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TMI Blog2016 (1) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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. 8,89,18,716/-. 3. The brief facts of this issue is that the assessee had derived the following exempt income :- Dividend income 14,89,69,574 Interest on tax free securities 3,86,70,000 18,76,39,574 The assessee voluntarily disallowed a sum of Rs. 19,44,035/- u/s 14A of the Act for the Asst Year 2002-03. The Learned AO adopted Rule 8D of the Rules and made disallowance u/s 14A of the Act to the tune of Rs. 8,89,18,716/-. On first appeal, the Learned CITA restricted the disallowance u/s 14A of the Act to the tune of Rs. 1,39,49,000//- being 0.5% of average value of investments by adopting R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax (Appeals) - VI, Kol has erred in disregarding the order of Learned CIT(A) - VI, Kol in respect of assessment year 2007-08 in the appellant's own case (Appeal No. 1 014/CIT(A)-VI/2009-1 0/Cir- 6/Kol and order dated 15.11.2010) in which 1 % of the tax-free income was held to be reasonable expenses for the purpose of disallowances under section 14A. 6. That, on facts as well as on law, the Learned Commissioner of Income Tax (Appeals) - VI, Kol has erred in disallowing 0.5% of tax free investments under section 14A in total disregard of many judicial pronouncements of Hon'ble ITAT, Kolkata in which Hon'ble ITAT, Kolkata held that 1 % of tax-free income shall be held as amount of disallowances u/s 14A in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of earning tax free income. The Hon'ble Jurisdictional High Court in the case of CIT vs M/s R.R.Sen & Brothers P Ltd in GA No. 3019 of 2012 in ITAT NO. 243 of 2012 dated 4.1.2013 had held as under:- "The assessee did not show any expenditure incurred by him for the purpose of earning the money which is exempted under income tax. The tribunal has computed expenditure at 1% of such dividend income, which, according to them, is the thumb rule applied consistently. We find no reason to interfere. The appeal is dismissed." Respectfully following the judicial precedent, we direct the Learned AO to disallow 1% of dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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