal expenses. The assessee claimed deduction of ₹ 15,000/- being legal fees paid in the case State vs. Abdul Hameed. This was supported by a bill of the Advocate from which it was seen that the assessee s driver, namely, Abdul Hameed, was taken into custody pursuant to an accident and the amount was paid as Advocate fee for seeking his bail. A further sum of ₹ 3,000/- was claimed as deduction as certification charges of the net worth of Directors. The AO disallowed ₹ 18,000/-. The ld.CIT(A) restricted the disallowance to a sum of ₹ 10,500/-, comprising ₹ 7,500/- out of legal fees paid to Advocate and ₹ 3,000/- paid as certification charges. 10. After considering the rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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