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2019 (5) TMI 1496 - AT - Income TaxAddition u/s 14A read with rule 8D - assessee has not claimed any income as exempt under section 10 and therefore the provisions of section 14A r.w.r. 8D are not applicable - HELD THAT:- We find from the perusal of the record that during the year the assessee has not claimed any exempt income under section 10(35) of the Act but instead reduced the same from the interest claimed under section 36(1)(iii) of the Act and only net claim of interest was made. The said position has been accepted by the Revenue itself in A.Y. 2009-10 and 2010- 11 in the assessment proceedings as is clear from the perusal of assessment orders placed before us. We are in agreement with the contentions of the Ld. A.R. that the provisions of section 14A are not applicable if income is not claimed as exempt. The case of the assessee is squarely covered by the decisions of Credit Lyonnais vs. ACIT [2016 (3) TMI 735 - BOMBAY HIGH COURT] and CIT vs. Cortech Energy P. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] . - Decided in favour of assessee. Addition u/s 14A while calculating book profit under section 115JB of the Act - HELD THAT:- Any disallowance made under section 14A read with rule 8D is not to be considered in the computation of book profit under clause (f) of explanation 1 of section 115JB of the Act as section 115JB is a separate code in itself. The case of the assessee is squarely covered by the decision of ACIT vs. Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] and Everest Kanto Cylinder Ltd. vs. ACIT [2015 (12) TMI 683 - ITAT MUMBAI]. We would like to point out that this is the position of law that even if there is a disallowance under section 14A read with rule 8D the same is not to be considered for the purpose of computing book profit but in the present case since we have deleted the disallowance under section 14A read with rule 8D, therefore, this ground of the assessee is automatically allowed. Interest assessment - Ultimate cost of borrowing would be the gross interest expenses as neted off by interest income earned from deployment of such borrowed funds - CIT(A) held that the ultimate cost of borrowing would be the gross interest expense as netted off by the interest income earned from deployment of borrowed funds and it would be immaterial whether the interest income has been assessed as income from other sources or as business income and accordingly directed the AO to compute the overall cost of borrowed funds by reducing the interest income from the gross interest expense - HELD THAT:- CIT(A) has taken a very reasoned and possible view of the issue and we do not find any reason to interfere in the same. Moreover, the Ld. D.R. has failed to bring any new facts or materials before us to take a different view than what has been taken by the Ld. CIT(A). Accordingly, we uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue.
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