TMI Blog2017 (9) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... orm part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. The assessee has come up with specific argument that it has not incurred any interest cost for earning exempt income but this plea of the assessee has also been brushed aside by the AO without recording any reason of dis-satisfaction. Moreover, when the assessee is having ample cost free funds to the tune of ₹ 6049.43 crores and had not made investment to earn exempt income as on 31.03.2011, but in its subsidiaries for commercial expediency, the question of disallowance under Rule 8D does not arise. AO has made disallowance without recording his dissatisfaction on any cogent ground and without disputin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961 (for short the Act ) read with Rule 8D of Income-tax Rules, 1962 (for short the Rules ), proceeded to work out the disallowance as under :- Clause Particulars Calculation Amount i) Expenditure directly related to exempt income Nil Nil ii) Disallowance of interest expenditure A*B/C Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Assessee carried the matter by way of filing an appeal before the ld. CIT (A) who has deleted the addition of ₹ 6,41,37,885/- made by the AO by accepting the appeal filed by the assessee. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Ld. DR for the Revenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not permissible. 8. Hon ble Apex Court in Godrej Boyce Manufacture Company Ltd . vs . DCIT 394 ITR 449 ( SC ) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of the Rules by observing as under :- 37 . We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002 - 2003 . Sub - sections ( 2 ) and ( 3 ) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent funds for making investment in shares and mutual funds yielding exempt income and self or voluntary disallowance made by assessee was not rejected and held to be unsatisfactory on examination of accounts, Assessing Officer had erred in invoking rule 80 ( 2 ) and recomputing disallowance under section 14A - Held, yes [ Paras 12 and 18 ][ 1n favour of assessee ] 10. So, by following the law laid down by Hon ble Apex Court in judgment cited as Godrej Boyce Manufacture Company Ltd . (supra) and Hon ble High Court of Delhi in CIT vs . Taikisha Engineering India Ltd . (supra), we are of the considered view that the findings returned by AO that, balance disallowance to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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