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Before: Smt. Diva Singh & Shri L.P. Sahu
ORDER Per L.P. Sahu, A.M.: This is an appeal by the assessee against the order of ld. CIT(A)-XXXIII, New Delhi dated 24.06.2013 for the assessment year 2009-10 on the following grounds : “Whether, on the facts and in the circumstances of the case the learned CIT(A) is right in confirming the disallowance made by the AO u/s 14A read with Rule 8D of Income Tax Rules, 1962 when no expenses were incurred by the assessee in earning the said exempt dividend income.” Whether, on the facts and in the circumstances of the case the learned CIT(A) is right in confirming the disallowance made by the AO u/s. 14A read with Rule 8D of Income Tax Rules, 1962 when the Assessing Officer did not bring any evidence on record to establish that any expenditure had been incurred by the assessee for earning exempt income.”
ITA No. 5646/Del./2013 2
The brief facts of the case are that the assessee filed its return of income on 28.09.2009 declaring income at Rs.2,24,78,290/-. The appellant was engaged in the business of manufacture and sale of spirit, IMFL and country liquor. In the course of assessment proceedings, the AO noticed that the assessee made investments during the year. The investment at the beginning of the year was of Rs.5,34,94,339/- and at the close of the year the amount of investments increased to Rs.5,73,51,171/-. The AO further noticed that the assessee had earned dividend income of Rs.2,32,109/- claiming the same as exempt not forming the part of total income. Since the appellant did not disallow any amount u/s. 14A, the AO resorting to the provisions of this section read with Rule 8D, disallowed the expenditure to the extent of exempt income of Rs.2,32,109/-. The addition so made by the Assessing Officer stood confirmed by the ld. CIT(A) vide impugned order. Aggrieved, the assessee is in appeal before the Tribunal.
The ld. AR submitted that the authorities below have failed to consider the crucial fact that the assessee did not make any expenditure to earn the impugned dividend income nor is there ITA No. 5646/Del./2013 3 any satisfaction to this effect on the part of the authorities below. At the beginning of the year the investment was Rs.5,34,94/339/- and at the close of the year it was Rs.5,73,51,171/- which shows that there was increase of Rs.38,56,832/- which was made out of the funds available in the bank of the assessee and therefore, no component of interest on this amount was involved. No expenses had been incurred in earning the exempt income of Rs.2,32,109/-. The AO while disallowing the claim of assessee has not brought on record anything to establish that the assessee had incurred any expenses while earning this exempt income and he has not given any finding in this respect. It was submitted that in appellant's own case for the immediately preceding assessment year 2008-09, ITAT "D" Bench, New Delhi has decided this issue in favour of the appellant in vide order 23.09.2015. Therefore, the action of the authorities below in disallowing Rs.2,32,109/- against the dividend income u/s 14A read with Rule 8D was not justified. Reliance is further placed on the following decisions: (i). Decision of Punjab & Haryana High Court in CIT vs. Hero Cycles Ltd. (ITA No.331/2009(0&M) decided on 04.11.2009). ./2013 4 (ii). Maxopp Investment Ltd. Vs Commissioner of Income-tax New Delhi (2011) 15 taxmann. Com 390(Delhi HC)