TMI Blog2015 (11) TMI 1668X X X X Extracts X X X X X X X X Extracts X X X X ..... t under section 36(1)(iii) - Held that:- This is an admitted fact in the present case that no specific loan was raised by the assessee for the purposes of purchase of this land. This is also a finding of fact recorded by the lower authorities that there were mixed funds available for this purpose with the assessee. On availability of mixed funds, it cannot be presumed by the Revenue that the borrowed funds have been used for the purposes of acquisition of said land. See DCIT Vs. Samrat Forging Ltd. [2012 (5) TMI 760 - ITAT CHANDIGARH] - Decided in favour of assessee. - ITA No.268/Chd/2015 , ITA No.271/Chd/2015 - - - Dated:- 30-11-2015 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER Appellant by : Shri Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 14A of the Act and computation made as per Rule 8D, made a disallowance of ₹ 12,35,568/-. One of the contentions before the learned CIT (Appeals) was that the disallowance under section 14A of the Act over and above the amount of tax free income earned is legally not tenable. However, rejecting the said contention of the assessee the learned CIT (Appeals) observed that the Legislature has provided Rule 8D of the Rules for computation of disallowance under section 14A of the Act, which does not provide for any such limit. Providing any limits to the disallowance in these circumstances by contending that the disallowance should not exceed the amount of exempt income would tantamount to amending the provisions of Rule 8D of the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. By making disallowance of an amount of ₹ 12,35,568/-, the Assessing Officer has not only disallowed the expenses to the extent of entire exempt income, he also exceeded the income so earned. In the case of Mascot Footcare (supra), the Hon'ble Punjab Haryana High Court has held in very clear terms that the disallowance under section 14A of the Act cannot exceed the dividend income or any other tax free income earned by the assessee during the year. Though this case was rendered before insertion of Rule 8D of the Rules, since the case relates to assessment year 2000-01, we observe that the proposition has been laid down by the High Court in the context of section 14A of the Act and not in the context of Rule 8D of the Rules, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 8. The appeal of the assessee is partly allowed. ITA No.271/Chd/2015 : 9. In this appeal, ground Nos. 1 and 2 are not pressed. 10. It is relevant to observe here that the issue in ground No.3 is similar to the issue in ground No.3 raised by the assessee in ITA No.268/Chd/2015 and the findings given in ITA No.268/Chd/2015 shall apply to this case also with equal force. 11. The ground No.4 raised by the assessee is general in nature and hence, needs no adjudication. 12. The ground No.5 is against the of interest under section 36(1)(iii) of the Act. 13. Briefly, the facts of the case are that the Assessing Officer noted that the assessee had invested money in purchase of land amounting to ₹ 48,90,240/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to restrict the disallowance in the debt equity ratio. In this way, he directed the Assessing Officer to compute the disallowance of interest on day-to-day basis by applying of debt equity ratio. 15. The learned counsel for the assessee reiterated the submissions made before the lower authorities and again placed reliance on the order of DCIT Vs. Samrat Forging Ltd. (supra), while the learned D.R. relied upon the order of the Assessing Officer as well as that of the learned CIT (Appeals). 16. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the Chandigarh Bench in the case of Samrat Forging Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently computed disallowance in view of the provisions of proviso to section 36(1)(iii) of the Act. The CIT (Appeals) has given the finding that no loan had been raised by the assessee company for the purchase of furnace or for the construction of building. The said finding of the CIT (Appeals) had not been controverted by the learned D.R. for the Revenue. Further the CIT (Appeals) has also noted that the total investment made by the assessee during the year on capital work-in- progress was ₹ 42.46 lacs spent on furnace and ₹ 33.23 lacs on the building as against the net profit of the assessee for the year at ₹ 1.97 crores. In view of the above said facts and circumstances, we find no merit in the disallowance made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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