Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 1134 - AT - Income TaxDisallowance u/s 14A - AO held that the suo moto disallowance offered by the assessee is not properly explained - HELD THAT:- Disallowance offered by assessee was considered by learned assessing officer. In addition, the same was rejected giving proper reasoning. Therefore it is apparent that the learned assessing officer has recorded proper satisfaction for invoking the provisions of rule 8D of the income tax rules 1962 for working of the disallowance u/s 14 A of the act. Disallowance u/r 8D (2)(i) - The total investment made by the assessee in which tax-free income could have been earned is ₹ 1343 crores as on that date. Further, that investment from which exempt income has been actually earned during the year is only ₹ 605 crores. Furthermore, the investment made by the assessee is out of the mixed funds, as it did not maintain the books of account of the earning exempt income as well as taxable income separately - we hold that there cannot be any interest disallowance in the case of the assessee. Accordingly, the interest disallowance made under rule 8D (2) (i) of the act of ₹ 24,657,534/– deserves to be deleted, hence, we direct the learned assessing officer to delete the same. Disallowance under rule 8D (2) (iii) the amount equal to ½% of the average value of the investment Income from which does not or shall not farm part of the total income as appearing in the balance sheet of the assessee on the first day and the last day of the previous year - The claim of the assessee is that the opening balance and closing balance of the investments on which exempt income is received during the year is Rs Nil. The assessee has submitted the various accounts of such investments before us. In case if the opening balance and the closing balance of such investments from which exempt income is received during the year is rupees nil, naturally the average of such investment would also be Nil and therefore the consequent disallowance would also be Nil. We hold that there cannot be any disallowance under rule 8D (2) (iii) of the act is also Nil. Accordingly, we direct the learned assessing officer to delete the disallowance under rule 8D (2)(iii) of the act. Accordingly we direct the learned assessing officer to delete the disallowance under that sub rule amounting to Rs 1 71,87,853/–. Accordingly we direct the learned assessing officer to delete the disallowances confirmed by the learned CIT – A being the interest expenses stated by the learned assessing officer to be directly attributable to the earning of the exempt income as well as a sum being 0.5% of the average value of investment on the opening and closing day of the previous year. Appeal of the assessee is allowed.
|