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TMI Blog2015 (11) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the Learned CIT(Appeals) has erred in confirming the disallowance of Rs. 1,18,675 out of the interest expenses incurred on borrowed funds pertaining to higher purchase of car. 4. That the Learned CIT(Appeals) has further erred in confirming the disallowance of Rs. 2,97,684 made by A.O. invoking the provisions of sec. 14A read with Rule 8D. 5. The Learned CIT(Appeals) has further failed to appreciate that assessee has invested in tax saving bonds in the form of one time investment and has not maintain any managerial staff or other office staff for managing the investment so made. 6. The Learned CIT(Appeals) has further failed to appreciate that for invoking the provisions of Rule 8D with sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 6 of the appeal. The application for allowing the additional ground is accordingly rejected. 5. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 6. The facts in brief are that assessee, a senior advocate, had shown income under the heads "income from profession" and "income from other sources". The assessee had shown income from house property at Rs. 4,78,460 and had debited interest expenses of Rs. 1,18,675 on account of secure loan taken for the vehicle. The Assessing Officer asked the assessee to justify the claimed expenses in view of the fact that the assessee had made interest free advance of Rs. 8.89 crores. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had advanced only Rs. 8,89,40,627. The Learned AR cited following decisions in support of his above contention: i) CIT vs. Bharti Televenture Ltd. - 51 DTR 98 (Delhi); ii) Amway India Enterprise Vs. ITO - 331 ITR 502. 11. The Learned Senior DR on the other hand tried to justify the orders of the authorities below on the issue. He contended that assessee had not explained what was the necessity to take the loan for purchasing of the car when the assessee was having sufficient funds available. Thus, taking of the loan was not commercial expediency. 12. Considering the above submission, we are of the view that it is now a well established proposition of law that when assessee was having an adequate non-interest bearing fund, disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited decision of Hon'ble Madhya Pradesh High Court in the case of Mahavir Prasad Jain reported in 172 ITR 231. The Learned AR submitted further that it is also a settled position of law that there would be no estoppels against the statute and if an income is not taxable under the four corners of income-tax law, the same cannot be made taxable because of the mistake of the assessee. In support, he cited the judgment of Hon'ble Supreme Court in the case of CIT vs. V.MR.P.FIR - reported in 56 ITR 67 (S.C) wherein the Hon'ble Supreme Court has been pleased to record their observation that the doctrine of "approbate & reprobate" is only a species of estoppels, it applies only to the conduct of parties. As in the case of estoppels, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.69 lacs as dividend income. He submitted that the dividend income was shown as net income after deducting the expenditure incurred on it by the profile manager of the assessee i.e. Societe Generale (Corporate & Investment Banking). Thus, when assessee himself had disallowed expenses on account of personal use then there was no question of making further disallowance under sec. 14A of the Act read with Rule 8D of the I.T. Rules without recording his satisfaction by the Assessing Officer vis-à-vis the correctness of the account of the assessee. He submitted that books of account of the assessee are admittedly audited. The Learned AR placed reliance on the following decision: i) Wallfort Shares - 310 ITR 421 (S.C); ii) Sesa Goa Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn by the assessee for earning the dividend income was not satisfactory before invoking the provisions of section 14A of the Income-tax Act, 1961 read with Rule 8D of the I.T. Rules to make disallowance there under. In absence of the compliance of such mandatory requirement, the Assessing Officer was not justified in making the disallowance of Rs. 2,97,684 under sec. 14A of the Act read with Rule 8D of the I.T. Rules. We, thus while setting aside orders of the authorities below in this regard direct the Assessing Officer to delete the addition of Rs. 2,97,684 made by way of disallowance under the above stated provisions. The ground Nos. 4 to 6 are thus allowed. 20. In result, the appeal is allowed. Order pronounced in the open court on 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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