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2015 (8) TMI 1026 - AT - Income TaxDisallowance u/s 14A(2) r.w.r. 8D(2)(ii) - CIT(A) delted addition - Held that:- As find that in the case of Morgan Stanley India Securities Ltd Vs ACIT (2014 (1) TMI 1412 - ITAT MUMBAI) a co-ordinate bench of this Tribunal has held that for the purpose of disallowance under section 14A what is to be taken into account is net amount debited in the profit and loss account and not the gross interest debited to the profit and loss account. Same was the view of another coordinate bench in the case of DCIT Vs Trade Investments Ltd (2012 (3) TMI 421 - ITAT KOLKATA). Viewed thus, the action of the CIT(A) was fully justified in taking into account only the net figure which was nil in this case. The interest expenditure will have to be excluded from the expenses to be allocated under rule 8D(2)(ii) for the reason that the interest expenditure is no way relatable to exempt income. The entire borrowing by the assesse, as we have seen on the facts of this case, has been passed on the AIDL and entire interest on this borrowing has been received from the AIDL. It is completely a back to back transaction and the material on record clearly demonstrates that. Just because it is routed through the same bank account, it cannot be presumed that the money is out of the common funds. Such a presumption, as has been strenuously argued before us by the learned Departmental Representative, will be contrary to the clearly established facts on record. For this reason also, and in the light of the coordinate bench decision in the case of Champion Commercial Co Ltd (2012 (10) TMI 24 - ITAT, KOLKATA), the relief granted by the CIT(A) was quite justified.
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