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TMI Blog2024 (5) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... r For the Appellant : None For the Respondent : Shri Kanv Bali, Sr. DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee is directed against the order of Ld. CIT(A)-V, New Delhi dated 12.11.2012 for the assessment year 2008-09. The assessee has raised following grounds of appeal:- 1. "That on the facts and circumstances of the case and in law, Ld CIT(A) -V, New Delhi erred in dismissing appellant's appeal. 2. That on the facts and circumstances of the case the appellant was prevented by reasonable cause in not attending the appellate proceedings before the Ld. CIT(A) -V, New Delhi. 3. That on facts and circumstances of the case the Ld. CIT(A) -V, New Delhi erred in deciding the appellant's appeal without discussing the merits of the case. 4. That the Ld. CIT (A) is not justified in confirming the disallowance of Rs. 1,22,76,000/- on account of depletion in value of investments. 5. That the Ld. CIT (A) is not justified in confirming the disallowance of Rs. 84,00,000/- on account of debit balances written off. 6. That the Ld. CIT (A) is not justified in confirming the disallowance of Rs. 92415/-on account of section 40(a) of Income Tax Act 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the income of the assessee at INR 13,92,540/- vide order dated 20.12.2010 u/s 144 r.w.s 143(3) of the Act. 4. Aggrieved against this, the assessee carried the matter before Ld.CIT(A), who after considering the submissions, dismissed the appeal of the assessee for want of non-prosecution. 5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. Apropos to the grounds of appeal, Ld. Sr. DR for the Revenue supported the assessment order. Ld. Sr. DR vehemently argued that the assessee has been negligent throughout the proceedings. He did not submit its response to the query raised by the AO and even before Ld.CIT(A), there was no representation on behalf of the assessee. He further contended that in the absence of the supporting evidences, the AO was justified in disallowing the claim of the assessee. He contended that the assessee claimed depletion in value of investment of INR 1,22,76,100/-. He contended that it was pointed out by the AO that Auditor of the assessee himself had clearly reported depletion in value of investment of INR 1,22,76,100/- as expenditure of capital in nature. Further, in respect of debit balance written off, he con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed debit balances written off at Rs. 84,00,000, as allowable deduction in it's computation of income filed on 21/09/2010, which can not be allowed. due to the following reasons: (a) Assessee itself has treated the same as not allowable in it's return of income filed. (b) Assessee has not given any reason for the claim of this deduction in spite off show cause given, vide order sheet entry dated 03/11/2010 and various other opportunities given as discussed in para 2 and 3 above. (c) These debit balances written off can be either claimed as bad debt written off or business loss. The bad debts written off can be allowed as deduction within the meaning of provisions as laid down in section 36(1)(vii) r.w.s. 36(2) of the I.T. Act in case of assessee which pre-requisite the following two conditions: A It should be actually written off in the books of account of assessee during the previous year and ; B. The debt or part thereof should have been taken into account in computing the income of the assessee of the previous year in which it was written off or in any earlier previous year. Since the conditions of section 36(2) r.w.s. 36(1)(vii) written off r.w.s. 36(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet entry dated 03/11/2010 as to why disallowance u/s 14A of the IT Act r.w.r. 8D of the IT Rules should not be made for the expenditure incurred in relation to income which does not form part of total income. 5.2 In reply to the same, the assessee company has not submitted any reply as discussed in para 2 and 3 above. 5.3 The invocation of Section 14A is automatic and comes into operation. without any exception as soon as dividend income is claimed exempt. The possibility of incurring certain expenditure under the head administrative expenditure for earning dividend income cannot be ruled out. While allocating expenses relating to exempt income not only the direct expenses like receiving and depositing the dividend warrant has to be taken into consideration but also the indirect expenses including major managerial/ clerical expenses which are involved in making and implementing the decision are also to be disallowed. The disallowance of administrative expenses and interest expenses on earning of dividend income claimed exempt is also held/permitted by the Hon'ble Supreme Court in the case of CIT vs. United General Trust, 200 ITR 488 (SC). 5.4 Keeping in view the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the provisions of Rule 8D (2) as under:- (All figures in Rs. ) (i) Amount of expenditure directly relating to income which does not form part of total income Nil (ii) A Amount of interest by which is not directing attributable to any particular income/receipt Nil B Average value of investment related to exempt income -Opening Balance of Investments 2,81,42,078 -Closing Balance of assets 1,57,09,798 -Average value of above assets- 2,19,25,938 C Average of total assets- -Opening Balance of assets 11,70,41,016 -Closing Balance of assets 12,88,00,025 -Average value of above assets- 12,29,20,520 A x B/C=Nil x 2,19,25,938/12,29,20,520 Nil (iii) Average value of investment -Opening Balance of Investments 2,81,42,078 -Closing Balance of Investments 1,57,09,798 -Average value of above investment 2,19,25,938 -1/2% of average value of investment 1,09,630 Disallowance u/s 14A of the Act i.e. aggregate of (i), (ii) and (iii) 1,09,630 5.8 Hence, an amount of Rs. 1,09,630/- is disallowed u/s 14A of the I.T. Act and added to the total taxable income. (Addition Rs. 1,09,630/-) Unsecured loans 6. During the course of assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward business losses and Unabsorbed depreciation set off (As per return of income) (-)1,27,11,752 Total Income 13,92,538 Rounded off 13,92,540 Assessed at an income of Rs. 13,92,540/-. Interest u/s 234B, 234C and 234D of the Income Tax Act, 1961 is charged as per provisions of the I.T. Act. Penalty proceedings u/s 271(1) (c) of the I.T. Act have been initiated separately. Necessary forms are issued." 8. The assessee has not brought any material contradicting the finding of the AO. Even it is found that Auditor of the assessee himself recorded about the depletion in value of investment being capital in nature, debit balance being capital in nature and disallowance made u/s 40(a) of the Act and disallowance made u/s 14A of the Act. The assessee grossly failed to bring on records material evidence, contradicting the findings of AO on impugned additions. In the absence of any contrary material filed by the assessee and the assessee, failed to get confirmation of the unsecured loan taken from the concerned parties, we do not see any reason to interfere in the findings of AO, the same is hereby affirmed. Grounds raised by the assessee are accordingly, rejected. 9. In the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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