Shri Ashok M. Wadhwa Vs ACIT (ITAT Mumbai)
As AO failed to arrive at satisfaction as to non-correctness of assessee’s claim as regards no expenditure against exempt income, invocation of rule 8D was in contravention of section 14A(2) and, therefore, disallowance was deleted.
Briefly stated, the facts pertaining to the issue under consideration are that the assessee had shown dividend income of Rs. 48,67,603 as his exempt income. However, no expenditure was attributed by the assessee in respect of the said exempt income. The assessing officer taking support of the judgment of the Hon’ble High Court of Bombay in the case ofGodrej & Boyce Mfg. Co. Ltd. v. DCIT & Anr. (2010) 328 ITR 81 (Bom), therein applied the formula contemplated in section 14A read with Rule 8D and worked out the disallowance at Rs. 7,60,656. Aggrieved, the assessee carried the matter in appeal before the Commissioner (Appeals). It was submitted by the assessee before the Commissioner (Appeals) that now when the assessee had not incurred any expenditure for the purpose of earning of the dividend income, therefore, the assessing officer had wrongly invoked the provisions of section 14A and carried out the aforesaid disallowance of Rs. 7,60,656. The Commissioner (Appeals) after deliberating on the aforesaid statutory provisions, viz. section 14A read with rule 8D, therein observed that the assessing officer not being satisfied with the claim of the assessee that no part of the expenditure was attributable to earning of the exempt income, had thus made the aforesaid disallowance in terms of rule 8D of the Income tax Rules, 1963. The Commissioner (Appeals) after deliberating on the issue under consideration, therein concluded that the assessing officer had rightly applied the provisions of Section 14A read with rule 8D and confirmed the aforesaid disallowance of Rs. 7,60,656 in the hands of the assessee.
