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2017 (8) TMI 320 - AT - Income TaxAddition u/s 14A - set-off / carried forward of business losses / depreciation - Held that:- A perusal of Balance Sheet reveals that the assessee’s Share Capital & Reserves stood at ₹ 23.21 Crores, Loan Funds stood at ₹ 46.16 crores whereas investments stood at ₹ 42.45 crores. The assessee has debited finance charges of ₹ 4.68 Crores in the Profit & Loss Account. Prima facie, the assessee has used mixed funds to make the investments which results into triggering of Rule 8D(2)(ii). In the revenue’s appeal, we have already settled that the rental income earned by the assessee shall be chargeable under the head ‘Business Income’. We are of the considered opinion that disallowance computed by AO under Rule 8D require re-appreciation / re-working in the light of our decision in revenue’s appeal. Therefore, we deem it fit to restore this matter back to the file of AO for re-appreciation / re-working of disallowance u/s 14A read with Rule 8D. We accordingly direct so. To reiterate, the rental income earned by assessee shall be assessed as ‘Business Income’ against which business expenditure as per law shall be allowable. The disallowance u/s 14A read with Rule 8D shall be computed denovo. The assessee shall be allowed set-off of unabsorbed depreciation in terms of our above order. The set-off / carried forward of business losses / depreciation, if any, shall also be reworked. The assessee’s appeal stands allowed for statistical purposes.
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