Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 274 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - specific disallowance of interest u/s 14A - Held that:- We find that the assessment year under consideration is 2008-09. It is from this year onwards that the mandate of Rule 8D has come into force. All the Hon’ble High Courts are unanimous that the disallowance u/s 14A is to be made only on ‘reasonable basis’ up to assessment year 2007-08. Such a disallowance has to be made in a holistic manner de hors any reference to individual items of expenses, including interest, as is the position under rule rule 8D applicable from the year under consideration. Thus, it is graphically clear that the question of specific disallowance of interest u/s 14A read with rule 8D is and could have occurred for the first time in the year in question and there can be no presumption that the AO accepted in the preceding year that no interest bearing funds were utilized by the assessee in making the investments in respect of opening balance of investments, so as to disable him from making disallowance of interest under rule 8D, even if it is proved that interest bearing funds were utilized for the purpose. Ergo, this contention of the ld. AR is jettisoned. It is, therefore, directed that the Assessing Officer will examine the question of disallowance of interest under Rule 8D(2)(ii) in the above hue and compute the same after allowing opportunity of being heard to the assessee. As decided in CIT vs. Holcim India P. Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] that if there is no exempt income, there can be no question of making any disallowance u/s 14A. A fortiori, the disallowance u/s 14A of the Act has to be restricted to the amount of exempt income. As such, we direct that the disallowance computed by the Assessing Officer in the fresh proceedings should not cross the amount of exempt dividend income of ₹ 3,38,62,672/- - Assessee's appeal is partly allowed for statistical purposes.
|