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2019 (1) TMI 942 - ITAT MUMBAIDisallowance u/s 14A r.w.r 8D - Non recording of satisfaction - MAT computation - Held that:- We conclude that Ld. AO, without having recorded requisite satisfaction as to how the computations made by the assessee were not correct, could not be clinched with the blanket jurisdiction to apply Rule 8D. Therefore, the additional disallowance made by AO could not be sustained on this account. The said observation is in tune with the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] whereas it has been held that for the purpose of computing disallowance, only those investments which yielded exempt income during impugned AY were to be considered. Disallowance deserves to be deleted on this account also. Another factor that goes in assessee’s favor is the uncontroverted fact that own interest free funds in the shape of share capital and reserves far exceeded the investments made by the assessee and therefore, a presumption was drawn in assessee’s favor that the investments were funded out of own funds rather than out of borrowed funds and therefore, no interest disallowance was called for under the circumstances. Viewed from any angle, we find no infirmity in the impugned decision of Ld. first appellate authority in directing AO to deleted additional disallowance of ₹ 388.66 Lacs while arriving at income under normal provisions as well as u/s 115JB. Penalty u/s 271(1)(c) - disallowance u/s 40(a)(ia) - Held that:- Upon perusal, we find that the impugned penalty was levied by AO vide order dated 28/03/2013 on aggregate quantum additions of ₹ 13.21 Crores which comprised-off of wrong claim of business loss of ₹ 11.40 Crores and disallowance u/s 40(a)(ia) for ₹ 1.81 Crores. Upon appeal by the assessee before this Tribunal, both these issues have been remanded back to the file of CIT(A) with certain directions. Since, quantum additions against which the penalty has been levied has been set aside to CIT(A), it would be logical to set aside the consequential penalty levied against the same to the same authority. Therefore, the matter of penalty stand restored back to the file of CIT(A) for re-adjudication in the light of decision taken against the quantum additions as per the direction of the Tribunal. The appeal stands allowed for statistical purposes.
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