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TMI Blog2013 (3) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... e had made investment in mutual funds and shares of various companies to the tune of Rs. 1,17,28,250/- as on 31.03.2007. The assessee had not incurred any expenses on dividend income u/s.14A of the IT Act r.w. Rule 8D. The appellant contended before the A.O. at the time of assessment that investment was pertained to earlier year out of interest free fund but A.O. did not satisfy with the reply of the appellant. He further held that the assessee must have incurred administrative expenses such as documentation, salaries of employees, handling the investment port folio, administrative over heads like stationery, telephone, computer, office equipments, vehicles etc. every year, a part of which can be attributed to the investment port folio. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of expenses relating to exempt income are to be made by the method prescribed in the said rule. It is not in dispute that appellant earned exempt income in the form of dividend on investment of more than Rs.117 lacs. Appellant paid interest of Rs.23.34 lacs on borrowed funds used for business purposes as well as making investments. Appellant incurred substantial employees remuneration and other administrative expenses, part of which may relate to investment resulting in exempt income. Similarly payment of interest will also partly relate to investment resulting in exempt income therefore disallowance under Section 14 A on account of interest and other expenses are necessary. Coming to the method of computation of disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the same basis, the interest disallowance is confirmed. 4. Now the assessee is before us. Ld. Counsel for the appellant contended that there is no exempted income. The investment in shares was made in A.Y. 1996-97 for which he had filed paper book. Page no.4 is a balance sheet for A.Y. 96-97 and it was argued that as per Schedule B investment in shares was Rs. 1.74 crore, out of share capital of Rs.4.09 crore in A.Y. 96-97. The partial investment carry forwarded and had been shown investment in shares in year under consideration at Rs.1.17 crore. The investment had been reduced to some extent but whatever balance in investment in share was coming from A.Y. 96-97. He further argued that the assessee company also have reserve and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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