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2019 (4) TMI 193 - AT - Income TaxDisallowance made u/s 14A - excess of own funds - HELD THAT:- Own funds available with the assessee is in excess of the value of investment and hence the decision rendered in the case of Karnataka State Industrial & Infrastructure Development Corporation Limited [2015 (11) TMI 1631 - KARNATAKA HIGH COURT] shall apply to the facts of the present case. The disallowance out of interest expenditure is no called for. DR submitted that the assessee has used the mixed funds. However, from the submission made by the assessee, we noticed that the assessee has made the impugned investment out of the sale proceeds of land sold to M/s.ITC Limited. Hence, we noticed that the assessee is able to show the nexus between the funds utilized and the investment made. Disallowance made out of administrative expenses under Rule 8D(2)(iii) the assessee has placed reliance on the decision rendered in the case of Syntex Industries Limited [2018 (3) TMI 1448 - SUPREME COURT] in order to contend that no disallowance out of administrative expense should be made. It show that the assessee had made minor investments out of surplus funds, while in the instant case the assessee has not shown that it had surplus funds and further investments made by it could be regarded as minor in nature. Hence, in our view, the assessee cannot take support of the above said decision. The assessee has made investment in Mutual Funds units which does not involve use of much of administrative capabilities. Provisions of Rule 8D(2)(iii) should not be applied to the facts of the present case. Since the assessee has received exempt income, some disallowance is called for to meet the requirements of sec.14A of the Act. Accordingly, we direct the A.O. to make lump sum disallowance of ₹ 25,000/- towards administrative expenses and, in our view, the same would meet the requirements of sec.14A of the Act. TDS u/s 194J - Disallowance of purchase cost of software u/s 40(a)(ia) - TDS liability fastened upon the assessee retrospectively - whether payment made towards purchase of software is in the nature of Royalty attracting TDS provisions? - HELD THAT:- The assessee cannot be fastened with the liability to deduct tax at source retrospectively and accordingly, we set aside the order passed by the CIT(A) on this issue and direct the A.O. to delete the impugned addition. Disallowance of interest levied on late remittance of TDS - HELD THAT:- Hon’ble Madras High Court in the case of CIT vs. Chennai Properties & Investments Ltd [1998 (4) TMI 89 - MADRAS HIGH COURT], wherein it was held that the interest paid would take the colour from the nature of Principal amount required to be paid, but not paid in time. Accordingly it was held that the interest paid on belated payment of TDS cannot be considered as compensatory in nature and accordingly held that the same is not allowable as deduction. Non-granting of TDS credit - HELD THAT:- Assessee should not be denied the benefit of credit of TDS as provided in Rule 37BA(3)(ii) of I.T Rules. Accordingly we restore this issue to the file of the AO for examining the claim of the assessee. We also direct the assessee to move appropriate petition before the AO in this regard, which shall be considered in a liberal manner by the AO. Appeal of the assessee is partly allowed.
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