9911796707
TMI Blog2013 (7) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of expenditure under section 14A of the Income Tax Act, 1961. 2. Facts in brief:- The assessee is a non-banking finance company and is engaged mainly in the investment business. For the relevant year, the assessee has earned dividend income of ₹ 13,89,40,620, which was claimed as exempt under section 10(34) in the return of income. For the purpose of disallowance under section 14A, the assessee itself has disallowed a sum of ₹ 9,00,907, for the purpose of earning the exempt income. The assessee, in the audit report had given a working of disallowance under section 14A, which has been incorporated by the Assessing Officer at Page-2 of the assessment order. In sum and substance, the assessee submitted that out of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.11 lakhs was made. 5. The learned Commissioner (Appeals), following the decision of Mumbai Bench of the Tribunal in Hoshanji D. Nanavati v/s ACIT, ITA no.3567/Mum./2007, order dated 18th March 2011, held that insofar as the depreciation is concerned, the same cannot be disallowed or can be held to be attributable to earning of exempt income. Thus, the amount of depreciation which is at ₹ 7.22 lakhs was to be excluded for the purpose of disallowance. Thus, out of additional disallowance of ₹ 15.11 lakhs made by the Assessing Officer, relief of ₹ 7.22 lakhs was given by the learned Commissioner (Appeals). 6. Before us, the learned Counsel, Mr. Madhur Agarwal, on behalf of the assessee, submitted that once the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order) and on deployment of such fund, it has earned dividend income of ₹ 13,89,40,620. For the purpose of disallowance, the assessee has disallowed sum of ₹ 9,00,907, which can be said to be attributable for earning of exempt income and, thereafter, has not claimed bad debt written-off at ₹ 8,00,000. In effect, the disallowance of ₹ 17,00,907, was claimed to be disallowed by the assessee, however, it has to be taken at ₹ 9,00,907, as the bad debt has not been claimed in the Profit & Loss account. It is not in dispute that the assessee has incurred expenditure relating to earning of the exempt income and, therefore, provisions of section 14A have to be applied. From the assessment year 2008-09, rule 8D has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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