TMI Blog2014 (6) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A r.w. Rule 8D of the Act – Held that:- Rule 8D cannot be held to be applicable as the same would apply only from AY 2008-09 - The issue of disallowance is only with regard to administrative expenses - rule 8D is not applicable, the formula prescribed under the rule shall also not apply - There has to be some reasonable basis for allocating administrative expenses after looking at the nature of expenses and also the expenses which can be said to be attributable for making the investment which are capable of yielding exempt income – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Deletion of interest income – Income from margin deposits, ICDs on Employees loan treated as income from oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29.01.10 passed by ld. CIT(A)-9, Mumbai for the quantum of assessment passed under section 41(3)(3) for the assessment year 2007-08. The assessee in its grounds of appeal has raised following grounds:- 1. The CIT(A) erred in confirming the addition for the provision for Income Tax recoverable from Gujarat Urja Vidyut Nigam Limited (GUVNL) and Essar Steel Ltd. amounting to Rs.3.18 Crores while computing income under the normal provisions of the Act. 2. The CIT(A) erred in confirming the disallowance of % of the Average value of investment amounting to Rs.3,05,88,538/- as per Rule 8D r.w.s. 14A of the Income Tax Act. 2. The brief facts are that the assessee is in the business of generation and distribution of power. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in the hands of the assessee and therefore the said amount is to be included in the income of the assessee. This order of the Tribunal has been consistently followed in the subsequent years also. Accordingly, following the judicial precedents, we also confirm the said addition and hence the ground No.1 raised by the assessee stands dismissed. 6. In the ground No.2, the assessee has challenged the disallowance under section 14A read with rule 8D. Before us, the ld. counsel submitted that the Assessing Officer as well as the ld. CIT(A) have applied rule 8D while making the disallowance even though, in view of the decision of the Hon ble Bombay High Court in the case of Godrej Boyce Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance made by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to work out some reasonable basis for the purpose of disallowance, if at all, looking at the nature of accounts and expenses incurred by the assessee under the head Administrative Expenses . 9. In the result, ground No.2 is treated as allowed for statistical purposes. 10 In the additional ground, the assessee has raised the similar disallowance under section 14A read with rule 8D which has been added back to the computation of book profit under section 115JB. Since the issue of disallowance under section 14A has been set aside to the file of the Assessing Officer, therefore this ground is also remitted back to the file of the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of power business activity and has to be assessed as business income. The ld. CIT(A), following the earlier year order of his predecessors, though, held that such an interest income is to be treated as business income, however, the assessee is entitled to deduction under section 80IA on account of interest expenses on pro-rata basis only while computing interest income. Accordingly, he held that interest income of the assessee from these sources is no doubt business income, however, no deduction shall be allowed under section 80IA. 15. Thus, the only issue arising for our adjudication is, whether interest income is business income or not. The issue of claim of deduction under section 80IA, qua this interest income is not sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y following the above order, decline to interfere with the order passed by the ld. CIT(A) on this account and accordingly the ground taken by the Revenue is rejected. 15.1 This order has been consistently followed in subsequent years also. Thus, respectfully following the same, we decline to interfere with the order of the ld. CIT(A) and accordingly ground No.1 raised by the department stands dismissed. 16. In ground No.2, the department has challenged the deletion of addition of Rs.3,18,00,000/- made on account of provision for income tax recoverable from the purchaser of the power while computing the book profit on the ground that it was unascertained liability and is covered under clause (e) of explanation to section 115JB. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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