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2017 (5) TMI 107 - AT - Income TaxWorking out disallowance under section 14A - depreciation and other related expenses dis-allowed by apportioning them in the ratio of exempt share income from firm u/s 10(2A) to taxable income - Held that:- There is no merit in the plea of the assessee as the element of personal use out of the car expenses incurred cannot be ruled out, however, the said disallowance is restricted to 10% of the total expenditure under section 37(1) of the Act. On the perusal of the record and the ratio laid down by the Special Bench of the Tribunal in the case of Vishnu Anant Mahajan Vs. ACIT (2012 (6) TMI 297 - ITAT, Ahmedabad ) while working out disallowance under section 14A of the Act, no disallowance is to be made on account of car depreciation claimed as deduction under section 32 of the Act. However, in respect of the interest expenditure on the car loans raised by the assessee there is no merit in the claim of the assessee. Accordingly, 50% of the balance expenditure is to be disallowed in the hands of assessee. In the paras hereinabove, we have already restricted the disallowance to 10% out of the total expenses for personal use and after excluding the same 50% is to be disallowed under section 14A of the Act. Disallowance made on account of interest paid against the interest income earned by the assessee on FDRs and other deposits - Held that:- the nexus between the amount borrowed by the assessee and the amount being deposited in various concerns. Admittedly the assessee had made investment in FDRs with banks but the same were not encashed for several reasons while the assessee made borrowals from different concerns in order to make investment with various concerns. In the totality of the present facts and circumstances where the assessee had earned interest income from bank FDRs at ₹ 2,95,750/- and against deposit with other concerns at ₹ 5,23,500/-, the interest expenditure claimed at ₹ 5,62,761/- merits to be allowed in the hands of assessee. Accordingly, the Assessing Officer is so directed. - Decided partly in favour of assessee.
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