TMI Blog2013 (9) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... er) For the Petitioner : Pramod Shingte For the Respondent: Y. K. Bhaskar ORDER R. S. Padvekar (Judicial Member) In this appeal the assessee has challenged the impugned order of the Ld.CIT(A)-V, Pune dated 13-04-2012 for the A.Y. 2008-09. 2. The assessee has taken the following effective ground : On the facts and in the circumstances of the case and in law, the lower authorities erred in invoking the provisions of section 14A(2) of the Income Tax Act 1961 and thereby applying rule 8D of the Income Tax Rules, 1961, by rejecting the appellants contention that appellant was in position of sufficient without interest bearing funds and assessing officer has failed to establish any nexus between exempt income and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m) and CIT Vs. Hero Cycles Ltd. 323 ITR 518 (P H). 5. The AO was not impressed with the explanation of the assessee and he made disallowance out of the interest expenditure claimed by the assessee which worked out at ₹ 21,55,531/- as per the working given on Page 4 of the assessment order. As noted by the AO w.e.f.01-04-2007 section 14A(2) is applicable. It authorises the AO to determine the amount of expenditure in relation to the income which is not forming part of the total income. The AO also referred to Rule 8D of the I.T. Rules, 1962. The assessee carried the issue before the Ld.CIT(A) but without success as the addition made by the AO by making the disallowance out of expenditure claimed by the assessee was confirmed. Now th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no categorical finding of the AO that the assessee utilised the interest bearing fund for making the investment in the mutual funds. We further find that AO has applied section 14A(2) but section 14A(2) only vests powers in the AO for quantification of the expenditure for making the disallowance but at the same time section 14A(2) does not override section 14A(1) of the Income Tax Act. 6.4 In the case of Hero Cycles Ltd. (Supra) the Hon'ble High Court of Punjab and Haryana has observed that disallowance u/s.14A required finding of incurring of expenditure for earning exempted income, and without said finding no expenditure can be disallowed u/s.14A of the Act. The Hon'ble High Court considered section 14A(2) and Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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