Case Law Details
Motilal Chunilal & Muktalal Shaw (HUF) & Ors. Vs Asstt. CIT (ITAT Kolkata)
The question raised in appeal is challenging the action of CIT(A) in confirming the addition made on account of Section 14(A) r.w.s. 8D(2)(ii)&(iii) of the Rules..
The assessee earned dividend of Rs. 52,012/- and claimed the same as exempt income. The AO by invoking Rule 8D(ii) and (iii) disallowed an amount of Rs. 24,152/- and added to the said disallowance to the total income of the assessee. The CIT(A) by placing reliance on the Circular no. 5/114 dated 11.12.2014 held that the expenses which are related to earning of exempt income have to be considered for disallowance irrespective of the fact whether any such income has been earned during the financial year or not.
The contention of the Ld. AR is that the assessee has its own sufficient funds for investments and the disallowance under Rule 8D(2)(ii)&(iii) is not maintainable.
ITAT find from the perusal of balance sheet as on 31.03.2012 that the assessee has balance of fund at Rs. 5,59,80,394.72 and therefore, ITAT find force in the arguments of the Ld. AR that the assessee did not utilize any borrowed funds for its investments and the disallowance made under Rule 8D(2)(ii) is not maintainable. Therefore, taking into consideration the submission of the Ld. AR along with the balance sheet ITAT restrict the disallowance to an extent of Rs. 4,000/- and Rs. 20,152/- made under Rule 8D(2)(ii) is deleted. and hence ground raised by the assessee is allowed in part.
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