Case Law Details
Shri Vinay Bhasin Vs. ACIT (Delhi ITAT)
The issue under consideration is whether the disallowance of expenditure under section 14A by AO without recording a satisfaction is justified in law?
In the instant case, the disallowances has been made by the Assessing Officer for expenses towards earning exempt income in terms of section 14A of the Act. During the year, the assessee shown exempted income of ₹ 10,87,838/-from dividend; income of ₹ 8,26,342/- from interest from tax-free bonds and ₹ 39,36,670/-from long-term capital gain on sale of listed shares. The assessee claimed that no expenditure was incurred and claimed in the books of accounts for earning the said exempted income. The Assessing Officer was not satisfied with this claim of the assessee and accordingly, he invoked rule 8D of the rules and made addition for 0.5% of the average value of the investment towards administrative expenses for earning exempt income in terms of rule 8D(2)(iii) of the rules.
ITAT states that, the Tribunal in the assessment year 2012-13 has followed the finding of the Tribunal in the case of the assessee for assessment year 2009-10, wherein also the Tribunal has found the dissatisfaction recorded by the Assessing Officer as not proper, which is required under the provisions of the Act. In the assessment year 2009-10, the Assessing Officer recorded that the assessee made heavy investment for earning of the exempt income and expenses for running the exempt income like manpower, vehicle, telephone, use of Internet, computer and its depreciation, electricity etc. must have been incurred by the assessee. But the Tribunal found that the Assessing Officer was not specific as to what exactly the probable expenditure in the matter. The Tribunal also noted that the expenses in respect of the mutual funds were already deducted by the respective operators. The Tribunal observed that the Assessing Officer would have taken legal exercise to verify the correctness or otherwise of the certificate, that was issued by the asset management companies or Citibank. ITAT find that in the year under consideration also the Assessing Officer has recorded similar dissatisfaction and not made any attempt to carry out the exercise which was proposed by the Tribunal in assessment year 2009-10. In view of the identical dissatisfaction recorded by the Assessing Officer, which has been held as not proper by the Tribunal(supra), ITAT respectfully following the finding of the Tribunal in assessment year 2009-10, delete disallowance in dispute in instant year. Accordingly, the appeal are accordingly allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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