JOINT INVESTMENT PVT. LTD. Vs. ASSISTANT COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
Joint Investment Pvt. Ltd.
ASSISTANT COMMISSIONER OF INCOME TAX
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(1.) THIS appeal by the assessee is directed against the order of learned CIT(A) -VIII, New Delhi dated 28th December, 2012 for the AY 2009 -10.
(2.) THE assessee has raised the following grounds of appeal: -
"(a) That on the facts, circumstances and legal position of the case, the learned Commissioner of Income Tax (Appeals) has erred in confirming the order of Assessing Officer in holding that rule 8D of Income Tax Rules is mandatory.
(b) That on the facts, circumstances and legal position of the case, the learned CIT(A) has erred in confirming the disallowance of Rs.99,45,325/ - on the basis of rule 8D read with section 14A particularly when assessee company has voluntarily disallowed all those expenses which are not related to business activities or attributable to exempt income.
(c) That learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that assessee company has claimed only those expenses which are necessary to run the company as separate legal entity or which are directly related to business activities such as salary, rent, audit fee, interest etc. and therefore erred in making addition of Rs.52,56,197 u/s 14A of the Income Tax Act 1961 and assessing the business loss at Nil as against declared loss of Rs.52,56,197/ -."
(3.) AT the time of hearing before us, the learned counsel for the assessee argued at length and claimed that before invoking the provisions of Section 14A(2), the Assessing Officer was required to record that he
is not satisfied with the correctness of the claim of the assessee that Rs.2,97,440/ - only have been
incurred for earning exempt income. Since no such satisfaction is available in the assessment order, the
Assessing Officer could not have invoked Section 14A(2) and consequentially, Rule 8D which is linked to
Section 14A is not attracted in the case of the appellant. In support of this contention, he relied upon the
following decisions: -
(i) Maxopp Investments Ltd. Vs. CIT - (2012) 247 CTR 162 (Del).
(ii) Jindal Photo Ltd. Vs. DCIT - (2011) TIOL -653 -ITAT -DEL.
(iii) DCIT Vs. Ashish Jhunjhunwala - ITA No.1809/Kol/2012, order dated 14.5.2013 for AY 2009 -10.
(iv) Kalyani Steels Ltd. Vs. Addl.CIT - ITA No.1733/PN/2012, order dated 30.01.2014.
(v) Godrej and Boyce Mfg.Co.Ltd. Vs. DCIT - (2010) 328 ITR 81 (Bom).
The learned counsel further disputed the correctness of the working of disallowance under Rule 8D and pointed out that expenses like filing fees, house tax, conveyance, insurance of building and cars,
electricity, building repair, printing & stationery, telephone expenses, audit fees, office rent, vehicle
expenses, staff welfare expenses, interest, establishment and depreciation etc. cannot be said to
berelated to earning of exempt income. In support of this contention, he relied upon the decision of ITAT
in the case of ACIT Vs. SIL Investments Ltd. - (2012) 73 DTR 233 (Del)(Trib) and of ITAT, Ahmedabad
Bench in the case of Vishnu Anant Mahajan Vs. ACIT - 16 ITR 621 (Trib)(SB). He, therefore, submitted
that the disallowance made by the Assessing Officer and sustained by the learned CIT(A) should be
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