TMI Blog2015 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... bad ( CIT(A) in short) dated 21/06/2011 pertaining to Assessment Year (AY) 2008-09. The Assessee has raised the following grounds of appeal (Without prejudice to each other):- 1. On the facts and in the circumstances of the case, the Departmental authorities have erred in considering it a case fit for any disallowance whatsoever in pursuance of section 14A. 2. Without prejudice, on the facts and in the circumstances of the case, the Departmental authorities have erred in upholding the aforesaid disallowance u/s.14A in a sum of ₹ 14,05,012/-. 3. The appellant craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 10/12/2010, thereby the Assessing Officer (AO in short) made disallowance by invoking the provisions of section 14A of the Act read with Rules-8D of the I.T.Rules, 1962 amounting to ₹ 1,04,63,924/-. Against this, the assessee filed an appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that in accounting as well as in law, netting of interest is required to be done and once netting of interest is done, there being net interest surplus of ₹ 42,85,846 no disallowance u/s. 14A can be made. For this proposition, the assessee relies upon the Coordinated Bench Decision dated 29-11-2013 in the case of Safal Realities Pvt. Ltd. in ITA Nos. 2334/A/2012 and 1842/A/2013 for A.Ys. 2009-10 and 2010-11 which is compiled on pages 50 and 59 of the paper book. On page 58, there is a specific finding of the Hon'ble Bench in para 5.3 as under:- 5.3 Under the totality of facts and circumstances of the case, we are of the considered opinion that when the interest income was more than the interest expenditure, then the A. 0. was not justified to invoke the provision of section 14A r.w.r. 3D of the I. T. Act. We hereby reverse the finding of the authorities below and direct to delete the disallowance. It is submitted that the above referred decision in the case of Safal Realities Pvt. Ltd. [supra] is for the A.Ys. 2009-10 and 2010-11, when Rule 8D of the I. T. Act for making disallowance u/s. 14A was on the statute and applicable for making such disallowance. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able Properties 11,37,240 11,37,240 iii) In shares of SGV Infrastructure Pvt Ltd 30,00,000 - TOTAL 23,10,84,572 10,19,89,607 Average investment 16,65,37,089 After considering assessee's contentions, the Ld. CIT(A) has given his findings on pages 15 and 16 of his appellate order to the effect as under:- appreciate the argument of the Ld. AR that interest earned from investments in firm Gokuldham Developers is taxes as business income and hence investment to that extent cannot be held to be earning exempt income. Accordingly, there should not be any disallowance with reference to this investment u/s. 14A. This view is totally supported by the decisions cited by the appellant. Further, from investment in house property, rental income is shown and hence, for that investment also, there should not be any disallowance of expenses u/s. 14A. 5. In the Statement of Facts cum Synopsis on pages 9 and 10 in para 14, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 Total investments to be considered for section 14A ₹ 3,44,99,076 As against this, there are interest free funds available with the assessee as under:- 1. Share capital ₹ 3,02,76,000 2 Reserves and surplus ₹ 8,47,84,324 Total interest free funds available ₹ 11,50,60,324 Thus, from the above, your Honours will appreciate that there are sufficient interest free funds of ₹ 11,50,60,324 available, as against the investments of ₹ 3,44,99,076. On this ground also, no interest disallowance u/s. 14A can be made. Kindly refer pages 8 to 12 of CIT(A)'s order wherein assessee's arguments on the above issue have been reproduced by the Ld. CIT(A), 7. Regarding disallowance of administrative expenses u/s. 14A of ₹ 1,33,745 being 0.5% of ₹ 2,67,49,109 being average investment is based on formula adopted in Rule 8D. As A.O. has not established any nexus of the expenditure incurred wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
