TMI Blog2019 (1) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT MUMBAI] relating to AY 2011-12 and it was held by the Tribunal Mumbai Bench that disallowance u/s. 14A of the Act cannot exceed the exempt income. Following the aforesaid decisions, we hold that disallowance u/s. 14A in the present case should be restricted to the exempt income earned by the assessee. Charging of Interest u/s 234B, 234C and 234D - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] and I therefore uphold the action of the AO in charging the assessee the said interest. The AO is, however, directed to re-compute the interest charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree reserves available with it and that the disallowance, if at all, cannot exceed the amount of exempt income earned by the assessee during the relevant previous year. The AO, however, was of the view that disallowances in terms of Rule 8D(2)(ii) and (iii) of the Rules were called for. Accordingly, the AO computed the disallowance under Rule 8D(2)(ii) and (iii) as under:- Assessment Year Disallowance u/R 8D(2)(ii) (Rs.) Disallowance u/R 8D(2)(iii) (Rs.) Total (Rs.) 2012-13 16,97,863/- 86,062/- 17,83,925/- 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in shares was only to the tune of ₹ 173.77 lakhs (of which more than 95% relates to investment in the shares of subsidiary company i.e. M/s.Lamina Foundries Ltd.) and these investments were made by the appellant from of its own funds represented by share capital and reserves, which was to the tune of ₹ 503.76 lakhs and no interest was paid thereon and therefore, the disallowance made by invoking the provisions of Rule 8D[2][ii] of the I.T.Rules was misplaced since the investment in shares was not out of borrowed funds and hence, the disallowance made to the extent of ₹ 16,97,863/- ought to have been deleted. 3.1 Without prejudice to the above, the Learned CIT[A] erred in considering the entire amount of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r thereon. 5. Grounds 2 to 4 Disallowance u/s 14A r.w.r. 8D 5.1 We have heard the rival submissions. The Hon'ble Delhi High Court in the case of Joint Investments (P) Ltd. v. CIT, 372 ITR 694 has taken the view that disallowance u/s. 14A of the Act cannot exceed the exempt income. Similar view was expressed by the Hon'ble Delhi High Court in the case of CIT v. Holcim India Pvt. Ltd., 272 CTR 282 (Del). These decisions were considered by the Mumbai Bench of the Tribunal in the case of Future Corporate Resources Ltd v. ACIT, ITA No.4658/Mum/2015 dated 26.07.2017 relating to AY 2011-12 and it was held by the Tribunal Mumbai Bench that disallowance u/s. 14A of the Act cannot exceed the exempt income. Following th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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