TMI Blog2014 (6) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 - - - Dated:- 7-3-2014 - SHRI A.MOHAN ALANKAMONY AND SHRI CHALLA NAGENDRA PRASAD, JJ. For the Appellant : Mr. Anirudh Rai, CIT For the Respondent : Mr. R. Vijayaraghavan, Advocate ORDER Per: Challa Nagendra Prasad: This appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Chennai dated 24.03.2011 for the assessment year 2006-07. The only grievance of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting the disallowance made under section 14A of the Act. 2. The Assessing Officer while completing the assessment disallowed Rs.47,69,464/- under section 14A of the Act read with Rule 8D of Income Tax Rules stating that assessee incurred expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleted the entire disallowance following the decision of Hon'ble Bombay High Court in the case of M/s. Godrej Boyce Manufacturing Co. Ltd (supra) and the decision of Hon'ble Punjab Haryana High Court in the case of Hero Cycles (supra observing as under:- 4.3 I have considered the facts of the case, the reasons given by the assessing officer and the submissions of the AR. From the records it is seen that as on 31-03- 2006, the total share capital and reserves and surplus as on 31-03-2006 was Rs.3,87,80,417/- and unsecured loan of Rs.47,82,24,831/-. Assessee company was having investments in the form of quoted and unquoted equity shares to the tune of Rs.25,99,54,080/-. Assessee has borrowed interest bearing loan f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished the nexus between the interest expenditure and interest income the disallowance u/s.14A is not warranted. Accordingly the assessing officer is directed to delete the disallowance made u/s.14A r.w. Rule 8D. 6. However, we find that the Hon'ble jurisdictional High Court in the case of M/s. Simpson Co. Ltd., held that in the absence of any materials regarding incurring of expenditure, the Tribunal was justified in confirming the order of the Commissioner of Income Tax (Appeals) that deduction of 2% managerial expenses had to be made while calculating the deduction under section 14A of the Act. Following the said decision, we direct the Assessing Officer to restrict the deduction to 2% of the dividend income earned by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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