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2023 (10) TMI 655 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - expenditure incurred on earning exempt income - HELD THAT:- From the judgment of Bennett Coleman & Co. Ltd. [2018 (2) TMI 730 - ITAT MUMBAI], it is vivid that where assessee had furnished details that it had surplus own funds to make investments in shares and mutual funds and it had not used borrowed funds for such purpose, the disallowance of interest expenses u/s 14A of the Act, is to be deleted. Therefore, delete the addition made by the Assessing Officer in respect of interest disallowance u/s 14A of the Act. However, direct the assessing officer to make the disallowance being 0.50% of average investment. Disallowance u/s 40(a)(ia) - TDS u/s 194A on interest expenses non deducted - HELD THAT:- As during the appellate proceedings, the assessee submitted before CIT(A) that out of the total interest interest partly was paid to M/s Deutsche Bank AG and since the entity was a banking company, the provisions of section 194A were not applicable. This argument of the assessee was accepted by ld CIT(A), and hence the corresponding disallowance was deleted by ld CIT(A). As Counsel stated that despite of this, ld CIT(A) had enhanced the addition without issuing notice to the assessee for enhancement and without giving opportunity to the assessee. Therefore, enhancement made by the CIT(A) is bad in law and needs to be deleted. Reliance can be placed on the judgment in the case of CIT Vs. Lotte India Corporation Ltd [2006 (9) TMI 141 - MADRAS HIGH COURT]. Hence, note that ld. CIT(A) without giving an opportunity to the assessee, has enhanced the assessment, therefore addition made by the ld CIT(A) t is hereby deleted.
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