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TMI Blog2014 (6) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... objection for the same. Accordingly, Ground No.2 is dismissed as 'not pressed'. 3. Ground of appeal No.1 relates to the order of the CIT(A) sustaining the disallowance of Rs. 5,86,962/- u/s.14A out of disallowance of Rs. 25,10,262/- by the Assessing Officer. 4. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of Promoters and Builders, trading in Futures and Options and shares. He filed his return of income on 27-09-2009 declaring taxable income of Rs. 12,27,86,500/-. During the course of assessment proceedings the Assessing Officer asked the assessee to explain as to why disallowance u/s.14A should not be made as per Rule 8D. The assessee submitted that no expenditure has been incurred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Assessing Officer in disallowing Rs. 5,86,962/- by observing as under : "38. So far as the disallowance under sub-rule 2(2)(ii) of Rs. 5,86,962/- is concerned, the appellant is seen to be in receipt of some exempt income and the investment made has been held by the appellant, which also is likely to yield tax free income to the appellant. The notings of the A.O. that expenses incurred on administration, brokerage, documentation charges, demat charges, manpower cost, handling and so on were embedded in the expenses claimed appear to be in order. The appellant has also not been able to bring on record any such material contrary to the findings of the A.O. in this regard. Therefore, the disallowance under Rule8D(2)(iii) of Rs. 5,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of the paper book he drew the attention of the Bench to the details of investment in shares as on 31-03-2009 and submitted that out of the total amount of Rs. 9.47 crores an amount of Rs. 8,32,69,490/- is invested in Corolla realty equity shares. Referring to the balance sheet for the year ending 31-03-2008 he submitted that the investment in Corolla Realty Equity shares was shown at Rs. 8,32,69,490/-. He submitted that the majority of the investment in shares are of private companies and the assessee has not received any dividend out of those shares. Further, all the shares are also held in physical form and not in the Demat account. 7.1 Referring to the decision of the Hon'ble Allahabad High Court in the case of CIT Vs. Shivam Motors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding as well as succeeding assessment years, therefore, disallowance of Rs. 5,86,962/- sustained by the CIT(A) should be deleted. He also relied on the following decision for the proposition that no disallowance u/s.14A can be made in absence of receipt of any tax free income : i. Kalyani Steels Ltd. VS. ACIT - ITA No.1733/PN/2012 ii. ACIT Vs. M/s. Magarpatta Township Development & Construction Co. Ltd. - ITA No.2114/PN/2012 8. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Motors Pvt. Ltd.(Supra) has observed as under : "As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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