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2016 (6) TMI 102 - AT - Income TaxDisallowance u/s 14A on interest expenditure - Held that:- We find that the Commissioner of Income Tax (Appeals) has given a finding to the effect that during the year, no new investments in mutual funds and shares, were made by the assessee as the investments as on 31/03/2011 which stood at ₹ 6.78 crores was reduced to ₹ 6.75 crores as on 31/03/2012. He further gave a finding to the effect that the assessee had shown profits after tax in the financial years 2008-09, 2009-10 & 2010-11 at ₹ 4.74 crores, ₹ 5.36 crores and ₹ 3.77 crores respectively and therefore, it is the normal presumption that the investments were made by the assessee in mutual funds and shares, out of its own funds. The Department has brought no material before us to controvert the above findings of the Commissioner of Income Tax (Appeals) therefore, we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) which is confirmed and the ground of appeal of the Revenue against the deletion of disallowance of interest expenditure under sec. 14A is dismissed. Disallowance under the head ‘administrative expenses’ under sec. 14A - Held that:- Departmental Representative could not bring any material on record to show that the 0.5% of the administrative expenditure worked out under sub-part (iii) of sub-clause (2) of Rule 8D on the basis of average value of the investment income from which does not form part of the total income as appearing in the balance sheet as on the first day and in the last day of the previous year was more than ₹ 2 Lac. We find that the Assessing Officer while calculating the disallowance for administrative expenditure has taken the average value of total investments as appearing in the balance sheet as on the first day and in the last day of the previous year, hence, we find no infirmity in the order of the Commissioner of Income Tax (Appeals) which is confirmed and the ground of appeal of the Revenue is dismissed. Computation of book profit under sec. 115JB - Held that:- In view of the specific provision in sec. 115JB of the Act which states the book profits shown in the profit & loss account is to be increased by the amount of expenditure relatable to any income to which secs. 10, 11 or 12 apply, the order of the Commissioner of Income Tax (Appeals) has to be reversed and the ground of appeal of the Revenue has to be allowed. Accordingly, we set aside the order of the Commissioner of Income Tax (Appeals) and allow this ground of appeal of the Revenue.
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