TMI Blog2015 (10) TMI 1862X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet under the head ‘Applications of Fund’ is after reduction of the shown of ₹ 75,49,010. Therefore, expenditure disallowed under 14A read with Rule 8D which cannot be capitalized must be reduced by that amount. In the aforesaid facts and circumstances, we modify the order of the learned CIT(A) by directing the Assessing Officer to requantify the amount to be disallowed by taking into consideration income shown by the assessee of ₹ 75,49,010. The assessee’s appeal is accordingly allowed to that extent - Decided partly in favour of assessee. - ITA No.1573/Hyd/2014 - - - Dated:- 19-6-2015 - SHRI B. RAMAKOTAIAH AND SHRI SAKTIJIT DEY, JJ. For The Appellant : Shri A.Siva Kumar For The Respondent : Smt. Amisha S.Gupt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer from the information available on record that the assessee has received an amount of ₹ 1,96,54,978 as income during the relevant previous year, which has been claimed as exempt from tax. The Assessing Officer observed that as per the provisions of S.14A read with Rule 8D of the Income-tax Act and Rules, expenditure incurred for earning such exempt income is required to be disallowed. Accordingly, in terms of Rule 8D of the Income-tax Rules, the Assessing Officer disallowed an amount of ₹ 2,41,59,811 and added it back to the income of the assessee for the year under consideration. 4. Being aggrieved of such disallowance, assessee preferred appeal before the learned CIT(A). In the course of hearing of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by the above order of the learned CIT(A), assessee is in second appeal before us. 5. The learned Authorised Representative submitted before us that the assessee has neither claimed any expenditure the year nor has capitalized the interest expenditure. It was submitted that on the other hand, the assessee has reduced an amount of ₹ 74,95,703 being interest earned on fixed deposits as well as an amount of ₹ 53,304 being short term capital gains on sale of mutual fund units, while showing the expenditure in the Balance Sheet. Thus it was submitted that since the actual interest amount considered for capitalizing in future is not ₹ 2,41,51,811, the direction of the learned CIT(A) not to capitalize the said amount is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to capitalize the amount of ₹ 2,41,51,811 in future and also will not be eligible for depreciation on such amount. In our view, once the expenditure claimed is disallowed, the same cannot be capitalized by the assessee. Therefore, we do not see any serious infirmity in the irections of learned CIT(A) in this regard. However, it is seen from the record that the expenditure shown by the assessee in the balance sheet under the head Applications of Fund is after reduction of the shown of ₹ 75,49,010. Therefore, expenditure disallowed under 14A read with Rule 8D which cannot be capitalized must be reduced by that amount. In the aforesaid facts and circumstances, we modify the order of the learned CIT(A) by directing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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