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TMI Blog2014 (7) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... e its contentions before the Assessing Officer. The Jurisdictional High Court in the case of Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court ) has clearly laid down that no disallowance can be made u/s 14A of the Act, if no expenditure is incurred in relation to the exempt income. This proprietary has to be applied by the Assessing Officer. - Decided in favour of assessee for statistical purposes. - ITA no. 2484/Del/2012 - - - Dated:- 22-7-2014 - SHRI J. SUDHAKAR REDDY AND SHRI A.T. VARKEY For the Appellant: - Sh. V.P.Gupta, Adv. Sh.Anurav Kumar, Adv. For the Respondent: - Mrs.Y.Kakkar, Sr.D.R. ORDER PER J. SUDHAKAR REDDY, AM This is an appeal filed by the assessee directed against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of ₹ 1,73,45,967/- offered by the appellant. 2. That the CIT(Appeals) failed to appreciate the legal position that only such expenses could be disallowed u/s 14A(1) which were incurred directly in relation to earning of exempt income and no disallowance could be made on proportionate or adhoc basis. 3. That the CIT(Appeals) also erred in not appreciating, that provisions of subsection (2) of section 14A and Rule 8D could be applied by the Assessing Officer only if he is not satisfied with the correctness of claim of the assessee, having regard to the accounts, in respect of such expenditure in relation to income which does not form part of total income. 4. That the CIT(Appeals) erred in not appreciating the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessee failed to disallow any amount on account of administrative expenditure and the Assessing Officer had followed the law by applying Rule 8 D . She vehemently contended that the rule has been brought to the Statute to avoid these problems of ascertaining by estimation the expenditure to be disallowed and to streamline the disallowance and hence it cannot be diluted by claiming that certain expenditure does not fall within the ambit of disallowance u/s 14 B . She relied on the following case laws. - 347 ITR 372 in the case of CIT vs. Birla Janahit Trust [1994] (Cal.) - 330 ITR 556 in the case of Catholic Syrian Bank Limited vs. CIT In reply the Ld.Counsel for the assessee submits that Rule 8 D has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleted by the learned Commissioner (Appeals) and donation amount of ₹ 23,35,000 which itself was disallowed by the assessee in its computation of income, then, the balance expenditure under the administrative head is ₹ 3,59,744 i.e., [Rs.34,91,251 (-) 7,96,507 (-) ₹ 23,35,000 = 3,59,744]. From this sum, if the amount of ₹ 46,309 is removed which the assessee has itself disallowed in the computation of income for the purpose of section 14A, then the resultant expenses debited is only ₹ 3,13,435. This expenditure mostly relates to legal and professional charges, auditor's remuneration, depreciation and bank charges and rates and taxes. These expenses are, any way, required to be incurred for the maintenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 7,99,580 on account of administrative expenditure is too excess than the expenditure claimed in the Profit Loss account and without rebutting the correctness of the assessee's claim, the disallowance offered by the assessee at ₹ 46,309, cannot be tinkered with. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and the ground raised by the assessee is treated as allowed. 9. The expenditure, which has to be disallowed, has to be in relation to exempt income. The assessee before us has demonstrated that expenses incurred by it, to a large extent pertain to amalgamation of ten companies. This expenditure cannot be attributable to the earning of exempt income. This expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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