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TMI Blog2015 (9) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... 78,36,495/- out of the interest expenditure made by the AO u/s.14A of the Act without appreciating the fact that the interest expenditure claimed was directly relatable to activity of investment in share/mutual funds and subsidiaries resulting in exempted income." 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the disallowance out of administrative expenses be restricted to Rs. 6, 36, 389/-as against Rs. 24,14,299/- made u/ s14A r.w.r.8D(2)(iii) without appreciating the fact that disallowance out of administrative expenses was made by the AO by applying the provisions of 36(1)(iii) as well after critical analysis of the expenses claimed in respect of business operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about deleting the addition made u/s.14A of the Act, amounting to Rs. 78.36 lakhs out of interest expenditure and restricting the disallowance to Rs. 6.36 lakhs against the disallowance of Rs. 24.14 lakhs, respectively. During the course of hearing before us, Representatives of both the sides agreed that the issue of disallowance u/s.14A of the Act, has been deliberated upon and decided by the Tribunal in its order dated 02.08.2013(ITA/4005/ Mum/2012)while deciding the appeal for the AY.2008-09 and same reads as under: "8. Ground no.2 and 3 relate to the disallowances u/s 14A r.w. Rule-8D of IT Rules, 1962. During the assessment proceedings, on finding the claim of exempt income, AO made a disallowance amounting to Rs. 67,33,850/- in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of the existing law in force. However, he relied on the provisions of rule 8D r w s 14A and asked for strict compliance by the AO. DR is not happy with the CIT(A) for not remanding the calculation to the AO before accepting the figure of Rs. 16,91,489/-. 11. On the other hand, Ld Counsel for the assessee mentioned that the said amount of Rs. 16,91,489/- was computed in accordance with Rule-8D and the said calculations being very simple in nature, they never require attention of the AO by way of remanding the matter to the files of the AO. 12. We have heard both the parties on this issue and perused the orders of the Revenue Authorities. The limited issue raised before us is restricted to the correctness of the calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2.10 lakhs as exempt income u/s.10 of the Act, that same had not been included in the book profit. Invoking the provisions of clause (f) of Explanation 1 to the section 115JB,he made an addition of Rs. 1.02 Crores to the income to be computed under MAT provisions. 4.Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA. Before him the assessee contended that the disallowance computed by the AO u/s.14A of the Act was not as per law, that disallowance made by him could not be considered for computing the income as per the provisions of section 115JB of the Act. After considering the submissions of the AO, the FAA held that disallowance u/s.14A had to be restricted to Rs. 6.36 lakhs. 5. Before us, the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of the assessee by holding as under: "I have considered the above facts and submissions and the arguments made by the Ld AR of the appellant. The Object Clause permitted by the company to carry on the activity of money lending. It can be seen from the resolutions passed at the meeting held on September 3 rd , 2007 that consent of the Board of directors was obtained to borrow monies from time to time up to an amount not exceeding Rs. 200 Crs, for the purpose of the business of the company subject to interest rate not exceeding 12% per annum. A resolution was also passed by the Board of Directors to make loans from time to time provided that the maximum amount of loan for each individual purpose did not exceed Rs. 100 Crs. The analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material placed before us on this issue. On perusal of the order of the CIT (A) order, we are of the opinion that the CIT (A)'s decision, in treating the interest income of Rs. 1,25,22,877/- earned on money lending operation as Profits & Gains of Business or Profession', is reasonable and it does not call for any interference. In this regard, we have considered 'object clause' authorizing the assessee to conduct the business of money lending and the entries in the books of accounts and the bank accounts. Accordingly, ground no.1 raised by the Revenue is dismissed". Respectfully, following the above, we decide ground no.4 against the AO. As a result, appeal filed by the AO stands dismissed. Order pronounced in the open court on 29th,Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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