9911796707
TMI Blog2013 (4) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this year, the Assessee has declared total income at a loss of ₹ 25,16,414/- and AO determined the total income at ₹ 26,67,067/-. The only addition made in the assessment is with reference to the section 14A at ₹ 51,83,481/-. The Assessing Officer on noticing that Assessee had earned tax free dividend income of ₹ 3,79,84,245/- from units of Mutual Funds asked assessee why disallowance u/s 14A should not be made. As assessee Company had debited interest amount ₹ 39,34,995/- in profit and loss account, he considered the entire interest paid, under rule 8D (a). He arrived at average value of investments and proportionately disallowed the above interest at ₹ 3121267/-. Thereafter, 0.5% of average invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning dividend. It was further submitted that out of the dividend received most of the amount was reinvested, therefore except banking charges on ECS credit no other expenditure was incurred, therefore mechanically invoking under section 14A does not arise. The Ld. CIT(A) did not agree and confirmed the same as the assessment involved is assessment year 2008-09 and the Special Bench decision of ITAT, available at the point of time in the case of Daga Capital Management 26 SOT 603, Mumbai SB supported the view. 6. Ld. Counsel reiterating the facts submitted that Assessee has not spent any amount and therefore question of disallowance any amount does not arise. Further referring to the total expenditure of ₹ 65,79,296/- it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretary and assistant to look after day to day affairs of the office work. Car Insurance 4,426 To insure the care used in the business. Demat Fees 8,060 Fixed charge incurred for holding the investments in non physical mode. Electricity Expenses. 6,183 Part of office expenses. Filing fees 3,000 Statutory payment. Loss on sale of Motor-Cars 2,18,928 --- Loss on sale of mutual funds 14,064 --- Legal and Professional Fees 6,56,230 Fees paid to Advocates Membership Fees 60,628 Part of office expenses Motor Car expenses 76,021 Part of office expenses Office Expenses 43,081 General officer running expenses. Printing & Stationery 9,523. General office running expenses Repairs & Maintenance Building. 1,64,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uard introduced by subsection 2 for fair and reasonable exercise of power by the AO. This view was also supported by the judgment of the Hon'ble Bombay Court in the case of Godrej and Boyce Manufacturing Ltd. Vs. DCIT 234 CTR 1(Bom) therefore, without proper satisfaction on the part of the AO, Rule 8D cannot be invoked. 11. As seen from the assessment order, there is no discussion about Assessing Officer having arrived at the satisfaction. The detailed explanation by the Assessee on various facts were not considered by the AO. Having examined the facts as stated above, we are of the opinion that Rule 8D cannot be invoked as such in the given facts of the case. However, we can also not say that Assessee had not spent any amount for earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses. 39,636 Part of office expenses. Entertainment Expenses. 25,000 Part of office expenses. Legal & Professional Fees 2,82,000 Fees paid to Advocates Membership Fees 50,652 Part of office expenses Motor Car expenses 2,53,790 Part of office expenses Office Expenses 72,705 General officer running expenses. Printing & Stationery 7,009 General office running expenses. Repairs & Maintenance Building. 37,430 General officer running expenses. Society Charges. 3,09,085 General office running expenses. Sundry Charges. 15,527 General office running expenses. Telephone Expenses. 65,180 General office running expenses. Transportation Expenses General office running expenses. Travelling & Conveyance Expenses 13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed funds and capital being invested in securities and that it was impossible to believe that out of common hodgepodge of funds, the entire capital would have come into investment in shares. This indicates that the facts are not co-related in the decision by the CIT(A). First of all, Assessee has not invested in any securities, rather made investment in Mutual Funds. Further there are no borrowals for the investment in Mutual Funds as Assessee had its own fund received by way of settlement amount from other group companies which has a direct nexus with the Mutual Funds Investments. The only unsecured loan received was directly advanced to another Company as Inter-corporate deposit. Findings/observations by the CIT(A) are not based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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