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TMI Blog2015 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. - ITA No. 4454/Del/2012, ITA No. 3765/Del/2012 - - - Dated:- 28-8-2014 - Shri S. V. Mehrotra And Shri H. S. Sidhu, JJ. For the Petitioner : Shri Rakesh Kumar Sr. DR For the Respondent : Shri R.K. Kapoor FCA ORDER Per S. V. Mehrotra, A. M:- These cross appeals, preferred by revenue as well as the assessee, are directed against the order dated 24-5-2012 passed by the ld. CIT(A)-XII, New Delhi, in appeal no. 341/11-12, relating to A.Y. 2009-10. 2. Brief facts of the case are that the assessee, during the relevant assessment year, derived income from the business of sale purchase of long term investments in the form of shares, stock, mutual fund and bonds. The assessee filed its return of income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also embedded in earning of income. (ii) The investment made, being a conscious decision and having deployment of funds clearly beings into picture expenditure by way of cost of funds invested . Composite funds having cost needs to be spread so as to apportion appropriate cost of funds invested in the activity lending to carrying of exempt income. 2.2. He further observed that the onus to prove that expenditure was incurred in the taxable business operations and not the exempt income, is upon the assessee. He further pointed out that the apportionment of the expense is permissible for making disallowance u/s 14A. He further pointed out that discussion about the apportionment of direct or indirect expenditure towards taxable and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenses incurred Rs. 8,58,737/- Expenses disallowed by the assessee in the computation of income/ return on account of disallowance u/s 14A as per Tax Audit Report, item 17(1): (i) Amount disallowed u/s 14A as per Audit Report: (a) Demat and stamp fee Rs. 15,875/- (b) Security transaction tax Rs. 1,61,036/- (c) Legal and professional charges Rs. 60,000/- Rs. 2,36,911/- Rs. 2,36,911/- 2.4. With reference to above computation, it was submitted that assessee had only claimed an expenditure of Rs. 6,21,822/-. The assessee relied on the decision of ITAT Delhi Bench G in assessee s own case in ITA no. 3271/Del/2011 for A.Y. 2008-09. Ld. CIT(A) while partly allowing the assessee s appeal, restricted the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure towards the earning of taxable income. Ld. Counsel submitted that ld. CIT(A) did not take into consideration that depreciation could not be allocated towards the earning of exempt income. 5. Ld. DR relied on the assessment order. 6. We have considered the rival submissions and have perused the record of the case. There is no dispute that the total expenditure incurred by the assessee was Rs. 8,58,737/-, out of which only appropriation could be made towards the earning of exempt income. Therefore, in any view of the matter, the disallowance u/s 14A could not exceed beyond Rs. 8,58,737/-. Out of this, assessee himself had made a disallowance of Rs. 2,36,911/- as detailed earlier and, therefore, the short issue, before us, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, we find force in the submission of ld. Counsel for the assessee that the entire expenditure could not be appropriated towards the earning of exempt income and, therefore, we estimate the expenditure incurred towards earning of exempt income at Rs. 4 lacs out of the total expenses of Rs. 8,58,737/-. We direct accordingly. 7. In the result, assessee s appeal is partly allowed. Revenue s appeal ( ITA no. 4454/Del/2012): 8. The Revenue in its appeal has raised following ground of appeal: On the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the disallowance of Rs. 55,35,655/- made by the AO u/s 14A r.w. Rule 8D to Rs. 6,21,826/-. 9. While dealing with as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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