9911796707
TMI Blog2025 (3) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... s view.
Looking to the fact that assessee has not claimed any expenditure which was incurred in relation to earn exempt income and further before invoking the provision of section 14A along with Rule 8D, the AO has failed to record satisfaction with respect to expenses claimed as related to earn exempt income, thus in our considered opinion the addition made made by invoking the provisions of section 14A r.w. rule 8D of the IT Rules, 1962 is not sustainable. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 37,98,056/- being 1% of the average value of investments. 7. Before us, Ld. AR submitted that the AO has made addition u/s. 14A r.w. Rule 8D by ignoring the fact that appellant has not claimed any interest on funds borrowed nor other expenses was claimed as the fund manager has not charged any fee or remuneration. Therefore, Section 14A of the Act is not applicable and hence no disallowance under Rule 8D can be made. To support his contentions, ld. AR relied on the decision of Hon'ble Supreme court in the case of Maxopp Investment Ltd. Vs. CIT reported in 402 ITR 640(SC) wherein it is held by the Hon'ble Apex court as under: that "...as per section 14A(1) of the Act, deduction of that expenditure is not to be allowed which has been incurred by the assessee "in relation to income which does not form part of the total income under this Act". Axiomatically, it is that expenditure alone which has been incurred in relation to the income which is includible in total income that has to be disallowed. If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incurred in relation to income not includible in total income. 14A. [(1)] [Notwithstanding anything to the contrary contained in this Act, for the purposes of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] [(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :] [Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard reliance is placed on the decision of Hon‟ble Jurisdictional High Court in the case of H T Media Ltd vs PCIT reported in 399 ITR 576 (Del) wherein it was held as under:- 30. Rule 8D(1) states more or less what Section 14 A (2) of the Act states. It requires the AO to first examine the accounts of the Assessee and then record that he is not satisfied with (a) the correctness of the Assessee's claim of expenditure or (b) the claim made by the assessee that no expenditure has been incurred. Unless this stage is crossed i.e. the stage of the AO recording that he is not satisfied with the clam of the Assessee in the manner indicated i.e. after examining the Assessee's accounts, the question of applying the formula under Rule 8D (2) does not arise. That this is a mandatory pre-requisite for applying Rule 8D (2) is fairly well-settled. ....... 34. The Assessee had explained that Rs. 3 lakhs was being disallowed voluntarily as an "expenditure which could be attributable for earning the said income." The Assessee explained that the disallowance had been determined on the basis of cost of finance department in the ratio of exempt income to total turnover. On that basi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
