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2015 (12) TMI 1021 - ITAT BANGALORE

2015 (12) TMI 1021 - ITAT BANGALORE - TMI - Disallowance made u/s 14A r.w. Rule 8D(2)(ii) - CIT(A) had directed the AO to re-compute disallowance - Held that:- A look at the balance sheet of the assesee placed show that its share capital of ₹ 21,19,01,000/- and reserves and surplus of ₹ 17,81,28,688/- totaling to ₹ 39,00,29,688/-. Its investments as on 31-03-2011 were only ₹ 13,01,27,472/-. Obviously, assessee had more than enough own funds with it for justifying the inve .....

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were used for the purpose of placing investments resulting in tax free income were also furnished by the assessee and this totalled only to ₹ 18,90,931/-. The CIT(A) directed the AO to confine the disallowance under Rule 8D(2)(ii) of the IT Act, 1961 to such amount which is justified - Decided against revenue - ITA No. 525(B)/2015 - Dated:- 30-10-2015 - Asha Vijayaraghavan, JM And Abraham P. George, AM For the Appellant : Dr P K Srihari, Addl. CIT For the Respondent : Shri Gururaj Acharya, .....

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sessment proceedings, it was noted by the AO that assessee had earned dividend income of ₹ 3,90,135/- which was claimed as exempt. As per the AO, the assessee had only offered ₹ 56,55,867/- as expenses relating to exempt income. In the opinion of the AO, assessee had not admitted any amount for indirect expenditure attributable to the earning of the tax free income. Relying on Rule 8D(2), AO concluded that disallowance under clauses-(ii) (iii) were also required in addition to the su .....

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2/2)=(½ % of 101308189) ₹ 5,06,541 Disallowance as per Rule 8D Rs.1,27,36,398 An addition for the difference was made. 3. Aggrieved, assessee moved in appeal before the CIT(A). Argument of the assessee was that the similar disallowances were made by the AO in assessment years 2009-10 and 2010-11 also. As per the assessee on its appeal for these years, the CIT(A) had deleted such disallowance. Assessee also stated that the AO had erroneously reckoned interest expenditure of ₹ 1 .....

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isallowance under Rule 8D(2)(ii) of the IT Act. 5. Now before us, learned DR strongly assailing the order of the CIT(A) submitted that the assessee could not produce any evidence for having used the loans raised by it for its business. As per the learned DR the sum of ₹ 18,90,931/- was only the net of out flow of interest. Learned AR submitted that Rule 8D(2)(ii) of the Act, had to be applied, as such irrespective of the actual utilization of loans on which interest was paid. 6. Per contra .....

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arning the exempt income. Reliance was also placed on the balance sheet as on 31-03-2011 placed at paper book opage-17. 7. We have perused the orders and heard the rival contentions. A look at the balance sheet of the assesee placed at paper book at page-17 show that its share capital of ₹ 21,19,01,000/- and reserves and surplus of ₹ 17,81,28,688/- totaling to ₹ 39,00,29,688/-. Its investments as on 31-03-2011 were only ₹ 13,01,27,472/-. Obviously, assessee had more than .....

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ose of its business. The break-up of such loans were also furnished by the assessee as under at paper book page-9. Interest ING Term loan ₹ 81,51,938 Interest on Kotak Term loan ₹ 79,49,587 Interest on Benz Car loan ₹ 1,09,484 Interest others ₹ 9,04,851 Interest SBI FCNB loan ₹ 53,38,956 Interest on SBI OCC A/c ₹ 5,09,57,984 Interest on HDFC Bank Trade Adv. ₹ 1,21,97,267 Interest on ICICI Bank Trade Adv. ₹ 98,92,429 Interest on Kotak Mahindra Prime .....

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own case had held as under; "7. We have perused the orders and heard the rival contentions. Assessee had share capital and reserves totaling to ₹ 337.287.692 and ₹ 355,450,356 as on 31-03- 2009 and 31-03-2010 respectively, as seen from the audited balance sheet placed at PB page-20 . As against this, its investment in listed shares were ₹ 13,877,323 and ₹ 48,740.155 as per schedule-F to its final accounts placed at PB page-22. Incremental investment were only 1.52 C .....

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