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TMI Blog2018 (6) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance under Section 8D of the Rules. Such abdication of duty in not permissible in law. Since no such exercise has been undertaken by the assessing authority, the case calls for a remand. See Commissioner of Income Tax & Anr. Vs. Microlabs Ltd., [2016 (4) TMI 219 - KARNATAKA HIGH COURT]. - I.T.A. No.342/2016 - - - Dated:- 12-6-2018 - Dr. Vineet Kothari And Mrs. S. Sujatha, J.J. Mr. K.V. Aravind, ADV.- For the Appellant Mr. A. Shankar Mr. M. Lava, ADVS.- For the Respondent JUDGMENT 1. The Revenue has filed this Appeal u/S.260A of the Income Tax Act, 1961, purportedly raising the substantial questions of law arising from the order passed by the ITAT, Bangalore Bench A , Bangalore, deciding I.T.A.No.525(B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following two judgments are quoted below for ready reference:- (i) Commissioner of Income Tax Anr. Vs. Microlabs Ltd., [2016] 383 ITR 490 (Karn). 39. Aggrieved by the order of CIT(A), the assessee has raised ground No.2. 40. We have heard the rival submissions. A copy of the availability of funds and investments made was filed before us which is at pages 38 to 42 of the assessee s paperbook and the same is enclosed as ANNEXURE-III to this order. It is clear from the said statement that the availability of profit, share capital and reserves surplus was much more than investments made by the assessee which could yield tax free income. 41. The Hon ble Bombay High Court in Reliance Utilities Power Ltd. 313 ITR 340 (B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also, the Court held in favour of the assessee in the following terms:- 13. The manner in which the aforesaid disallowance has been made by the assessing authority and has been upheld by the appellate authorities leaves much to the desired and the same cannot be sustained and therefore the matter deserves to be remanded back to the Assessing Authority. 14. We make it clear that the expenditure for earning exempted income has to have a reasonable proportion to the income, so earned, going by the common financial prudence. Therefore, even if the Assessing Authority has to make an estimate of such an expenditure incurred to earn exempted income, it has to have a rational nexus with the amount of income earned itself. Disallowance und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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