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2016 (2) TMI 236 - ITAT CHENNAI

2016 (2) TMI 236 - ITAT CHENNAI - TMI - Disallowance u/s. 14A - Held that:- The assessee company has made investment from earlier years and received dividend income every year and demonstrated that funds utilized for investments are surplus funds or interest free funds. The assessee earned exempt income ;1,64,06,932/-. Since Rule 8D provisions was introduced with effect from 24.03.2008, which was prospective in operation and cannot be regarded as being retrospective as held by Delhi High Court i .....

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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 [2015 (3) TMI 618 - DELHI HIGH COURT], wherein it was h .....

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UMAR, JUDICIAL MEMBER For The Appellant : Shri. G. Baskar, Advocate For The Respondent : Shri. V. Vivekanandan, IRS, CIT. ORDER PER G. PAVAN KUMAR, JUDICIAL MEMBER: This appeal filed by the assessee is directed against order of Commissioner of Income-tax (Appeals)-VI, Chennai in ITA No.1270/13-14/A-VI, Dated 21.02.2014 for the assessment year 2008- 2009 passed u/s.143(3) r.w.s.92CA(4) and 250 of the Income Tax Act, 1961. 2. The assessee has raised two grounds i.e (i) disallowance u/s.14A of the .....

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red from time to time and filed details. Further, the ld. Authorised Representative also furnished details of international transaction entered with the Associated Enterprises alongwith Accountant report u/s.92E in form No.3CEB. The Assessing Officer for the purpose of computing the Arms Length Price referred the case to Transfer Pricing Officer with necessary approval from the Commissioner of Income Tax and subsequently, Transfer Pricing Officer vide order dated 23.08.2011 has submitted the sam .....

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and claimed exempted. The ld. Authorised Representative submitted that the assessee company has made investments in shares and mutual funds ;47,31,60,062/- and earned dividend income and explained that assessee has not incurred any expenditure for earning exempted income. On perusal of the Balance sheet and profit statement, the assessee has secured loan and has been paying interest of ;53,94,901/- apart from administrative overheads. Under the provisions of Sec.14A of the Act, the assessee has .....

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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 assessee company. The assessee company SEZ unit is eligible for deduction u/s.10 .....

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oss of SEZ unit assessed total income of ;19,98,99,336/- and raised demand. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 4. The ld. Commissioner of Income Tax (Appeals) has upheld the findings of the Assessing Officer on Sec.14A, disallowance and applied the judicial decisions for disallowing expenses u/s.14A under Rule 8D of the Income Tax Rules based on the decision of Supreme Court in the case of Wallfort Sh .....

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(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 asses .....

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Tax (Appeals) and contested the issues. 7. We heard the rival submissions of both the parties, perused the material on record and also judicial decisions cited. The assessee company has made investment from earlier years and received dividend income every year and demonstrated that funds utilized for investments are surplus funds or interest free funds. The assessee earned exempt income ;1,64,06,932/-. Since Rule 8D provisions was introduced with effect from 24.03.2008, which was prospective in .....

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