TMI Blog2014 (1) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of interest debited to the Profit & Loss Account as on net basis the disallowance of interest should also be made only with reference to the net interest. Disallowance of expenses u/s 37(1) of the Act - Transaction charges and turnover fees – Held that:- FAA should have not admitted the bifurcation given by the assessee, without obtaining a report from the AO - FAA, a senior officer of the hierarchy of the department is supposed to follow the rules prescribed by the Act - He can direct the AO to submit a remand report or make further inquiries and AO is bound to follow his instructions - AO has specifically taken a ground about not given him an opportunity to verify the claim made for the first time before the FAA - Whatever w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified by the A.O. 3. "On the facts and in the circumstances of the ease, the impugned order of the Ld.CIT(A) is contrary to law and consequential merits to he set aside and that of the Assessing Officer be restored. 4. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Assessee-company, engaged in the business of share trading and broking, filed its return of income on 28.08.2009 declaring a total income of Rs 7,66,723/-. AO finalised the assessment on 28. 11.2011 u/s. 143(3) of the Act determining the total income of the assessee at Rs. 29,00,035/-. First ground of appeal is about disallowance, amounting to Rs. 17.06 lacs, made u/s 14A of the Act. During the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance made under Rule 8D(ii) of the Act. 4. After considering the submissions of the assessee and the assessment order, FAA held that AO had justifiably invoked the provision of Rule 8D to determine the quantum of expenses which had to be disallowed u/s 14A of the Act with respect to earning of exempt income, that the assessee had not maintained separate account of expenses incurred for earning exempt income, that the assessee s contention that the provisions of section 14A did not provide for apportionment of expenses was not sustainable w.e.f. 01.04.2007, that assessee had failed to produce cash flow statement or any other material which could establish that borrowed funds were utilised for earning exempt income with regard to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t paid/received while making disallowance under section 14A r.w. Rule 8D. We find that, in the cases relied upon by the FAA, the issue has been decided in favour of the assessee. In the case of Morgan Stanley India Securities Ltd. (supra) Mumbai Tribunal has held under: " .there could be no dispute that since the amount of interest debited to the Profit Loss Account as on net basis the disallowance of interest should also be made only with reference to the net interest". Respectfully, following the orders of the coordinating benches, we decide ground no.1 against the AO. 7. Ground No. 2 is about disallowance of expenses of Rs. 4.22 lacs consisting of transaction charges (Rs. 1,10,433/-)/Stock Exchange Stamp Duty (Rs. 3,09,045/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out the business of the assessee, that AO had not called for any detail in this regard, that during the appellate proceedings assessee had filed necessary details, that AO was not justifying in disallowing all the expenditure claimed by the assessee, that assessee itself had admitted before the FAA that only a small portion of the expenditure was not relatable to the business carried out by it. 10. We have heard the rival submissions and perused the material before us. It is found that the assessee itself had admitted before the FAA that a certain portion of the expenditure was not incurred wholly and exclusively for carrying out its business and hence not allowable. FAA held that bifurcation given by the assessee was to be accepted. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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