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2016 (3) TMI 1101 - ITAT KOLKATA

2016 (3) TMI 1101 - ITAT KOLKATA - tmi - Disallowance under section 14A r.w.r 8D - Held that:- In the absence of requisite satisfaction recorded by the Assessing Officer showing how the disallowance offered by the assessee under section 14A was not correct having regard to its books of account, it was not permissible to the Assessing Officer in law to invoke section 14A and make a further disallowance. We, therefore, uphold the impugned order of the ld. CIT(Appeals) deleting such disallowance ma .....

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ld. Commissioner of Income Tax (Appeals)-IV, Kolkata dated 28.02.2013 and the same is being disposed of along with Cross Objection filed by the assessee being C.O. No. 88/KOL/2013. 2. The solitary issue involved in the appeal of the Revenue relates to the deletion by the ld. CIT(Appeals) of the addition of ₹ 57.68 lakhs made by the Assessing Officer under section 14A of the Act read with Rule 8D of the Income Tax Rules. 3. The assessee in the present case is a Non-Banking Finance Company. .....

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d out the disallowance to be made under section 14A at ₹ 91,28,456/-. Since the total expenditure incurred by the assessee was only ₹ 63,44,119/-, the Assessing Officer finally made a disallowance to that extent thereby making addition of ₹ 57.68 lakhs. 4. The addition made by the Assessing Officer by way of a further disallowance made under section 14A was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by t .....

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akhs. The assessee himself disallowed ₹ 5.76 lacs u/s 14A while submitting the return. Therefore the applicability of section 14A read with Rule 8D is not in dispute. However the A.O. has applied all the provisions of Rule 8D(i)(ii)and (iii) mechanically. The A.O. has not brought on record any evidence to show that the loans funds were used in investment in the mutual funds securities. There was investment of ₹ 17.95 crores mainly consisting of ₹ 17.87 crores in the mutual fund .....

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directly related to the earning of the exempted income. Therefore the provision or Rule 8D(2)(i) were not applicable. It is also not the case of the A.O. that mixed funds were used for investment in mutual funds and securities. As found earlier till A.Y. 2008-09 no such disallowance was made and during the year no loan funds have been used for investment in shares and mutual funds. The appellant s case is supported by judgement of the Hon'ble Supreme Court in the case of Munjal Sales Corpor .....

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isions of the I.T Act. It is worth noting that the expense disallowed by the assessee on proportionate basis were more than the expenses (exclusive of interest) claimed in the profit &, loss account since no evidence has been brought on record that the investments have come out of the loans taken by the assessee. In view of the above there is no necessity to deal with the calculation mistake made by the A.O. while taking out the average assets. The addition made by the A.O. is deleted . Aggr .....

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in 144 ITD 141, which is affirmed by the Hon ble Calcutta High Court in ITAT No. 161 of 2013 dated 23.12.2013. 6. We have considered the rival submissions and also perused the relevant material available on record. It is observed that in the computation of total income, disallowance of ₹ 5.76 lakhs was offered by the assessee under section 14A of the Act on account of expenditure incurred in relation to the earning of exempt dividend income and there was no reason given by the Assessing Of .....

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