TMI Blog2014 (7) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... unds raised before us. This is not so, as, firstly, the identification of interest allowable, or not so, u/s. 57(iii) is necessarily required to identify and quantify the interest subject to the disallowance u/s.14A. The said section is in fact a complete code in itself, widening the scope of apportionment, as explained in the case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Reference in this context may also be made to the decision in the case of Kapurchand Shrimal v. CIT [1981 (8) TMI 2 - SUPREME Court] - Decided in favour of assessee. - I.T.A. Nos. 6479/Mum/2011 & 5446/Mum/2012 - - - Dated:- 31-7-2014 - Shri Sanjay Arora, AM AND Dr. S. T. M. Pavalan, JM,JJ. For the Appellant : Mrs. Aarti Visanji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment u/r. 8D(2); c) interest on borrowed capital invested in assets which could yield taxable income, would stand to be allowed u/s.57(iii), even if no income has actually arisen there-from to the assessee for the year/s - made with reference to the decision in the case of CIT vs. Rajendra Prasad Moody [1978] 115 ITR 519 (SC); and d) the disallowance u/s.14A r/w r. 8D(2)(iii) be restricted it to the amount actually incurred, being at ₹ 95,091/- and ₹ 1,13,440/- for the two consecutive years, i.e., much below the disallowance, as effected and confirmed, for the relevant years. 4. We have heard the parties, and perused the material on record. 4.1 The argument made before us, being with reference to the balance-sheets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts is on the assessee. c) On the basis of the foregoing, the following are to be determined: i. interest (direct) admissible u/s.57(iii); ii. interest (direct) inadmissible u/s.57(iii); iii. interest (direct) inadmissible u/s.14A read with rule 8D(2)(i); and iv. interest (indirect) inadmissible u/s.14A read with rule 8D(2)(ii). It is clear that the proportionate formula shall apply only in relation to the balance interest, not falling under categories (i) to (iii). Needless to add that in-so-far as the assets whose financing (and to the extent it is) is confirmed, would stand excluded from both - the average investment and the total assets, in computing the interest attributable under rule 8D(2)(ii). Again, we may emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eckoned w.r.t. r. 8D (2)(iii) cannot exceed the actual expenditure incurred and claimed by the assessee per its return of income. 4.3 Toward the foregoing, we may also advert to the decision in the case of Rajendra Prasad Moody (supra) and Cheminvest Ltd. v. ITO [2009] 121 ITD 318 (Del-SB). The disallowance, it may be appreciated, is of the expenditure incurred, and which may not have any direct bearing on the income arising. Further, where and to the extent the A.O. is not in agreement with the assessee s claims - for which though we do not see any reason in-as-much as the financial position, properly analyzed, should be able to identify the financing of each asset, either directly with reference to a source of funds, or from the common ..... X X X X Extracts X X X X X X X X Extracts X X X X
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