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2019 (4) TMI 1900 - AT - Income TaxDisallowance of interest u/s 14A - CIT- A deleted addition - HELD THAT:- Though AO has accepted the methodology of calculation of disallowance of interest but he has considered the net worth of investment as deductible amount from the total investment. It is a settled proposition of law that if the assessee has interest free funds available with it, then, it can be safely presumed that investments have been made out of interest free funds available No merit in the computation of disallowance of interest made by the AO - approach of adopting net worth cannot be accepted as interest free available funds available with the assessee should be given set off against the investments and then only the proportionate interest needs to be disallowed as per the computation of disallowance made by the assessee mentioned elsewhere. Secondly, as mentioned elsewhere, Rule 8D of the Rules is not applicable for the year under consideration and, therefore, no weightage can be given to the methodology given u/r 8D of the Rules for the year under consideration. Similar methodology has been accepted by the revenue in earlier A.Ys and following the Rule of Consistency, as enunciated in the case of Radha Soami Satsang [1991 (11) TMI 2 - SUPREME COURT]the Assessing Officer ought to have followed the findings in the earlier A.Ys. No error or infirmity in the findings of the CIT(A). Suo moto disallowance in respect of administrative expenses - CIT-A confirmed disallowance - HELD THAT:- AO has computed the disallowance as per Rule 8D of the Rules, which we have already held to be not applicable for the year under consideration. All that has to be considered is whether the disallowance made by the assessee is reasonable qua the facts of the case. In our considered opinion and after considering the computation as mentioned elsewhere, the suo moto disallowance @ 10% is reasonable and cannot be faulted with. We, accordingly, set aside the findings of the CIT(A) and direct the Assessing Officer to accept the suo moto disallowance. Assessee appeal allowed.
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