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2012 (7) TMI 626 - AT - Income TaxDisallowance of interest expenses and Management expenses u/s 14A - CIT deleted the disallowance - re opening of assessment - Held that:- The A.O. did not establish any nexus between the borrowed funds and the investments. Nothing has been brought on record by the A.O. to rebut the assessee’s contentions that the investments have been made from own interest free funds and not borrowed funds. The assessee has submitted that he has not incurred any expenses for earning the income but the A.O. has not given any clear finding of incurring of expenses, and has not established nexus of expenses incurred with the earning of exempt income - invoking Rule 8D to disallowance is not warranted as AY under appeal is 1999-2000 and Rule 8D is to be applied prospectively from Assessment Year 2008-09 onwards - against revenue. Deletion of disallowance of software expenses by CIT(A) - Held that:- CIT (A) has given a finding to the effect that the issue of software expenses was disallowed by A.O. in the original assessment and CIT (A) had allowed the assessee’s appeal. In the second round, in reassessment proceedings, the A.O. has again raked up that very issue of disallowance of software expenses which had already reached to the finality in favour of the assessee by the order of ITAT - against revenue.
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