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TMI Blog2017 (12) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... h provisions entailed in Section 14A are in the nature of safeguards with the intention to provide natural justice to the taxpayers before invoking the prescribed method which is only presumptive in nature. We find that in the instant case, even though the AO has given due opportunity to the assessee to explain its claim that only an amount of ₹ 17,20,346 was in the nature of expenses incurred for earning tax exempt income, however, he was not judicious in examining the claim and dismissed the same as such without any cogent reasoning or any sound basis. The assessee had given detailed explanation in respect of interest expenses and in the absence of identifying any specific expenses incurred for earning the exempt income, had disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 115JB of the Income Tax Act, 1961 (hereinafter referred as the Act). The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 30.8.2011. Again notice u/s. 143(2) of the Act alongwith questionnaire under section 142(1) of the Act was issued on 22.6.2012. In response to the notices, the A.R. of the assessee appeared from time to time and filed the requisite details in the assessment proceedings. The assessee company is engaged in the business of finance and investment, coal mining. The AR of the assessee has produced the books of account before the AO. Thereafter, the AO observed that the assessee had made investments in quoted shares of ₹ 1,11,37,92,755 (as on 31.03.2010) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (i), ₹ 64,89,681 under sub-clause (ii) and ₹ 20,37,152 under sub-clause (iii) aggregating to ₹ 93,82,420. In view of this, after giving allowance for the disallowance made by the assessee of ₹ 17,20,346/-, additional disallowance of ₹ 76,62,074/- was made vide order dated 26.3.2013 passed u/s. 143(3) of the Act. 3. Aggrieved with the aforesaid assessment order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 31.7.2014 has allowed the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal. 5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e current year. So far as the current investments are concerned, on the strength of the bank statements, the assessee identified certain borrowings which had gone for making investments in shares and the assessee had made disallowance in respect thereof. Accordingly, we find no error in the explanation given by the assesee to the AO that the disallowance made by it towards earning of exempt income amounting to ₹ 17,20,246 was on cogent ground. We are of view that the AO has rejected the claim of the assessee on frivolous grounds without examining the bank statements furnished by the assessee in support of the current investments and the basis given for making disallowance under Section 14A vide its letter dated 20.03.2013. The basis f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, even though the AO has given due opportunity to the assessee to explain its claim that only an amount of ₹ 17,20,346 was in the nature of expenses incurred for earning tax exempt income, however, he was not judicious in examining the claim and dismissed the same as such without any cogent reasoning or any sound basis. The assessee had given detailed explanation in respect of interest expenses and in the absence of identifying any specific expenses incurred for earning the exempt income, had disallowed relevant administrative expenses proportionately on turnover basis. No fault could be pointed out by the AO in it. In view of the above, we find that the Ld. CIT(A) has rightly held that the action of the AO of invoking th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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