9911796707
TMI Blog2020 (12) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 (for short "the Act"). 3. Brief facts are, the assessee, a resident company, filed its return of income on 25th November 2014, declaring total income of Rs. 484,24,27,520, under the normal provisions of the Act and book profit of Rs. 513,57,61,685, under section 115JB of the Act. During the assessment proceedings, the Assessing Officer noticed that in the year under consideration, the assessee received exempt income by way of dividend amounting to Rs. 8,55,01,594, and tax free income on investments amounting to Rs. 278,64,723. Since, the assessee had not disallowed any expenditure attributable to earning of exempt income in terms of section 14A of the Act, the Assessing Officer issued a show cause notice to the assessee to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f rule 8D(2). While doing so, he treated the suo-motu disallowance of Rs. 6,13,500, made by the assessee as a direct expenditure under rule 8D(2)(i). Additionally, the Assessing Officer disallowed an amount of Rs. 79,06,890, being 0.5% of the average value of investment by applying rule 8D(2)(iii). Being aggrieved with such disallowance, the assessee preferred appeal before the first appellate authority. 4. After considering the submissions of the assessee, learned Commissioner (Appeals) granted partial relief to the assessee and further directed the Assessing Officer to grant benefit of suo-motu disallowance made by the assessee. 5. The learned Authorised Representative submitted, the assessee is an asset management company and has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the assessee relied upon a number of judicial precedents as submitted in the legal paper book. Thus, he submitted, the disallowance made by the Assessing Officer should be deleted. 6. The learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 7. We have carefully considered the rival submissions in the light of the decisions relied upon and perused the material placed on record. As could be seen from the facts on record, in the year under consideration, the assessee had earned substantial amount of exempt income exceeding more than Rs. 11 crore. Whereas, in the return of income filed for the impugned assessment year, the assessee had not disallowed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not a case where the Assessing Officer has failed to record any satisfaction and mechanically proceeded to compute the disallowance under section 14A r/w rule 8D. Therefore, in our view, the condition of section 14A(2) stands satisfied in the present case. 8. Having held so, it is now necessary to deal with the reasonableness of disallowance computed under rule 8D(2) by the Assessing Officer. As could be seen, the Assessing Officer has treated the suo-motu disallowance of Rs. 6,13,500, as direct expenditure under rule 8D(2)(i). However, learned Commissioner (Appeals) has disapproved the aforesaid decision of the Assessing Officer and we entirely agree with the reasoning of the first appellate authority. As regards the disallowance m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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