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TMI Blog2016 (2) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has raised two grounds i.e (i) disallowance u/s.14A of the Act and (ii) disallowance of setting off of loss u/sec.10AA of the Act. 3. The Brief facts of the case are that the assessee company is engaged in the business of manufacturing of cold forged auto parts and filed return of income on 23.09.2008 declaring total income of ;6,08,73,560/- after claiming deduction u/s.10B of the Act. The Return was processed u/s.143(1) of the Act and was selected for scrutiny and notice u/s.143(2) was issued. In compliance to the notice the ld.AR of the assessee appeared from time to time and filed details. Further, the ld. Authorised Representative also furnished details of international transaction entered with the Associated Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relied on the decisions of Supreme Court in the case of Rajasthan State Warehousing Corporation vs. CIT (242 ITR 450) and Punjab and Haryana High Court in the case of CIT vs. Hero Cycles Ltd (323 ITR 518) and submitted that no expenditure is incurred for earning above exempt income were no disallowance of expenditure was worked out. Further, Rule 8D has come into effect from 24.03.2008 for the assessment year 2008-2009 and relied on decisions and applicability of law. But, the Assessing Officer has calculated disallowance u/s.14A under Rule 8D relying on judicial decisions and attributed expenditure under Rule 8D ;46,82,087/- and added to the returned income. The Assessing Officer also further not allowed the set off of loss of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order of the Assessing Officer. Aggrieved by the order of the CIT(A) the assessee has filed an appeal before the Tribunal. 5. Before us, the ld. Authorised Representative reiterated his submissions made in assessment proceedings and in the appellate proceedings. In respect of dividend income the ld. Authorised Representative demonstrated that the company has made investments in shares and mutual funds out of surplus funds available and no part of borrowed funds have been utilized for the purpose of investment and during the financial year 2007-2008. The assessee company has received an amount of ;1,64,06,932/- as dividend income and further exhibited that there is no expenditure incurred in earning such dividend income. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative explained that the assessee is having two separate units and as per the provisions of Secs.70 and 71 set off of loss from one source against the income from any other source under same head of income is allowed except capital loss and relied on CBDT circular No.07/2013. We after analyzing the provisions of set off and Sec.10A, the assessee company loss from the SEZ unit has to carried forward and set off against profit of eligible units only. We draw support from the decision of Delhi High Court in the case of CIT vs. KEI Industries Ltd 373 ITR 575, wherein it was held that loss suffered by the assessee in a unit entitled for exemption cannot be set off against income from any other unit not eligible for such exemption. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X
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