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2020 (4) TMI 229 - AT - Income TaxDisallowance u/s.14A - investment in shares made by the assessee and its source - HELD THAT:- CIT(A) after considering the applicability of section 14A of the Act held that out of interest nothing was to be disallowed since the Assessing Officer had not attached attributability of such interest to any particular income and thus only administrative expenses were found to be disallowed. Thus, in this way, the disallowance of interest and administrative expenses in terms of section 14A have already been considered and decided by Ld.CIT(A) in an appeal against original order passed u/s.143(3) of the Act. Thus, in the present circumstances, the Ld.CIT(A) while passing the impugned order had rightly concluded that Assessing Officer was not justified in enhancing such disallowances by re-working the disallowance from interest and administrative expenses. Even otherwise, it was rightly concluded by the ld.CIT(A) that the provisions of Rule 8D of the Income Tax Rules, 1962 are applicable from AY 2008-09 as held by Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg.Co.Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Since the year under consideration is AY 2006-07, therefore we are also of the view that as per the decision of Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg.Co.(supra), the provisions of Rule 8D are not applicable for the year under consideration. Assessee had aggregate interest-free funds by way of share capital and reserves and amounting to ₹ 195.10 crores which are more than the investment in shares and mutual funds amounting to ₹ 129.80 crores. Thus, in this way, the assessee was having enough interest-free funds and, hence, the disallowance out of interest expenditure could not have been made while relying upon the ratio laid down by the Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] Since Ld.CIT(A) had rightly concluded that disallowance of ₹ 2,56,00,942/- out of interest expenditure made by the Assessing Officer as per section 14A of the Act was not justified keeping in view the principles laid down by the Hon’ble Bombay High Court as well as the Coordinate Bench of ITAT Ahmedabad and even no new facts or circumstances have been brought before us in order to controvert or rebut the findings so recorded by the Ld.CIT(A). Therefore, we find no reason to interfere with or deviate from the findings so recorded by the Ld.CIT(A). Long Term Capital Loss - investment sold by the assessee was acquired by him in a scheme of amalgamation - HELD THAT:- As period of holding by the amalgamating companies is to be ‘included’ in the period of holding by the assessee. Accordingly, ld.CIT(A) has rightly held that assessee held capital asset from the date on which the amalgamating companies acquired such assets and the Assessing Officer was, therefore, not justified in considering the date of amalgamation for the purpose of indexation. The ld.CIT(A) while reaching to said conclusion had relied upon the decision of Hon’ble Bombay High Court in the case of CIT vs. Manjulla J. Shah [2009 (10) TMI 646 - ITAT MUMBAI] wherein under the similar circumstances, the Hon’ble Court decided the controversy. No new facts or circumstances have been brought before us in order to controvert or rebut the findings so recorded by the Ld.CIT(A). Therefore, we find no reason to interfere into or to deviate from such findings of the Ld.CIT(A) and we uphold the findings of the Ld.CIT(A) and reject the ground raised by the Revenue. Addition of disallowance u/s.14A while computing the Book Profit/Income u/s.115JB - HELD THAT:- Book profit has to be computed as per the audited books of accounts maintained by the assessee and the audited results which have been approved in the AGM by the shareholders. Only those adjustments can be made to the approved book profit, which are specifically mentioned in the Income Tax Act. Thus, in our view, any “notional adjustment” in the book profit is not permissible. No new facts or circumstances have been brought before us in order to controvert or rebut the findings so recorded by the Ld.CIT(A). Therefore, we find no reason to interfere with or deviate from the findings so recorded by the Ld.CIT(A). See GUJARAT STATE ENERGY GENERATION LTD. [2011 (4) TMI 179 - ITAT, AHMEDABAD]
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