TMI Blog2014 (5) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred for earning the exempt income by way of dividend – relying upon Assistant Commissioner of Income Tax Circle 10, Kolkata Versus Champion Commercial Co Ltd [2012 (10) TMI 24 - ITAT, KOLKATA] - the AO did not return a finding that the claim of the assessee that no expenses had been incurred for earning the exempt income, was incorrect - She merely held that administrative expenses had to be incurred for earning of exempt income also - The rejection of the assessee’s claim in this manner is found to be improper and the CIT (A) correctly reversed the action of the AO by deleting the disallowance made – there was no error in the order of the CIT(A) – Decided against Revenue. - ITA No. 4135/Del/2013 - - - Dated:- 9-5-2014 - Shri R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133 TTJ 377 (Mum); 7. Container Corporation of India vs. ACIT , (2009) 30 SOT 284; and 8. Expeditors International India (P) Ltd. vs. Addl. CIT , 118 TTJ 652. 4. Further, it has been brought to our notice that vide order dated 15.12.2011, passed in ITA No.1284 of 2011 in the case of Birla Soft Ltd. , the Hon ble High Court again decided the matter in favour of the assessee, following BSES Rajdhani Powers Ltd. (supra) (a copy of the said order has been placed by the assessee at APB 2-3). The SLP filed by the department against the aforesaid order of the Hon ble High Court in the case of Birla Soft Ltd. also stands dismissed vide order dated 14.02.2014 in SLP (Civil) No.20645/2012 (Copy at CLPB-1). In view of the above, Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The ld. Counsel for the assessee, on the other hand, has placed strong reliance on the impugned order. It has been contended that in its computation of income filed along with the return of income, the assessee had suo motu added back Rs. 1,15,394/-; that this, in any case, was more than the disallowance that could possibly have been made under the provisions of Rule 8D (2) (iii); that the assessee had not incurred any interest expenditure for making investment in mutual funds; that no interest bearing borrowing, taken in the earlier years, was for the purpose of making investment in shares/mutual funds; that the assessee s own sources were sufficient, as available from the accounts; that the interest was concerning vehicle loans; that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee was itself more than the disallowance envisaged in the formula provided by Rule 8D of the Rules. Therefore, on this short score, no further disallowance was called for and the AO erred on this count. 10. Then, it is on record, as before the taxing authorities also, that the assessee had not incurred any expenditure during the year. Also, no loans were taken to make investment in mutual funds. In fact, as available from page 9 of the APB, which is a copy of Schedule-6 to the audited financial statement of the assessee for the year under consideration, the total investment in mutual funds and equity shares as on 31.3.07 (i.e., the end of the immediately preceding assessment year) was of Rs. 8,59,44,282/-. Similarly, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be open to revenue authorities to take any other stand on the issue with regard to the actual implementation of the formula in the case of any assessee. Viewed thus , the correct application of the formula set out in rule 8D(2)(ii) is that, as has been noted by Hon ble Bombay High Court in the case of Godrej and Boyce (supra), amount of expenditure by way of interest that will be taken (as 'A' in the formula) will exclude any expenditure by way of interest which is directly attributable to any particular income or receipt (for example any aspect of the assessee's business such as plant/machinery etc.) . Accordingly, even by revenue s own admission, interest expenses directly attributable to tax exempt income as also directly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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