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TMI Blog2015 (12) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the workings given by the assessee after giving a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purpose. Disallowance u/s. 14A r.w. Rule 8D - Held that:- The Hon’ble High Court of Delhi in the case of Joint Investments Pvt. Ltd (2015 (3) TMI 155 - DELHI HIGH COURT) has held that the “window for disallowance is indicated in Sec. 14A, and is only to the extent of disallowing “expenditure incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case.” Thus we direct the AO to restrict the disallowance to ₹ 2,62,194/-.- Decided in favour of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said company. The accumulated profit of M/s. Sumo Investment Pvt. Ltd. was at ₹ 98,39,957/- in which the assessee was holding 30.39% of shares. 2.2. The AO was of the firm belief that the provisions of Sec. 2(22)(e) of the Act squarely apply on the facts of the case therefore the assessee was asked to explain why provisions of Sec. 2(22)(e) should not be applied. 2.3. The assessee filed a detailed reply claiming that the assessee has from time to time given loan to the companies on which the companies have paid interest to the assessee after deducting tax at source. In support, the assessee filed the copies of the ledger account. The assessee claimed that since he has given the loan to the companies, therefore, the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dger, the Ld. Counsel stated that most of the time, it was the company which owed to the assessee, therefore it is incorrect to say that the assessee has borrowed ₹ 1,27,71,834/- from the said company. Same is the situation with M/s. Sumo Investment Pvt. Ltd. The Ld. Counsel further drew our attention to exhibit-24 of the Paper Book and stated that even the calculation of deemed dividend as taken by the AO is on wrong facts and the correct position figure comes to ₹ 66,35,285/-. In support of his submission, the Ld. Counsel relied upon the decision of the Hon ble High Court of Calcutta in the case of Mukundray K. Shah Vs CIT 277 ITR 128 and Hon ble Madras High Court in the case of Sunil Kapoor Vs CIT 375 ITR 01. 6. Per contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as exhibited at page-24 of the Paper Book is as follows: Name of the party Amount Deemed Dividend Polyarn Agencies Pvt. Ltd. Loan Received Free reserves upto the date of loan Deemed Dividend restricted to lower of the free reserves or loan received 2,694,668/- 1,745,285/- 1,745,285/- Sumo Investment Pvt. Ltd. Loan Received Free reserves upto the date of loan Deemed Dividend restricted to lower of the free reserves or l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue to the file of the AO. The AO is directed to decide the issue afresh in the light of the workings given by the assessee after giving a reasonable opportunity of being heard to the assessee. Ground No. 1 is treated as allowed for statistical purpose. 11. Ground No. 2 relates to the disallowance made u/s. 14A r.w. Rule 8D. 12. While scrutinizing the return of income, the AO found that the assessee has received dividend of ₹ 2,62,194/-. The AO noticed that the assessee has not allocated any expense for earning of the exempt income. The assessee was asked to explain why expense should not be allocated as per provisions of Sec. 14A r.w. Rule 8D. 12.1. The assessee claimed that no expenses have been incurred for earning t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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