Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1945 - AT - Income TaxDisallowance u/s.14A r.w.r. 8D - Scope of amended / substituted Rule 8D - CIT(A) in directing AO to make the disallowance u/s 14A @ 1% of the average value of investment as per the amended / substituted Rule 8D of the I.T. Rules as against the claim of the assessee that no disallowance in this case is attracted u/s 14A of the Act except the amount suo motu disallowed by the assessee - HELD THAT:- The issue is covered by the various decisions of the Hon'ble High Courts including that of the Hon'ble Jurisdictional High Court in ‘Bright Enterprises Ltd. [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] and also with the decision of Hero Cycles (P) Ltd [2015 (11) TMI 1314 - SUPREME COURT] wherein, it has been held that if assessee has own funds / interest free funds available with it to make investment, the presumption will be that investment made by the assessee is out of own funds. The issue is also squarely covered by the recent decision of the Hon'ble Supreme Court in ‘CIT (LTU) Vs. Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT]. In view of the above, no disallowance out of interest expenditure is warranted u/s 14A of the Income Tax Act. Application of the substituted provisions of Rule 8D w.e.f. 6.2.2016 by the Ld. CIT(A) is concerned, the issue has been settled by the Hon'ble Supreme court in the case of ‘CIT Vs. Essar Teleholdings Ltd., [2018 (2) TMI 115 - SUPREME COURT] wherein, it has been held that the amended rule 8D of the I.T. Rules is applicable prospectively. Administrative expenditure incurred for making the investment - HELD THAT:- As we find that assessee during the year had made investment in four companies. The rest of the investments were old investments. There is no churning of the portfolios or to say repetitive investments. The assessee suo motu has disallowed a sum of Rs. 1 lacs in this respect. The Assessing Officer has not recorded his satisfaction that how the suo motu disallowance of Rs. 1 lac made by the assessee on account of administrative expenditure was not justified or correct vis-a-vis the accounts of the assessee and the investment made. In view of this, we do not find any justification on the part of the Assessing Officer in enhancing the suo motu disallowance made by the Assessing Officer on this issue. We restrict the disallowance u/s 14A of the Act in this case to the extent of suo motu disallowance made by the assessee of Rs. one lac. Appeal of assessee allowed.
|