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Income Tax Appellate Tribunal, “D”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This appeal is filed by the assessee against the order of CIT(A)-22, Mumbai dated 23/03/2016 for the Assessment Year 2012-13 in the matter of order passed u/s.143(3) of the IT Act. 2. In this appeal, assessee is aggrieved for disallowance of Rs.5,29,605/- under Rule 8D(2)(ii) r.w.s.14A of the Act. 3. Rival contentions have been heard and record perused. From the record we found that assessee has made investment in Mutual Fund for which it has offered disallowance of 25% of salary of Shri Rajesh Vohra whose salary was to the tune of Rs.7,06,140/- being incurred for earning exempt income. By observing that in the preceding year assessee has M/s. Hindustan Diamond Co. Pvt. Ltd., incurred expenditure on PMS for maintaining those of investment portfolio and now all this work is done by the Accountant, the AO disallowed 100% of the salary of Shri Rajesh Vohra. By the impugned order, the CIT(A) confirmed the action of the AO.
It was contended by learned AR that from the details of the expenditure, it was clear that the expenditure incurred and claimed by the assessee had direct nexus with the business income of the assessee. That it was not the case of the AO that the assessee has used its official machinery and Establishment for earning the exempt income. That the AO has not given any finding that any of the expenditure incurred and claimed by the assessee was attributable for earning the exempt income. In other words when the AO has not pointed out that certain expenditure was not incurred for earning the business income; but were incurred in relation to dividend income or such expenditure was incurred for inseparable and indivisible activities comprising professional as well as the activities on which exempt income has been earned by the assessee, then in the absence of any such instance of expenditure, finding of AO or any material to show that the expenditure incurred and claimed by the assessee against the taxable income had any relation for earning the exempt income, the provisions of Section 14A could not be applied.
On the other hand, learned DR relied on the order of the lower authorities.
We have considered rival contentions and gone through the orders of authorities below. From the record we found that the Accountant of the