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TMI Blog2016 (2) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... t is basis to work out this disallowance? The assessee could not demonstrate before the AO as to how the expenditure it has added back relating to earning of exempt income were inflated or added back under mistaken fact. Here it is not the case that some statutory benefit was available to the assessee, which by mistake it refrain to claim such benefit. In the present case, the assessee has to work out the expenditure relatable to earning of exempt income, which it has worked out itself. Unless it is pointed out that such working was based on misconception of fact or misconstruction of law, it cannot be allowed to take somersault from the declaration made by it in the return of income. Therefore, the assessee cannot draw any benefit from the judgment cited before us. We do not find any error in the order of the ld. CIT(A), which is upheld. - Decided against assessee - ITA No. 2087/Ahd/2011 - - - Dated:- 10-12-2015 - Rajpal Yadav, JM And Manish Borad, AM For the Appellant : Shri Nutan R Vakil For the Respondent : Shri Nagendra Singh, DR ORDER Per Rajpal Yadav, Judicial Member The assessee is in appeal before us against the order of the ld.CIT(A)-XX, Ahmedabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Gujarat High Court in the case of CIT Vs. Milton Laminates Ltd., rendered in Tax Appeal No.122 of 2010. He placed on record copy of the Hon'ble Gujarat High Court's order. 6. On the other hand, the ld. DR relied on the order of the AO. 7 We have duly considered rival contentions and gone through the record carefully. In the original return filed by the assessee, a disallowance of ₹ 21,74,522/- was made by the assessee itself. This amount was added back by the assessee on the ground that it is relatable to earning of exempt income. The assessee has filed revised return on 28.1.2009. As per section 139(5) of the Act, the revised return could be filed within one year from the end of the relevant assessment year or completion of the assessment whichever is earlier. The return was processed under section 143(1) on 25.10.2008. One year was already expired on 31.3.2009. Thus, the revised return filed by the assessee was not in time. Next question is whether disallowance can be made with the help of Rule 8D or not. The Hon'ble Delhi High Court in the case of Maxopp Investments Ltd. Vs CIT reported in 347 ITR 272 (Del.) as explained the position lucidly. Para 28 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositive amount of expenditure in relation to income which does not form part of the total income under the said Act and sub-section (3) applies to cases where the assessee asserts that no expenditure had been incurred in relation to exempt income. In both cases, the Assessing Officer, if satisfied with the correctness of the claim of the assessee in respect of such expenditure or no expenditure, as the case may be, cannot embark upon a determination of the amount of expenditure in accordance with any prescribed method, as mentioned in sub- section (2) of Section 14A of the said Act. It is only if the Assessing Officer is not satisfied with the correctness of the claim of the assessee, in both cases, that the Assessing Officer gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the said Act in accordance with the prescribed method. The prescribed method being the method stipulated in Rule 8D of the said Rules. While rejecting the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income, the Assessing Officer would have to indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee incurs expenditure by way of interest which is not directly attributable to any particular income or receipt. The formula essentially apportions the amount of expenditure by way of interest [other than the amount of interest included in clause (i)] incurred during the previous year in the ratio of the average value of investment, income from which does not or shall not form part of the total income, to the average of the total assets of the assessee. The third component is an artificial figure one half percent of the average value of the investment, income from which does not or shall not form part of the total income, as appearing in the balance sheets of the assessee, on the first day and the last day of the previous year. It is the aggregate of these three components which would constitute the expenditure in relation to exempt income and it is this amount of expenditure which would be disallowed under Section 14A of the said Act. It is, therefore, clear that in terms of the said Rule, the amount of expenditure in relation to exempt income has two aspects (a) direct and (b) indirect. The direct expenditure is straightaway taken into account by virtue of clause (i) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... want to make further enhancement. Now, the assessee wants to go back with the declaration made by it. It is true that Income Tax officer is supposed to determine true taxable income of the assessee as observed by the Hon'ble Gujarat High Court in the case of Milton Laminates (supra), but the fact is where is the lapse ? how one can plead that the AO has failed to carry out his exercise ? According to the assessee, the disallowance under section 14A ought to be ₹ 6,93,201/- which it has worked out in the alleged revised return. But, what is basis to work out this disallowance? The assessee could not demonstrate before the AO as to how the expenditure it has added back relating to earning of exempt income were inflated or added back under mistaken fact. Here it is not the case that some statutory benefit was available to the assessee, which by mistake it refrain to claim such benefit. In the present case, the assessee has to work out the expenditure relatable to earning of exempt income, which it has worked out itself. Unless it is pointed out that such working was based on misconception of fact or misconstruction of law, it cannot be allowed to take somersault from the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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