DCIT, NEW DELHI vs. M/S. OSCAR INVESTMENTS LTD., NEW DELHI

O R D E R PER PRASHANT MAHARISHI, A. M. 01. This appeal is preferred by revenue against the order of the Commissioner of income tax (appeals) – XVII-B, New Delhi dated 30/04/2014. 02. The revenue has raised in all 3 effective grounds of appeal as under:- 1. on the facts and circumstances of the case and in law, the Ld. CIT (A) has added in deleting the disallowance of Rs. 1, 92, 77, 595/– under section 14. A of the act without appreciating the facts given by the AO in its assessment order and the detailed calculations as per the provisions of the act.

2. On the facts and the circumstances of the case and in law, the Ld. CIT (A) has added in deleting the above disallowance by ignoring the fact that the assessee has failed to produce any justification regarding nexus between borrowings and investments and loans and advances which invariably indicates that finance costs have been incurred towards financing of investments, yielding exempt income.

3. On the facts and circumstances of the case and in law the Ld. CIT (A) has added in deleting the above disallowance by failing to appreciate that the provisions laid down by the act through section 14 A read with rule 8D as per which all the clauses (i), (ii) and (iii) of subsection to are duly applicable even if such direct expenses have been added back by the assessee on its own. 03. Briefly stated assessee is a company engaged in the business of investment/dealing in shares and securities and financing activities, who filed its return of income on 23/09/2011 declaring an income of Rs. 6 9, 00, 44, 440/–. During the year the company has earned dividend income of Rs. 1, 10, 58, 833/– which is been claimed as exempt in the return of income and therefore the assessee was asked to show cause as to why disallowance under section 14 A read with rule 8D be not made at the rate of 0.5% on average value of investment as per the balance sheet. In response to this, the assessee submitted that it has already made disallowance of expenditure of Rs. 2.13 crores against the exempt dividend income of Rs. 1.11 crores. It is further submitted that it is disallowed the entire expenditure of Rs. 2.13 crores incurred by the assessee on account of personnel, administrative and other expenses. However the Ld. assessing officer did not accept the contention of the assessee and therefore he computed the disallowance as per rule 8D (2) (iii) of Rs. 4 055 1458/– being 0.5% of the average value of investment. Out of this the