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TMI Blog2015 (10) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... actually incurred any expenditure in relation to exempt income. In the absence of the same, in view of the decision of in the case of CIT Vs. Torrent Power Ltd., (2014 (6) TMI 185 - GUJARAT HIGH COURT ) the disallowance confirmed by the CIT(A) is not sustainable. - Decided in favour of assessee. - ITA No. 2990/Ahd/2011 - - - Dated:- 19-6-2015 - N S Saini, AM And S S Godara, JM,JJ. For the Appellant : Shri Dinesh Singh, Sr. DR For the Respondent : Shri S N Soparkar ORDER Per N S Saini, Accountant Member This is an appeal filed by the assessee against the order of the CIT(A)-VIII, Ahmedabad dated 22.9.2011. 2. The sole ground of appeal taken by the assessee is that the CIT(A) erred in confirming the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance with the provisions of sub-rule (2) of Rule 8D. In view of the above, the calculation done by the AO at ₹ 1,06,372/-, which provides for an amount equal to one-half percent of the average of the value of investment, the income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year, is more logical and apt, considering the facts and circumstances of the case. The CIT(A), therefore, restricted the disallowance to ₹ 1,06,372/-. 5. Being aggrieved by this order of the CIT(A), the assessee is in appeal before us. 6. The AR of the assessee argued that the assessee-company earned dividend income of ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the assessee, for which, management, time and cost are incurred, and therefore to say that no expenditure for earning tax free income was incurred by the assessee for earning exempt dividend income of ₹ 3,10,10,076/-, cannot be accepted. It was further argued that out of the total income shown in the profit loss account for the year at ₹ 6.32 crores, dividend income was ₹ 3.10 crores, which was approximately 50% of the total income of the assessee, and therefore, substantial amount of income of the assessee, which was exempt from tax. Hence, the argument of the assessee that no expenditure was incurred for earning of such dividend income cannot be accepted. He, therefore, prayed that the order of the CIT(A) shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores, the assessee could point out that 6.12 crores (rounded off) was earned by 'S' project which was under construction for which no expenditure had been claimed and for the remaining income of ₹ 7.88 crores which consists of dividend and tax free interest, no part of expenditure appears to have been made towards the investment activity as emerging from the material. According to the respondent, the total investment from the huge surplus is comparatively small and investment made was effortless, without any burden of administrative expenses. [Para 8] In view of feet that no expenditure was incurred for earning exempted income and that being the question of fact, disallowance of 1% of interest expenditure artificially or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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