TMI Blog2017 (4) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER S. Rifaur Rahman (Accountant Member) 1. Both these appeals filed by the assessee are directed against the separate orders of the Commissioner of Income-tax (Appeals)-5, Hyderabad, both, dated June 30, 2016 for the assessment years 2009-10 and 2012-13 wherein the assessee has raised the following grounds of appeal, which are common in both the appeals, except the quantum of disallowance : 1. The order of the hon'ble Commissioner of Income-tax (Appeals) is erroneous in law as well on facts. 2. The hon'ble Commissioner of Income-tax (Appeals) ought to have observed that the Assessing Officer ought not to have disallowed any amount by invoking the provisions of section 14A of the Income-tax Act. 3. The hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the staff and management and also the borrowings for business, contribute to this exempt income. Overruling the contention of the assessee that the investments were made from the surplus funds, the Assessing Officer observed that disallowance under rule 8D was called for in respect of the expenditure on exempt income. Such disallowance under section 14A as per rule 8D(iii) i.e. 0.5 per cent. of the average value of investments worked out to ₹ 4,06,620 by the Assessing Officer. 3. Before the Commissioner of Income-tax (Appeals), the assessee filed explanation highlighting the fact that there was no nexus between investment in funds yielding exempted income with any expenditure. It also submitted that the reserves and surpluses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der : 11.1 While carefully reading the rule 8D(2)(ii), the formula given are : A x B C Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year : B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance-sheet of the assessee, on the first day and the last day of the previous year; C = the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; In par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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