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TMI Blog2017 (9) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... ut, if the assessee does not claim any expenses against the exempt income, then no disallowance can be made. In short, the pre-condition for making any disallowance u/s.14A r.w. Rule 8D is incurring of expenditure for earning exempt income. As the assessee has not claimed any expenditure against the dividend income or other exempt income, so, in our opinion, the FAA was not justified in upholding the order of the AO. Respectfully, following the order of the Tribunal in the case of Daga Global Chemicals Private Ltd. (2015 (1) TMI 1204 - ITAT MUMBAI) we decide first ground of appeal in favour of the assessee. Disallowance under the head electricity expenses - as per AO the electricity expenses claimed by the assessee were not of the office pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee : Shri Bhavik V. Shah-CA PER Rajendra A. M.- Challenging the order, dated 27.02.2015, of the CIT (A)-7, Mumbai the assessee has filed the present appeal. Assessee-firm, engaged in the business of architecture and interior designing filed its return of income, on 28/09/2010, declaring total income at ₹ 81.99 lakhs. The Assessing Officer(AO) completed the assessment u/s.143(3)of the Act, on 30/11/2012, determining its income at ₹ 1.02 crores. 2. The assessee has filed an application for admitting additional evidences. It was stated that the ledger for mutual fund statement for dividend and LTCGs were required to be considered for deciding the first two Grounds of appeal, that those documents could not be produced befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explain as to why such disallowance of expenses should not be made. After considering the submission of the assessee, the AO held that explanation filed by it was not satisfactory, that management of investment involved monitoring, that in turn it would necessitate expenditure in terms of man-hours and administrative expenditure. Referring to the judgment of the Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing Company Ltd. (ITA No. 616 of 2010), he disallowed an amount of ₹ 34, 205/- under Rule 8D(2)(iii) of the Income Tax Rules, 1962 (Rules). 3.1. Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA and made elaborate submissions. After considering the available material, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/FAA have not mentioned the basic fact as to how much expenditure was incurred by it for earning tax free income. The idea behind introducing the provisions of section 14A was to discourage the practice of claiming double benefit i.e.claiming exemption for a particular item of income and claiming expenditure against such income. But, if the assessee does not claim any expenses against the exempt income, then no disallowance can be made. In short, the pre-condition for making any disallowance u/s.14A r.w. Rule 8D is incurring of expenditure for earning exempt income. As the assessee has not claimed any expenditure against the dividend income or other exempt income, so, in our opinion, the FAA was not justified in upholding the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dress on the invoice was 1 Juhu Scheme-Smriti NS Road No.10, Vile Parle (W), Mumbai-56., that as per the return of income the address of the assessee is duplex-4, NS Road No.10, JVPD Scheme, Vile Parle (W), Mumbai -49, that the AO had not disallowed electricity expenses for office premises of assessee that he had disallowed the expenditure in respect of other premises i.e., (1) Juhu Scheme situated which was in the name of AR Killawala, that the assessee had nowhere stated that its office was at 1 Juhu Scheme. Finally, he held that electricity expenses claimed in respect of premises, other than the office premises of assessee had been rightly disallowed by AO. 4.2. Before us, the AR stated that electricity bills were in the name of the mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment proceedings, the AO directed the assessee to submit documents in support of the various expenses incurred by it and to prove that same were incurred wholly and exclusively for business purposes. He held that the nature of expenses were such that personal element could not be ruled out. He disallowed 20% of motor car expenses (Rs.49, 444/-), motor car depreciation (Rs. 80, 859/-), telephone expenses (Rs.37, 901/-). 5.1. After considering the submission of the assessee and the assessment order, the FAA, during the appellate proceedings, held that the assessee had relied upon certain case laws, that unless a specific defect was pointed out no disallowance could be made on ad hoc basis for any expendi - ture, that expenses in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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