1. CIT Vs. M/S Sher Cot Leather Craft Ltd. Kanpur, ITA No. 134 of 2013, Date of Order: 13.12.2013, Allahabad High Court
After hearing
both the parties and on perusal of the record, it appears that the
penalty is levied under Section 271-D for the violation of the provision
of Section 269SS of the Act. The Tribunal in its order, after examining
the entire material on record, had observed that the company made
entries in the books of account for acknowledging the debt and as such
there was no cash receipt on the part of the assesseecompany, and as
such there could be no penalty u/s 271D for the violation of the
provision of Section 269SS of the Act, in respect of book entries.
(Please click here for judgment)
2. DCIT Vs. M/s Allied Investments Housing P. Ltd., ITA No. 305/Mad/2013, Date of Order: 07.11.2013, ITAT-Chennai
S. 14A
& Rule 8D: Onus is on AO to show how assessee’s claim is incorrect.
AO has to show direct nexus between expenditure & exempt income.
Disallowance cannot be made on presumptions
A disallowance
u/s 14A read with Rule 8D cannot be made without recording satisfaction
as to how the assessee’s calculation of s. 14A disallowance is
incorrect. It is a prerequisite that before invoking Rule 8D, the AO
must record his satisfaction on how the assessee’s calculation is
incorrect. The AO cannot apply Rule 8D without pointing out any
inaccuracy in the method of apportionment or allocation of expenses.
Further, the onus is on the AO to show that expenditure has been
incurred by the assessee for earning tax-free income. Without
discharging the onus, the AO is not entitled to make an ad hoc
disallowance. A clear finding of incurring of expenditure is necessary.
(i) No disallowance can be made on the basis of presumptions.
(ii) the
mere fact that some interest expenses were incurred cannot be the reason
for disallowance unless the nexus between the expense and the exempt
income is established.
(iii) the assessee did not make any fresh investment during the year which could generate exempt income in forthcoming years.
(iv) the exempt income earned during the year comprised of dividend received from an investment made in an earlier year.
(v) the interest expenditure of the year is not directly related to the earning of exempt income.
(vi) the AO
has not pointed out any direct nexus between the interest expenditure
incurred and the exempt income earned during the year.
(Please click here for judgment)
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