BOSCH CHASSIS SYSTEMS INDIA LTD.,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

Though the assessee has raised several grounds of appeal but the issue raised is as per ground of appeal No.1.1, which reads as under:- “1.1 The learned CIT(A) erred in confirming disallowance of Rs.15,36,442/- as incurred in relation to exempted dividend income u/s 14A by applying Rule 8D while assessing total income as per regular provisions of the Income Tax Act, 1961.”

The balance grounds of appeal are argumentative in nature.

The assessee is in appeal against the orders of authorities below against disallowance made under section 14A of the Act read with Rules 8D(iii) of Income Tax Rules, 1961 (in short ‘the Rules’).

Briefly, in the facts of the case, the assessee was a Public Limited Company and was engaged in the manufacture and sale of different items at difference places. During the year under consideration, the assessee had received dividend income of ₹ 2,43,47,017/-, which was claimed as exempt under section 10(34) / 10(35) of the Act. The Assessing Officer invoked the provisions of section 14A of the Act and after elaborating on the issue, applied the provisions of Rule 8D(iii) of the Rules. Since the assessee was not maintaining separate details of expenditure relating to tax free and taxable income, the Assessing Officer computed the disallowance under Rule 8D(iii) of the Rules at ₹ 15,36,442/-.

The disallowance made by the Assessing Officer was upheld by the CIT(A), since the disallowance was worked out under specific provisions of Rule 8D(iii) of the Rules.

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee placed reliance on the submissions made before the authorities below.

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below.

We have heard the rival contentions and perused the record. The limited issue which arises is against disallowance made under section 14A of the Act. The year under appeal is assessment year 2009-10 when the provisions of Rule 8D(iii) of the Rules were on Statute. During the year under consideration, the assessee had earned dividend income at ₹ 2,43,47,017/-. The Assessing Officer had applied the provisions of Rule 8D(iii) of the Rules to work out the disallowance of administrative expenses incurred for earning the dividend income. The case of Revenue is that in the absence of any separate details being maintained for the exempt and taxable income, disallowance has to be worked out by applying the provisions of Rule 8D(iii) of the Rules. We find merit in the said stand of Revenue and uphold the same. In view of settled position, we uphold the disallowance made under section 14A of the Act read with Rule 8D(iii) of the Rules at ₹ 15,36,442/-. The grounds of appeal raised by the assessee are thus, dismissed.

In the result, the appeal of assessee is dismissed.