Case Law Details
Brief Facts of the Case
The AO observed that during the year the assessee has received dividend income of Rs.3,10,10,076/-, which is exempt under section 10 of the Act. The AO observed that the assessee is in receipt of considerable amount of exempt income, and no separate accounts have been maintained with regard to the earning of exempt income. The AO observed that the management and maintenance of such investments always entail certain administrative expenditure, such as, telephone expenditure etc. Therefore, he disallowed the proportionate amount of expenditure incurred out of the total expenditure incurred by the assessee during the year amounting to Rs.1,06,372/-.
Question of Fact
Whether disallowance of expenditure can be made on the basis of estimation or assumption, where there is nothing on record to indicate that there has been in fact any actual expenditure incurred by the assessee for earning tax free income?
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