TMI Blog2015 (4) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and in the light of the decision of Joint Investments Pvt Ltd Versus CIT [2015 (3) TMI 155 - DELHI HIGH COURT] and in view of the fact that the disallowance worked out by A.O u/s. 14A is more than the exempt income and considering the alternate submission of ld. A.R. to make a reasonable disallowance u/s. 14A as deemed fit, we are of the view that disallowance of ₹ 5,000/- if made in the present case will meet the ends of justice. - Decided partly in favour of assessee. - I.T. A. No. 245 /AHD/2013 - - - Dated:- 27-3-2015 - Shri Anil Chaturvedi And Shri Kul Bharat JJ. For the Appellant : Smt. Urvashi Sodhan, A.R. For the Respondent : Shri Roop Chand, Sr. D.R. ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal filed by the Assessee is against the order of CIT(A)-VI, Ahmedabad dated 10.12.2012 for A.Y. 2008-09. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in the business of trading of Ready Cotton Bales and Investment. Assessee filed its return of income for A.Y. 08-09 on 23.09.2008 declaring total income of ₹ 94,51,250/-. The case was selected for scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that fact that appellant was in the same line of business from several years. Against claim of such loss, only copy of account of the party was submitted. No other evidence in the form of specific reasons for shortages or correspondences proving shortages in transit was filed. In the' absence of any material, such abnormal claim made for the first time, cannot be allowed as genuine business expense. The decisions relied upon by the appellant are on the issue of levy of penalty and hence not applicable to the facts of the case. Accordingly the disallowance made by the AO is confirmed. As seen from para-2 of the assessment order, no explanation was given on the issue. Following the order of my predecessor, impugned disallowance of ₹ 3,42,128/- is upheld. These grounds of appeal are dismissed. 5. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 6. Before us, at the outset ld. A.R. submitted that identical issue arose in Assessee s case in A.Y. 07-08 when the matter was carried by Assessee before Hon ble ITAT. Hon ble Tribunal decided the issue in Assessee s appeal bearing no. ITA NO. 1008/AHD/2011 order dated 04.04.2014. She also placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parties. The ld.counsel for the assessee submitted that merely because the assessee has claimed this kind of expenditure for the first time and it cannot be the sole ground for making disallowance. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO as well as the Id.CIT(A) has disallowed the expenditure on the basis that in earlier year the assessee has not claimed such kind of expenditure. In our considered view, since the assessee has placed on record the debit notes raised by various parties to whom the material was supplied, therefore the authorities below were not justified in disallowing the expenses claimed by the assessee. We therefore direct the AO to delete this addition. Accordingly, ground raised by the assessee is allowed. 8. Before us, Revenue has not brought on record any material to demonstrate as to how the decision of Hon ble Tribunal for A.Y. 07-08 in Assessee s own case would not be applicable to the facts of the case for the year under appeal more so when ld. CIT(A) himself has noted that identical issue arose in A.Y. 07-08 and had followed the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, disallowance of interest and other expenses relatable to exempt income are to be made. The formula given in rule 8D computes the disallowable interest by spreading interest paid to the total asset and therefore it is quite reasonable and disallows interest only at the average cost of borrowing by the company including all the funds. Similarly the disallowance of other expenses is just ₹ 5137 which is quite reasonable. Accordingly the disallowance made by the assessing Office is confirmed. As seen from para-3 of the assessment order, no explanation was given on the issue. Following the order of my predecessor, impugned disallowance of ₹ 1,02,077/- is upheld. These grounds of appeal are dismissed. 10. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 11. Before us, ld. A.R. reiterated the submissions made before ld. CIT(A). She further submitted that no new investments were made during the year and the investments were made in earlier years from the free funds available. She further submitted that though the provisions of Rule 8D are applicable to the year under consideration but the interest free funds are far in excess of the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.R that disallowance u/s. 14A cannot be more than tax free income. On the other hand, while dictating the order, we have come across the decision of Hon ble Delhi High court in the case of Joint Investment Pvt. Ltd. vs. CIT ITA No. 117 of 2015 decided on 25.02.2015 wherein the Hon ble High Court has held as under:- 9. In the present case, the AO has not firstly disclosed why the appellant/assessee's claim for attributing ₹ 2,97,440/- as a disallowance under Section 14A had to be rejected. Taikisha says that the jurisdiction to proceed further and determine amounts is derived after examination of the accounts and rejection if any of the assessee's claim or explanation. The second aspect is there appears to have been no scrutiny of the accounts by the AO - an aspect which is completely unnoticed by the CIT(A) and the IT AT. The third, and in the opinion of this court, important anomaly which we cannot be unmindful is that whereas the entire tax exempt income is ₹ 48,90,000/-, the disallowance ultimately directed works out to nearly 110% of that sum, i.e., ₹ 52,56,197/-. By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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