Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (8) TMI 603 - AT - Income TaxDisallowance u/s 14A - amount of expenditure directly relating to income which does not form part of total income - Held that:- We observe that assessee has voluntarily made disallowance of ₹ 65,753/- u/s 14A of the Act and to examine this fact we refer to the computation of income available at pages 21 to 24 of the paper book and find that assessee has made specific disallowance u/s 14A at ₹ 65,753/-. We further observe that before lower authorities assessee has submitted that disallowance u/s 14A of the Act has been made at ₹ 2,10,753/- which includes ₹ 65,753/- specifically made u/s 14A of the Act and remaining amount of ₹ 1,45,000/- was termed as an ad hoc disallowance. However, we are of the view that only ₹ 65,753/- can be treated as specific disallowance u/s 14A of the Act and we accept the same as the amount of expenditure directly relating to income which does not form part of the total income and there is no dispute to the same by both the lower authorities. Disallowance is called for towards interest expenditure - Held that:- As per audited profit and loss account for the year under appeal, the gross interest income earned by the assessee is shown at ₹ 1,60,47,758/- and expenditure under the head interest and financial charges have been claimed at ₹ 1,19,95,664/- therefore, the net interest income earned by the respondent during the financial year 2009-10 is at ₹ 40,52,094/-. There is no dispute from the side of Revenue to this fact that there is net interest income earned by the assessee during the year, thus with reference to part (ii) of Rule 8D(2) we are of the view that no disallowance is called for towards interest expenditure as the assessee has a net interest income during the year i.e. interest received is more than interest expenditure. Amount equal to 0.5% of the average of the value of investment, income from which does not form part of the total income - Held that:- Out of the categories investments in immovable property, movable property and partnership firm are certainly not eligible to form part of average investment for the purpose of Rule 8-D. As far as investment in share is concerned, assessee has submitted that these investments were made in equity shares of Kalupur Commercial Coop. Bank Ltd. is held since last year at ₹ 54,37,500/- and assessee earns taxable dividend income and, therefore, the same should not be considered for calculation of average investment. Now the only amount left is investment in mutual fund which stood at ₹ 6,00,48,057/- as on 31.3.2009 & at Rs.NIL as on 31.3.2010. Therefore, the average investment for the purpose of calculation of disallowance in part (iii) of the method provided under Rule 8D(2) of IT Rules shall be 0.5% of ₹ 3,00,24,029 (6,00,48,057 + 0 ÷ 2). This amount works out at ₹ 1,50,120/-. Now summarizing all the three parts of Rule 8D(2), we find that in part (i) ₹ 65,753/- is the amount of admissible expenditure voluntarily disclosed by assessee and accepted by us. So no disallowance is called for. In part (ii) we have observed above that no disallowance is called for on the interest expenditure and in part (iii) we observe that 0.5% of average investment will be calculated at ₹ 1,50,120/-. Therefore, we are of the view that a disallowance of ₹ 1,50,120/- in the case of assessee is sustainable on account of disallowance u/s 14A of the Act. - Decided partly in favour of revenue
|