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| DATE: | May 22, 2013 (Date of publication) |
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| Click here to download the judgement (ashish_jhunjhunwala_14A_Rule_8D.pdf) |
No S. 14A/ Rule 8D disallowance without showing how assessee is wrong
In AY 2009-10, the assessee earned tax-free dividend of Rs. 32 lakhs on investments that had been made in earlier years. The assessee claimed that as he had not incurred any expenditure to earn the dividend income, no disallowance u/s 14A was permissible. The AO rejected the claim and made a disallowance by applying Rule 8D. The CIT(A) deleted the disallowance on the ground that the AO had mechanically applied Rule 8D to compute the disallowance. On appeal by the department to the Tribunal, HELD dismissing the appeal:
The AO has not brought on record anything which proves that there is any expenditure incurred towards earning of dividend income. The AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D. While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. The AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½% of the total value. This is not permissible (J. K. Investors (Bombay) followed)
There are decisions on the subject matter and the assessee is the right owner/judge what has happen in their course of business. Also he has relied on the case laws considering the facts and law but the Assessing Officers never look out the case blindly applied the provision of the Act speaking that their order scrutinized by the superior authorities and they cant take risk. Always assessee punished/harass for their wrongs.