TRUSTLINE HOLDINGS PVT. LTD.,,CHENNAI vs. DCIT, CC-3(1),, CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order passed by Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 30-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 15-12-2019. The sole issue that fall for our consideration is disallowance u/s.14A r.w. rule 8D(2)(ii) for Rs.12.25 Lacs. Having heard rival submissions, the same is adjudicated as under.

Upon perusal of assessment order, it could be seen that the assessee earned exempt dividend income of Rs.17.97 Lacs and also earned exempt Long Term Capital Gains. The assessee did not offer any disallowance u/s 14A on the ground that no expenditure was incurred towards earning of exempt income. Since the assessee had closing investment of Rs.12.25 Crores, Ld. AO proceeded to compute disallowance u/r 8D(2). The direct expenses disallowance u/r 8D(2)(i) was computed as Rs.5.69 Lacs. However, the same has already been deleted by Ld. CIT(A) and the same is not the subject matter of appeal before us. The only dispute is with respect to indirect expenses disallowance u/r 8D(2)(ii) for Rs.12.25 Lacs which has been computed by Ld. AO @1% of annual average of monthly averages of value of investments yielding exempt income. The Ld. CIT(A) has confirmed the same. The only plea raised by Ld. AR is that for the purpose of computations, only those investments are to be considered which have actually yielded any exempt income during the year. The computations, in that respect, have been placed in the paper-book.