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TMI Blog2021 (5) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... n alternate plea that the total exempt income earned during the year is only ₹ 3,40,000/- hence disallowance u/s. 14A cannot exceeds this sum. CIT(A) considering the judgment of Jurisdictional High Court in the matter of CIT vs. Corrtech Energy P. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] wherein it is held that disallowance cannot be more then exempt income. Thus, in our considered opinion order of the Ld. CIT(A) does not required any kind of interference at our end. He has passed the detailed and reasoned order therefore this ground of revenue is dismissed. Disallowance of Management Charges u/s 40A(2)(b) - HELD THAT:- As decided in own case similar grounds has been raised in assessee's own case in appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilities. During the course of assessment proceedings it was noticed by the AO that the assessee has paid an amount of ₹ 1,62,00,000/- to Adarsh Foundation towards Management Charges. It is also seen that this payment is covered u/s. 40A(2)(b) of the Act, as the father of one of the Director of the assessee company is the Managing Trustee of the said foundation. In reply to the notice the assessee stated that assessee has paid the amount not for acquisition but it was made for the payment of goodwill and the right of the Sal Hospital running by the payee. As per the clause No. 4 of the agreement the assessee has undertaken to pay a minimum sum irrespective of revenue generated or loss incurred by SAL Hospital under the management of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 3,40,000/- in the form of dividend but assessee has not disallowed any expenditure u/s. 14A of the Act and uplied Rule 8D as follows: (III) An Amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. From the submissions made, it is evident that as regards (i) There is no amount of expenditure which directly relates to the income not forming part of total income. (ii) A = 44,80,736/- (44,60,548 + 20,188) B=8,05,54,380 + 16,64,57,862/2 =12,35,06,121 C=46,73,20,905 + 56,96,38,990/-/2 =52,84,79,948 Therefore, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is having huge interest free funds for making investments and there being no nexus of the borrowed funds and investments made the disallowance was interest expenses cannot be made. However, assessee had taken alternate plea that the total exempt income earned during the year is only ₹ 3,40,000/- hence disallowance u/s. 14A cannot exceeds this sum. 10. Ld. CIT(A) considering the judgment of Jurisdictional High Court in the matter of CIT vs. Corrtech Energy P. Ltd. (2014) 223 Taxmann 130 (Gujarat) wherein it is held that disallowance cannot be more then exempt income. Thus, in our considered opinion order of the Ld. CIT(A) does not required any kind of interference at our end. He has passed the detailed and reasoned order ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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