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TMI Blog2016 (2) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... ly issue to be decided in this appeal is as to whether in the facts and circumstances of the case, the disallowance u/s 14A of the Act could be made in the sum of Rs. 12,24,192/-. 3. The brief facts of this issue is that the assessee had derived the following exempt income :- Dividend from Mutual Funds 1,61,72,775 Dividend from Shares 14,19,096 Tax free interest 3,84,725 1,79,76,596 The assessee voluntarily disallowed a sum of Rs. 4,67,484/- u/s 14A of the Act in the revised computation of income filed before the completion of assessment proceedings together with workings for the same. The Learned AO ignoring the said workings, directly proceeded to make disallowance u/s 14A of the Act to the extent of Rs. 12,24,192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of Learned CIT(A) - VI, Kolkata in respect of assessment years 2006-07 and 2007-08 in the appellant's own case (Appeal No. 850/CIT(A)- VI/Cir-6/Kol/2009-10 and Appeal No. 569/CIT(A)-VI/Cir-6/Kol/2008- 09 respectively and Orders dated 29/11/2010) in which 1 % of the taxfree income was held to be reasonable expenses for the purpose of disallowances under section 14A. 4. That, on facts as well as on law, the Learned Commissioner of Income Tax (Appeals)-VI, Kol has erred in disallowing 0.5% of taxfree investments in accordance with the provision of Rule 8D read with section 14A(2) of the Income Tax Act, 1961 even though the amount of most reasonable expenses was offered to tax in relation to earning of tax-free income in computa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument, argued that even assuming if disallowance u/s 14A is made in terms of Rule 8D of the Rules, then only the investments yielding exempt income should alone be considered for the purpose of Rule 8D of the Rules. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 5. We have heard the rival submissions and perused the materials available on record. We find that the assessee had voluntarily disallowed a sum of Rs. 4,67,484/- u/s 14A of the Act with some basis. We find that the assesee does not have any debt funds and hence no interest is debited. The fact is that no investments were made during the previous year relevant to Asst Year 2009-10 out of the money borrowed from outside the company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture under section 14A of the Income Tax Act, 1961 without first recording that he was not satisfied with the correctness of the claim as regards the claim that "no expenditure" was made by the assessee. Challenging the order of the tribunal, the present appeal has been filed. We have heard Mr.Bhowmik and are of the opinion that no point of law has been raised. Therefore, this appeal is dismissed". 5.1. We also find lot of force in the alternative arguments of the Learned AR that only investments yielding exempt income should be considered for the purpose of disallowance u/s 14A read with Rule 8D of the Rules. Reliance in this regard is placed on the following decisions:- * Alliance Infrastructure Projects Pvt Ltd vs DCIT in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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