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TMI Blog2018 (5) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... , we delete the disallowance made by the AO under Rule 8D(2)(ii). See HDFC Bank Ltd. vs. DCIT [2016 (3) TMI 755 - BOMBAY HIGH COURT] - ITA No. 6291/MUM/2016 - - - Dated:- 18-4-2018 - SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Assessee : Mr. Mukesh B. Advani, AR For The Revenue : Mr. Saurabh Rai, DR ORDER PER N.K. PRADHAN, AM This is an appeal filed by the assessee. The relevant assessment year is 2012-13. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-29, Mumbai [ in short CIT(A) ] and arises out of the assessment completed u/s 143 (3) of the Income Tax Act 1961, (the Act ). 2. The grounds of appeal raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 14A. Therefore, he asked the assessee to explain why disallowance u/s 14A r.w. Rule 8D should not be made. In reply to it, the assessee submitted that investments were made from own capital and not from borrowed funds and also argued that it had not incurred any expenditure on the dividend received during the year. However, the AO was not convinced with above explanation of the assessee and relying on the decision in CIT v. Abhishek Industries Ltd. 286 ITR 1 (P H) made a disallowance of ₹ 28,78,154/- u/s 14A r.w Rule 8D. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the order of the AO making disallowance u/s 14A r.w. Rule 8D. However, the Ld. CIT(A) dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Utilities Power Ltd. [2009] 313 ITR 340 (Bom) held as under : 15. It is clear that for the first time in the case of HDFC Bank Ltd. (supra) that this Court took a view that the presumption which has been laid down in Reliance Utilities Power Ltd. (supra) with regard to investment in tax free securities coming out of assessee's own funds in case the same are in excess of the investments made in the securities (notwithstanding the fact that the assessee concerned may also have taken some funds on interest) applies, when applying Section 14A of the Act. Thus, the decision of this Court in HDFC Bank Ltd. (supra) for the first time on 23rd July, 2014 has settled the issue by holding that the test of presumption as held by this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt income. Under Portfolio Management Schemes (PMS), the fee charged ranges between 2 and 2.5 per cent of the portfolio value which would be inclusive of a profit element for the portfolio manager. While the fixed administrative expenses were excluded on the ground that in the case of a large corporate taxpayer they would be spread over a large number of voluminous activities, the variable expenses were computed at one-half per cent of the value of the investment. 7.3 In view of the above position of law, the disallowance of ₹ 37,737/- made by the AO under Rule 8D(2)(iii) is confirmed. 8. Thus the 1st ground of appeal is partly allowed. 9. Now we turn to 2nd ground of appeal. During the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed details and also gave clarifications with respect to the return of income and submission made and the case has been discussed with him. There is no dispute that copy of the ledger accounts were filed before the AO. The AO resorted to test check and presumed that personal element cannot be ruled out. This sort of general propositions do not decide concrete cases. In the second paragraph of his assessment order the AO mentions that details were furnished and clarifications made. In the fourth paragraph, the AO makes an ad-hoc disallowance of ₹ 3,00,000/- on presumptions. As the above disallowance of ₹ 3,00,000/- is ad-hoc in nature, we delete the same . 10. In the result, the appeal is partly allowed. Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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