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TMI Blog2016 (2) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that:- The issue in question is squarely covered by Hon’ble Rajasthan High Court judgment in the case of CIT V. SBBJ [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] which has been relied by ld. CIT(A). Respectfully following Hon’ble Rajasthan High court judgment this ground is dismissed. - ITA No. 230/JP/2015, ITA No. 916/JP/2014 - - - Dated:- 4-2-2016 - SHRI R.P.TOLANI, JM SHRI VIKRAM SINGH YADAV, AM Revenue by: Shri Rajender Singh, JCIT - DR Assessee by : Shri B.V. Maheshwari CA Shri Ramesh Goyal , CA ORDER PER R.P. TOLANI, JM These are two revenue appeals against the respective orders of ld. CIT(A)-1, Jaipur dtd. 22-12-2014 for AY 2008-09 and dtd. 28-10-2014 for AY 2011-12. 2.1 One common ground in both revenue appeals for these assessment years challenges disallowance on account of expenditure as U/s 14A applying rule 8D of the Income Tax Act amounting to ₹ 53,54,056/- and ₹ 1,29,52,621/- for AYs 2008-09 and 11-12 respectively. 3.1 Brief facts are assessee, Om Metals Infra-Projects Ltd. is a listed Company, engaged in the business activities of Hydro-mechanical dam gates as its main business and also business activities like hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a business necessity to promote its business and cannot be termed an investment to earn exempt income. (ii) Total share capital and reserves available with assessee were to the tune of ₹ 378.00 crores. It has been admitted by ld. AO that investment in shares is made by the assessee out of its own funds. The reason for disallowance u/s 14A as given by ld. AO is only that still rule 8d is to be mechanically applied. This clearly indicates that ld. AO has not discharged his onus on cogent reasons to establish how the assessee s working about non disallowance of expenditure u/s 14A can be found fault with. (iii) Fixed and currents assets used by the assessee in its business were more than the borrowed moneys, therefore, there was no reason to hold that any part of interest incurred by assessee was attributable to investments in shares and mutual funds. (iv) Ld. AO has failed to bring on record any evidence to suggest any administrative or other expenditure was incurred for earning exempt income. (v) Since ld. AO has failed to substantiate that any direct or indirect expenditure was incurred by assessee to earn exempt income or to show any proximate nexus, the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi) :- That the clear findings of the Appellate authorities were that the assessee had sufficient funds for making investment in shares and mutual funds. The findings coupled with the failures of the Assessing Officer to record his satisfaction clinched the issue in favor of the assessee. The voluntary deductions made by the assessee were not rejected or held to be unsatisfactory, on examination of accounts. The Assessing Officer erred in invoking sub-rule (2) without elucidating and explaining why the voluntary disallowance made by the assessee was unreasonable and unsatisfactory. There was no such satisfaction recorded by the Assessing Officer before he invoked subrule (2) of rule 8D and made the computation. The Assessing Officer has to reject the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income; the Assessing Officer would have to indicate cogent reasons for the same. We do not find any such satisfaction recorded in the present case by the Assessing Officer before he invoked sub-rule (2) of rule 8D of the Rules and made the re-computation. Therefore the respondent assessee would succeed. (2) CIT V T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO clearly clinch the issue in favor of the assessee in view of above judgments. 3.6 Without prejudice to above in AY 2011-12, assessee earned dividend of only to the extent of ₹ 1,19,645/- whereas ₹ 59,01,52,708 has been disallowed u/s 14A by mechanical application of rule. In view of above judgments even in worst circumstances and if assessee s all explanation fail, disallowance u/s 14A can never exceed the exempt income. In AY 2011-12 also ld. AO has admitted the acquisition of JV shares and mutual funds from the same interest free own sources i.e. capital and reserves of company. 4.1 Apropos the second ground raised in AY 2011-12 in respect of contribution to Employees PF, it is not disputed that the payments are made by the assessee within the due date prescribed for filing the return. The issue in question is squarely covered by Hon ble Rajasthan High Court judgment in the case of CIT V. SBBJ (2014) 263 ITR 17, which has been relied by ld. CIT(A). Respectfully following Hon ble Rajasthan High court judgment this ground is dismissed. 5.1 We have heard the rival contentions, judicial pronouncements and material available on record. Following facts clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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