TMI Blog2015 (11) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... account of interest under section 14A while deciding Ground No. 1 involved in this appeal of the assessee. Consequently this ground is treated as allowed. - Decided in favour of assessee MAT credit against tax before levy of surcharge and education cess - Held that:- Assessee’s appeal is squarely covered against the assessee by the decision of the Hon’ble Supreme Court in the case of CIT -vs. - Tulsyan NEC Limited ( 2010 (12) TMI 23 - Supreme Court of India ), and respectfully following the same, we uphold the impugned order of the ld. CIT(Appeals) holding that MAT credit has to be allowed after calculation of tax plus surcharge and education cess - Decided against assessee - I.T.A. No. 171/KOL/ 2012 - - - Dated:- 20-11-2015 - Shri P.M. Jagtap, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member Shri R.N. Bajoria, Sr. Advocate, for the Appellant Shri Kalyan Nath, JCIT, for the Respondent ORDER Per Shri P.M. Jagtap:- This appeal is preferred by the assessee against the order of ld. Commissioner of Income Tax (Appeals)-VI, Kolkata dated 24.11.2011 for the assessment year 2008-09. 2. The issue involved in Ground No. 1 relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income as computed by the AO in the assessment order is ₹ 53.35 crores. The total investments held by the appellant on the opening date were ₹ 70.61 crores. The appellant has invested ₹ 1.18 crores during the year. The opening investment of ₹ 70.61 crores was made by the appellant in several earlier years out of its own funds and not out of any borrowings. The appellant filed evidence before the AO in support of its contention that no part of the interest paid during the year on the borrowings related to investment made during the year. In the income-tax assessments of the appellant for earlier years (assessment years 2006-07 and 2007-08), the AO himself has accepted similar contention of the appellant that interest expenses paid on borrowings for business should not be allocated against exempt dividend income. There is no change in the facts of the case during the year . 5. The ld. CIT(Appeals) did not find merit in the submissions made by the asseessee and rejected the same for the following reasons given in paragraphs no. 5, 6 7 of his impugned order:- 5. I have carefully considered the observations of the Assessing Officer and submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation is provided at fixed rate irrespective of the year of purchase. Therefore, the business loss as per income tax is real loss to look into the capital of the assessee and to compute income of the assessee or real assets value as per Income Tax Act, 1961.The assessee has relied upon various case laws but the case laws cited by the assessee are prior to assessment year 2008-09 and Rule 8D of I.T. Rules 1962 has become applicable from AY. 2008-09. 7. There is no presumption provided in the Act that if the assessee has interest free loans and interest bearing loans and is earning exempt and taxable income then it should be presumed that the exempt income is out of the this own funds. Rule 8D(2)(b) of I.T. Rules 1962 Provides any expenditure by way of interest which is not directly attributable to any particular income or receipt then the interest has to be calculated as per formula provided therein. Now, the law has provided a specific method of calculation of interest expenditure on exempted income from AY. 2008-09 and it is applicable directly in the case of the assessee. In this case, it can not be said that the loans have been taken for specific purposes and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no fresh investment made in the purchase of shares during the year under consideration, there is no case to make disallowance on account of interest under section 14A in view of the finding already recorded by the Assessing Officer in the assessments completed for the earlier years, i.e. A.Ys. 2006-07 and 2007- 08 that interest bearing borrowed funds were not utilized by the assessee for making investment in shares. He also invited our attention to the written submissions filed before the Assessing Officer as well as before the ld. CIT(Appeals) to point out that it was specifically contended on behalf of the assessee before the authorities below that the investment in shares was made entirely out of its own funds and the borrowed funds were fully utilized for the purpose of business and not for making any investment in shares. 8. The second contention raised by the ld. Counsel for the assessee was that the disallowance of ₹ 36,51,843/ was offered by the assessee under section 14A on account of expenses incurred in relation to the exempt income as worked out by applying Rule 8D and the disallowance as worked out by the assessee was not accepted by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration and there being no fresh investment made by the assessee in shares, it follows that investment in shares is entirely made by the assessee out of its own funds and there was no utilization of borrowed funds for making such investment as found by the Assessing Officer himself while completing the assessments for the earlier years. In this regard, ld. D.R. has contended that Rule 8D having been made applicable for the year under consideration for the first time, the issue has to be looked into from different angle and the view taken by the Assessing Officer in the earlier years has no relevance. We are unable to accept this contention of the ld. D.R. Once it is found that the investment in shares is made by the assessee out of its own funds and there is no utilization of borrowed funds for making such investment, we are of the view that no disallowance on account of interest under section 14A can be made even by applying Rule 8D as the said Rule 8D will have application only in such cases where there is any nexus between the interest bearing borrowed funds and investment made in shares. Even a perusal of the balance-sheet of the assessee-company as on 31.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue raised in Ground No. 2 relating to the addition to be made on account of disallowance made towards interest under section 14A while computing book profits of the assessee-Company under section 115JB of the Act, we find that this issue no more survives for consideration independently on merit as a result of deletion by us of the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of interest under section 14A while deciding Ground No. 1 involved in this appeal of the assessee. Consequently this ground is treated as allowed. 13. As regards the issue involved in Ground No. 3 relating to the assessee s claim for allowing MAT credit against tax before levy of surcharge and education cess, the ld. Counsel for the assessee at the time of hearing before us has relied, inter alia, on the decision of the Hon ble Allahabad High Court in the case of CIT -vs.- Vacment India reported in 369 ITR 304, wherein it was held by relying on the entries made in relevant form ITR-6 providing the method of computation of tax liability that the tax payable is to be arrived at after deducting credit on account of minimum alternate tax from gross tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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