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2015 (7) TMI 532 - AT - Income TaxDisallowance under section 14A - CIT(A) who deleted the addition under rule 8D(2)(ii), while he confirmed the disallowance made under rule 8D(2)(iii) - Held that:- Tribunal for the earlier assessment year had considered the very same issue at length stating as per Rule 8D(2)(ii), disallowance can be made in respect of that interest expenditure which is not directly attributable to any particular income or receipt. The learned CIT (Appeals) after considering the facts on record held that there is no material on record to show that the overdraft cannot has been directly used for tax exempt investments and that the interest free funds, reserves and surplus are sufficient to make the tax free investments. Revenue has not brought on record any material to substantiate that the overdraft account was utilized for making tax free investments. Revenue has also not disputed that the investments proceeds from the public issue of shares. Thus, it cannot be said that funds from the overdraft account, on which interest is paid, has been invested in mutual funds which yield tax exempt income. In this factual matrix, we hold that the learned CIT (Appeals) was justified in deleting the disallowance under section 14A r.w. Rule 8D(2)(ii) In the present case, the assessee, in so far it relates to common expenses [falling within the ambit of Rule 8D(2)(iii) of the Rules], has taken a stand that no expenses whatsoever was incurred by the assessee. The AO has only dealt with the expenditure in the form of interest. With regard to other indirect common expenses, he has only made an observation that the assessee does not maintain separate accounts to enable identification of expenditure relating to exempt income. It is thus clear that as far as indirect expenses are concerned, neither the assessee has given any basis for his claim that no expenses were incurred for earning the exempt income, nor has the AO arrived at an objective satisfaction regarding the claim of the assessee that no indirect expenses were incurred to earn the tax-free income is not correct. In the circumstances, we are of the view that it would be just and appropriate that the order of the CIT(A) should be set aside and the issue with regard to disallowance to be made of indirect expenses under Rule 8D(2)(iii) of the Rules should be remanded to the AO for fresh consideration. Thus we confirm the order of the CIT(A) as far as disallowance under rule 8D(2) is concerned and set aside the issue of disallowance u/s rule 8D(2)(iii) to the file of the AO with similar direction as given by the Tribunal. - Decided partly in favour of assessee for statistical purposes. Claim of deduction u/s 80IB(10) - residential units having built up area of 1500 sq. ft. or less in ‘Brigade Gateway’ and ‘Brigade Metropolis’ housing projects. - Held that:- As the housing projects “Brigade Gateway” and “Brigade Metropolis” were same for Assessment Years 2007-08, 2008-09 and 2009-10 in respect of which deduction under section 80-IB(10) of the Act was denied by the Assessing Officer. Revenue has failed to demonstrate as to how the facts in the assessment year under consideration i.e. 2009-10 are different, even though in ground No.5 of revenue’s appeal it is stated that the facts of the present assessment year are different. It appears to us that the facts and circumstances of the case as it prevailed for Assessment Years 2007-08 and 2008-09 are identical for the Assessment Year under consideration i.e. 2009-10. As explained above, proportionate deduction under section 80- IB(10) of the Act has been allowed by different co-ordinate benches of this Tribunal in the assessee's own case for earlier assessment years. Revenue’s appeals against the aforesaid decisions of the Tribunal (supra) have been dismissed by the Hon'ble Karnataka High Court (supra) and Revenue’s SLPs by the Hon'ble Apex Court (supra). In this view of the matter, respectfully following the decisions of the co-ordinate benches of this Tribunal, the Hon'ble Karnataka High Court and the Hon'ble Apex Court in the assessee's own case for the earlier assessment years (supra), we hold that the assessee is entitled for deduction under section 80-IB(10) of the Act in respect of residential units having built up area of 1500 sq. ft. or less in ‘Brigade Gateway’ and ‘Brigade Metropolis’ housing projects. - Decided in favour of assessee. Disallowance of Interest paid u/s.36(1)(iii) - CIT(A) deleted the disallowance - Held that:- The CIT(A) has only followed the decision of this Tribunal in the assessee’s own case for the earlier assessment year 2009-10. Respectfully following the decision of the co-ordinate bench to which one of us i.e. Judicial Member is the signatory, we do not see any reason to interfere with the order of the CIT(A) as there appears to be no material on record to justify the Assessing Officer’s conclusion that deposits and advances have flown from out of the bank overdraft facility, we are of the considered view that the learned CIT (Appeals) has rightly deleted the disallowance of interest - Decided in favour of assessee. Disallowance of fine and penalty paid by the assessee on account of project Brigade Gateway - Held that: - This issue is decided against the assessee by the decision of the jurisdictional High Court in the case of CIT vs. Mamta Enterprises (2003 (10) TMI 26 - KARNATAKA High Court) which has been followed by the CIT(A) in rejecting the assessee’s ground of appeal.- Decided against assessee. As in respect of disallowance of fine and penalty, the AO should be directed to allow the deduction u/s 80IB(10) of the Act as it results in increase in the business profit. Estimating annual value of the building let out to Brigade Foundation for running its school at ₹ 15,00,000/- and consequent addition of ₹ 10,50,000/- under the head ‘income from house property’ - Held that:- The assessee has not disputed the fact that it had parted with the completed portion to Brigade Foundation for running the school during the relevant assessment year and since it had not entered into an agreement of sale with Brigade Foundation for sale of the said property, the benefit of using the property should be treated as the ALV of the property and should be brought to tax. Since the revenue authorities have accordingly brought the income to tax and the assessee has not been able to produce any evidence to the contrary, we do not see any reason to interfere with the order of the CIT(A). This ground of appeal is, therefore, rejected - Decided against assessee.
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