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TMI Blog2020 (12) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... he time devoted by the investment committee and the employees as well as other overheads certainly involve a cost which is attributable to earning of exempt income. Therefore, 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. Reasonableness of disallowance computed under rule 8D(2) - AO treated the suo motu disallowance of ₹ 6,13,500, as direct expenditure under rule 8D(2)(i) - Commissioner (Appeals) has disapproved the aforesaid decision of the AO and we entirely agree with the reasoning of the first appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) 2, Mumbai, pertaining to the assessment year 2014 15. 2. The dispute in the present appeal is confined to the disallowance of expenditure under section 14A of the Income Tax 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 ₹ 484,24,27,520, under the normal provisions of the Act and book profit of ₹ 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 ₹ 8,55,01,594, and tax free income on investments amounting to ₹ 278,64, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer rejected assessee s claim of having incurred expenditure of ₹ 6,13,500, only. Having done so, the Assessing Officer proceeded to compute disallowance under section 14A by applying the provisions of rule 8D(2). While doing so, he treated the suo motu disallowance of ₹ 6,13,500, made by the assessee as a direct expenditure under rule 8D(2)(i). Additionally, the Assessing Officer disallowed an amount of ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as held by the Tribunal, Kolkata Bench, in DCIT v/s M. Junction Services Ltd., ITA no.1960/Kol./2016, dated 1st June 2018, and another decision in M. Junction Services Ltd., vide ITA no.171/Kol./2018, dated 26th April 2019. Besides the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e easily identified. Rather, the Assessing Officer has clearly stated that the time devoted by the investment committee and the employees as well as other overheads certainly involve a cost which is attributable to earning of exempt income. Therefore, 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 ₹ 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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