9911796707
TMI Blog2016 (7) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... dabad ('CIT(A)' in short) dated 02/07/2012 & 27/04/2012 pertaining to Assessment Years (AYs) 2008-09 & 2009-10 respectively. 2. Before us, at the outset the Ld AR submitted that though there are two appeals of the assessee and appeal for Revenue in different assessment years but the issue involved in all the two years are identical except for the assessment year and the amount involved and therefore the submission made by him while arguing the appeal for one year would be applicable to the other years also. He therefore submitted that all the appeals can be heard together. Before us ld.Sr.DR did not object to the aforesaid submissions of ld.AR. We therefore for the sake of convenience proceed to dispose of all the appeals by a consolidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Assessing Officer u/s.14A of the I.T. Act. 2. On the facts and in the circumstances of the case, the CIT(A) erred in rejecting the claim of the assessment proceedingscompany that only net interest expenditure can be considered for the purposes of making disallowance, if any, u/s.14A. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in not considering the fact that average investments considered for making disallowance u/s.14A as on 31/03/2009 for Rs. 26,86,63,398 and as on 31/03/2010 for Rs. 14,35,58,094/- from which taxable interest income has been earned and accepted by AO and disallowance to that extent is required to be reduced as no exempt income has been earned from such investment. 4. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Rules, 1962 worked out the disallowance u/s 14A of the Act at Rs. 30,78,541/-. Aggrieved by the order of AO, assessee carried the matter before ld.CIT(A), who upheld the order of AO by holding as under: "3. I have carefully considered rival submissions. I have also perused various case laws relied upon by the appellant. It is seen that appellant has paid interest on borrowed funds and invested heavily in equity shares and mutual funds. Income from equity shares and mutual funds are exempt as per the provisions of I.T.Act, 1961. This way, as per the provisions of section 14A, the A.O. was required to disallow expenditure incurred on these investments. The statute has also provided schemes to make such disallowance and the schemes are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not constitute expenditure incurred in terms of section 14A. In view of these facts, I hold that disallowance for the purpose of section 14A is to be made against interest expenditure debited in the Profit & Loss account. This way, I am inclined to agree with the disallowance made by the ld.A.O. In view of the above, disallowance of Rs. 30,78,541/- made by the A.O. is confirmed. This ground of appeal is dismissed." 3. Aggrieved by the order of ld.CIT(A), the assessee is now in appeal before us. 3.1. Before us, the ld. A.R. reiterated the submissions made before lower authorities and submitted that against the investment of Rs. 21.67 crores, assessee had interest-free funds to the extent of Rs. 27.89 crores and therefore since interest-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that if the assessee's ground in its appeal is decided in assessee's favour the ground raised in Revenue's appeal would not survive. 3.2. On the other hand, the ld.Sr.D.R. submitted that the assessee has not proved that interest-free funds have been utilized for making the investments. He further submitted that the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg.Co. reported at 328 ITR 81 has held that AO is duty bound to compute the disallowance by applying a reasonable method having regard to the facts and circumstances of the case. He also relied on the decision of Pune Tribunal in the case of Thermotech Engg. Vs. ACIT (ITA No.533/PN/2013, order dated 30/10/2015. He thus submitted that the AO has rightly worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Reliance Utilities and Power Ltd. (supra), we are of the view that no disallowance of interest u/s 14A of the Act can be made in the present case. As far as the issue of net interest for the purpose of disallowance u/s.14A is concerned, we find that the Coordinate Bench of Tribunal in the case of Safar Reality Pvt.Ltd. vs. ACIT (ITA Nos.2334/Ahd/2012 & 1842/Ahd/2012, order dated 29/11/2013) has approved the theory of netting off of interest income with interest expenditure. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance u/s.14A is called for and thus direct the deletion of addition made by the AO. Thus, the ground(s) of assessee are allowed. As far as the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
