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TMI Blog2016 (1) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... represented by interest. Besides investment decisions are generally taken in the meeting of Board of Directors for which administrative expenses are incurred. It is therefore, not correct to say that income can be earned by incurring no or nominal expenditure. We further observed that originally at the time of assessment order, assessee did not offer any disallowance at its own but disallowed the expenses to the tune of ₹ 2,74,150/- at its own during the appellate stage. However, we find that the rule 8D is applicable w.e.f 24th day of March 2008 i.e. from the assessment year 2008-09. Hence the provisions of Rule 8D does not apply to the relevant year under consideration i.e. Assessment year 2007-08. So prior to the applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has earned exempted income dividend of ₹ 2,30,23,830/- out of trading and investment in share. The AO found that assessee has not claimed any expenditure in connection with exempted income in his books of account. On question put by AO to assessee about the disallowance of such expenses incurred in aforesaid income, Ld. AR of assessee submitted that the company has not incurred any expenses other than to maintain its corporate structure and running its day to day business. There is no borrowed fund for the purpose of the business. Hence no disallowance of the expenses is required for the purpose of section 14A of the Act. However the AO did not accept the reply of the assessee and worked out the disallowance by relying the order of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and convenience:- 10. Therefore, in the facts circumstances as discussed and following the judgments of the Hon'ble Appellate Authorities including the Hon'ble jurisdictional High Court in the case of ISG Traders Ltd. vs. CIT-III, Kolkata; Dhanuka Sons v. CIT (Central)-1; the Hon'ble Special Bench of ITAT in the case of Chminveste Ltd. v. ITO, New Delhi, the expenses disallowed by the Assessing Officer are much less than the proportionate expenses incurred by the appellant while the major source of income is dividend during the year. Therefore, the expenses disallowed by the Assessing Officer amounting of ₹ 17,77,325/- is held to be appropriate and reasonable. The addition made by the Assessing Officer is upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case including the provisions of law, the Tribunal has held as under:- Whether to invest or not to invest and whether to retain the investments or to liquidate the same are very strategic decisions which the management is called upon to take. These are mindboggling decisions and top management is involved in taking these decisions. This decision making process sis very complicated and requires very careful analysis. Moreover, the assessee has to keep track of various dividend income declared by the investee companies and also to keep track of the dividend income having been regularly received by the assessee. This activity itself calls for considerable management attention and cannot be left to a junior clerk We further observe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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