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TMI Blog2017 (10) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... n in CBDT's Circular No. 5/2014 dated 11-02-2014 wherein it has been mentioned that disallowance u/s.14A of the Income Tax Act, 1961 is to be made even if there is no exempt income during the year." 3. Facts of the case in brief are that the assessee filed the return of income on 30.09.2012 declaring an income of Rs. 16,68,78,960/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO asked the assessee to file details regarding the investments made in various companies and explain the position with regard to the disallowance u/s 14A of the Act r.w.r. 8D of the Income Tax Rules, 1962. In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture by way of interest during the prevision year which is not directly attributable to any particular income or receipt an amount computed in accordance with the following formula -A X B/C Where A = Amount of expenditure by way of interest incurred on OD only, included in clause (1) incurred during the previous year B = the average value of investment, income from which does not or shall not form part of total income appearing in the balance sheet of the assessee, on the last day and the last day of the previous year C = The average value of the total assets as appearing in the balance sheet of the assessee on the first day and the last day of the previous year. A = 5,22,03,622 B = 16,24,33,000 C = 2,751,170,153 Hence, Disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the merits of the appellant's claim in respect of expenditure disallowed or not incurred to attract the mischief of disallowance u/s 14A of the Act (Maxopp Investment Ltd. vs. CIT 347 ITR 272 (Del), CIT vs. Walfort Share and Stock Brokers P. Ltd. 326 ITR 1, CIT vs. Hero Cycles Ltd. 323 ITR 518, CIT vs. Consolidated Photo and Finvest Ltd. 211 Taxman 184). The disallowance made by the AO therefore, is not in order. 3.3. As stated above, the disallowance computed by the AO is far in excess of the exempt income disclosed by the appellant i.e. Rs. 7,000/-. The Hon'ble Delhi High Court in the case of Joint Investment (P) Ltd. vs. CIT 2015 (3) TMI 155 has held that disallowance u/s 14A cannot exceed the exempt income. Respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X
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