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Mrs. Anita Dalal Versus The Asst. Commissioner of Income Tax, 12 (1) , Mumbai

2016 (7) TMI 1040 - ITAT MUMBAI

Disallowance of expenses relatable to earning exempted income by invoking the provisions of Section 14A r.w.r 8D - Held that:- Revenue has not disputed the availability of assessee’s own interest free funds as detailed out by the assessee before the learned CIT (A) and now before us also. Hence, this being the position, the issue in the present appeal is squarely covered by the decision of the Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH .....

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owance can be made. - Decided in favour of assessee - ITA No.3604/Mum/2014 - Dated:- 16-6-2016 - SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM For The Appellant : Shri Neelkanth Khandelwal, AR For The Respondent : Shri A. Ramachandran, DR ORDE R PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of the learned CIT (A)-23, Mumbai passed in appeal No.CIT (A)-23/ACIT-12(2)/IT-292/2011-12 dated 07-02-2014. Assessment was framed by the ACIT, Circle -12 (1), Mumbai for ass .....

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during the course of assessment proceedings noticed that the assessee has earned exempt income being dividend of ₹ 12,35,406/- and interest on PPF at ₹ 78,619/-. According to the AO, the assessee has claimed expenses relating to interest and finance charges to the tune of ₹ 42,54,630/- out of total expenses of ₹ 70,50,098/-. According to the AO the assessee would have utilized some portion of the loan in purchase of shares which have yielded dividend income and also the s .....

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ce acceptable for the reason that the assessee has not made any disallowance of interest expenses under Rule D(2) (ii) of the Rules. Accordingly, he worked out the disallowances as under:- a) Under Rule 8D(2)(i) ₹ 42,391/- b) Under Rule 8D(2)(ii) Rs.56,87,655/- c) Under Rule 8D(2)(iii) ₹ 3,20,601/- Total Rs.60,50,647/-. Aggrieved, the assessee preferred appeal before the learned CIT (A). 4. The learned CIT (A) confirmed the action of the AO in respect to disallowance of interest expe .....

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ccepted and no such presumption can be made. The assessee has to show with clear evidence that all investments which come under the purview of sec. 14A have been actually made from out of the interest free funds have been utilized for such purposes. It is only to address the situation where no such correlation can be made that Rule 8D(2)(ii) has been brought into the statute. In view of the above and in view of the fact that the assessee has furnished no evidence to show that only the interest f .....

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learned CIT (A), confirming the order of the AO, the assessee came in second appeal before the Tribunal. 5. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee filed complete statement of working of expenditure and calculation of disallowance u/s 14A of the Act under Rule 8D (2)(i) and Rule 8D (2) (iii) of the Rules which is as under:- Calculation of disallowance under section 14A 1. Investment in shares T .....

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23,40,57 (2,23,40,557+95,00,30,430) 9,013 Rs. 42,391 The learned Counsel for the assessee also filed the details of expenditure of interest not attributable to any particular income for the reasons that assessee s non-interest bearing funds are more than of investment in shares, hence, there can be no disallowance invoking the provisions of Rule 8D(2) (ii) of the Rules. In this respect, he filed the following details:- Expenditure by way of interest not attributable to any particular income Part .....

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ment and according to the assessee which comes to ₹ 2,52,903/- and not as computed by the AO at ₹ 3,20,601/- and he filed the following computation:- Half per cent of average value of investment Opening investment in shares 5,76,66,378 Closing investment in shares 4,34,94,528 Rs. 10,11,60,906 0.5% of Rs.10, 11, 60,906 2. = ₹ 2, 52,903/- The learned Counsel for the assessee, on query from the Bench replied that the complete details in respect to assessee s own funds was availabl .....

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i), the assessee has submitted that her investment in quoted equity shares as at 31.03.2009 is ₹ 2,82,41,048/- and her investments in PPF is ₹ 10,78,858/-. Hence, a total investments were ₹ 2,93,19,906/- as against that she had a capital as at 31.03.2009 of ₹ 2,23,54,176/- advance for purchase of shares from Mr. Deepak Dalal (Husband) of ₹ 1,60,00,000/- and amount payable to partnership firm of ₹ 1,80,36,420/-, totally amounting to ₹ 5,63,90,596/-. It ha .....

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