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2017 (2) TMI 273 - ITAT KOLKATA

2017 (2) TMI 273 - ITAT KOLKATA - TMI - Disallowance u/s 14A r.w.r 8D - whether the deduction on account of cess on green leaf is to be allowed from the composite income before applying Rule 8D or from 60% agricultural income after applying Rule 8D - Held that:- Now stands resolved by the decision of the Hon’ble Supreme Court in the case of CIT –vs. - Apeejay Tea Co. Limited (2015 (8) TMI 1260 - SUPREME COURT ), wherein it was held that the deduction on account of cess paid has to be allowed whi .....

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The Department : None For The Assessee : Shri Bijay Kumar Chaturvedi , A.R. ORDER Per Shri P.M. Jagtap, A.M. . : This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-IV, Kolkata dated 05.12.2013. 2. In Ground No. 1, the Revenue has challenged the act ion of the ld. CIT(Appeals) in deleting the disallowance of ₹ 92,73,089/- made by the Assessing Officer under section 14A of the Act read with Rule 8D of the Income Tax Rules. 3. The assessee i .....

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77; 30,57,783/- was offered under section 14A on account of expenditure incurred in relation to the earning of the said exempt income. Since the said disallowance offered by the assessee was not computed as per the method prescribed in Rule 8D, the Assessing Officer recomputed the disallowance to be made under section 14A by applying the said Rule of ₹ 1,30,08,824/- and made a further disallowance of ₹ 92,73,089/-. 4. The disallowance made by the Assessing Officer under section 14A r .....

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stment as well as other direct expenditure incurred for earning the exempt income. However, the Ld. Assessing Officer further disallowed a sum of ₹ 92,73,089/- on account of proportionate interest. In this connection this may be noted that total investment of the assessee at the beginning of the year was ₹ 94,68,05,193/- and at the end of the year i.e. as on 31.03.09 was ₹ 1,00,70,62,725/-. The assessee has not made any investment out of the borrowed fund on which interest has .....

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sessee was having his own sufficient fund for making investment out of which the exempt income has been earned. In this connection, the reliance is placed on the judgement of Hon ble Supreme Court in the case of CIT vs. Wal fort Share & Stock Brokers Pvt. Ltd. [326 ITR 1} and the recent judgement of the Hon ble ITAT, Mumbaiin the case of Just ice Sam P. Bharucha vs. The Addl . Commissioner of Income Tax 11(3), Mumbaiin the [ITA 3889/Mum/2011] wherein it was held that unless a direct nexus is .....

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sufficient funds of its own to make investment in shares at the relevant time. 6. At the time of hearing before us, the ld. D.R. has filed an application seeking adjournment. However, keeping in view the submission made by the ld. counsel for the assessee that both the issues involved in this appeal of the Revenue are squarely covered in favour of the assessee, the request of the ld. D.R. for adjournment is not acceded to and this appeal of the Revenue is being disposed of exparte after taking .....

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p; 7 of its order:- 6. We have heard the rival submissions and perused the materials available on record. The fact s stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. Admittedly the disallowance u/s 14A to the tune of ₹ 92,89,825/- have been made by the ld. AO by invoking the provisions of Rule 8D(2)(ii) of the Rules. We find that the assessee company is having share capital of ₹ 10.67 crores and sufficient free reserves of ₹ 12 .....

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fficient own funds to make the investments and when that point is not in dispute, no disallowance could be made u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules. Reliance in this regard is placed on the following decisions: - CIT-vs. - Reliance Utilities & Power ltd. reported in 313 ITR 340 (Bom.) Interest on borrowed capital - investments by assessee finding that investments were from interest free funds available with assessee-borrowed capital for the purposes of business- interest .....

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for business use, it cannot be said that the borrowed funds have been used for the purposes of investment s . CIT -vs. - HDFC Bank Ltd reported in 366 ITR 505 (Bom.) Held, dismissing the appeal , (i) that the finding of fact given by the Tribunal was that the assessee s own funds and other non-interest bearing funds were more than the investment in the tax-free securities. This factual position was not one that was disputed. Undisputedly, the assessee s capital, prof it reserves, surplus and cur .....

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e decision in the case of Reliance Utilities power Ltd. was rendered in the context of allowability of interest u/s 36(1)(iii) of the Act , the analogy drawn thereon would apply with equal force for adjudicating the issue of disallowance u/s 14A of the Act. We also find that the Hon ble Bombay High Court in the case of CIT -vs. - HDFC Bank Ltd. reported in 366 ITR 505 (Bom.) had also held the same view. 7. In view of the aforesaid facts and findings and respectfully following the judicial preced .....

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