9911796707
TMI Blog2014 (7) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... made a disallowance of about 16 lakhs. - assessee had not claimed any expenditure in its P 16.35 lakhs, as against the total expenditure of 13 lakhs (app.) claimed by the assessee in P & L account, is not justified. Provisions of Rule 8D cannot and should not be applied in a mechanical way. - AO had not deliberated upon the facts of the case before making the disallowance, whereas the FAA has decided the issue on merits - Decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... y, telephone and other administrative expenses must have been related to the activities for earning exempt income. Accordingly, invoking the provisions of section 14A read with Rule 8D, he made disallowance of ₹ 16,35,869/-, being 0.5% of average investment of ₹ 32,71,73,884/-. 3. Against the order of the AO assessee preferred an appeal before the First Appeal Authority (FAA). Before him it was submitted that the investment transaction undertaken by the assessee were managed by the investment advisors, that the assessee had made payment on account of port folio management services (PMS) amounting to ₹ 1,91,231/- to Reliance PMS, ₹ 12,157/- to Barclays Bank and ₹ 3,61,028/- to HSBC PMS, that those expenses had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es & Stock Brokers Pvt. Ltd. (326 ITR 1) and Godrej & Boyce Manufacturing Co. Ltd (328 ITR 81). He deleted the disallowance of ₹ 16,35, 869/- made by the AO. 4. Before us, Departmental Representative(DR) stated that provisions of Rule 8D of the Rules were applicable for the year under consideration, that the assessee had earned exempt income. Authtorised Representative(AR)argued that all the investment transaction undertaken by the assessee were managed by investment advisors, that during the year he had paid Portfolio Management Charges, amounting to ₹ 5.64 lakhs, to the investment advisor and the same was debited in his Capital Account, that the Demat Expenses and Security Transaction Tax amounting to ₹ 2,19,856/- was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to earning of exempt income. Not only this he had to give the basis of such calculation. In any manner disallowance of ₹ 16.35 lakhs, as against the total expenditure of ₹ 13 lakhs (app.) claimed by the assessee in P & L account, is not justified. Provisions of Rule 8D cannot and should not be applied in a mechanical way. Facts of the case have to be ananlysed before invoking them. We are of the opinion that the AO had not deliberated upon the facts of the case before making the disallowance, whereas the FAA has decided the issue on merits. Therefore, confirming his order, we decided the effective ground of appeal against the AO. As a result, appeal filed by the AO stands dismissed. (Order pronounced in the open court on 30.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
