TMI Blog2016 (7) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... e & expenditure and then to consider the net interest expenditure for disallowance u/s 14A - Held that:- For assessment year 2008-09 wherein the Tribunal, on identical facts and circumstances, as are in the year under consideration, has allowed the netting of interest and has held that the disallowance of interest should be made with reference to the net interest only. The Tribunal upheld the findings of the CIT (A) directing the AO to verify the figures given by the assessee and to take into consideration only net interest if any, for computation of disallowance of expenditure under Rule 8D of the Rules. The Tribunal has further upheld the findings of the learned CIT (A) allowing bifurcation of the expenses between the Head Office and Regional Offices and to re-compute the disallowance on proportionate basis relatable to the Head Office only. It has been further noted by the CIT (A) in the impugned order that the AO has followed the aforesaid decision of the Tribunal while completing the re-opened assessment for assessment year 2007-08 and regular assessment for assessment year 2010-11. The learned CIT (A) accordingly has directed the AO to verify the allocation of the expenses as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd. 1,89,80,500 1,82,70,000 Unit 14, Corporate Park, Sion Trombay Road, Chembur, Mumbai (10150 sq. ft.) -do- 43,64,400 4,76,10,000 Unit 15, Corporate Park, Sion Trombay Road, Chembur, Mumbai (10150 sq. ft.) -do- 43,64,400 4,62,87,500 Unit 1 to 13, 2nd floor, Kamala Mill Compound, Trade World, B Wing, Senapati Bapat Marg, Lower authorities Parel, Mumbai ICICI Bank Ltd. 1,81,85,807 2,62,76,412 (Refunded on 04.08.2008) Unit 2, 3rd Floor, Address do- Baxter India Pvt. Ltd. 9,46,871 14,20,500 Unit 7 8, Basement, Address do- -do- 12,37,210 17,88,000 (Refunded on 01.11.2008) The assessee submitted that the actual rent received in respect of the above stated properties had been offered for taxation. The assessee also submitted with regard to the three properties located at Corporate Park that the rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agents/dealers contacted by the Inspector for the purpose of ascertaining the prevailing market rate. Even, it did not mention any comparable instance of commercial properties in Corporate Park and Kamala Mill Compound which were let out. The Inspector had simply reported that he had contacted certain agents who were said to have been providing let out charges to various parties. The said report was vague and even no names of such agents were mentioned. No specific details were given, only the rates per sq. ft. were mentioned. However, no details of the specification or infrastructures etc. were mentioned to which those rates were applicable. He, therefore, held that no details of comparable instances were obtained by the Inspector. He, therefore, held that in the absence of any specific details, the socalled prevailing market rates obtained by the Inspector could not be considered to be reliable and credible evidences. He thereafter observed that, as per the settled law as laid down by various High Courts, the ALV is the sum at which the property may reasonably let out from year to year uninfluenced by any extraneous circumstances and that actual rent received is a reliable yardst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out any independent investigation or enquiry regarding determination of fair market value where he has derived a positive material to indicate that the parties have suppressed the prevailing rate of the locality. The AO must not make a guess work or act on conjecture or surmises. He can make a comparative study and make analysis. In this regard, transactions of identical and similar nature can be ascertained by obtaining the requisite details. The AO must safeguard against adopting the rate stating therein straightway, rather, he should take into account all relevant factors. That the AO must comply with the principles of fairness and justice and should disclose the material in his possession to the assessee so as to obtain his view. That if the letting out of the properties does not reflect any extraneous circumstances, then merely because an interest-free security deposit has been obtained, the AO should not presume that this sum or the interest derived there from is the rental income of the assessee. After considering the above principles, the learned CIT (A) observed that in the case in hand, the AO did not have any definite and positive material to show that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the order of the Tribunal dated 12th March, passed in ITA No.6364/Mum/2012 for assessment year 2008-09 wherein the Tribunal, on identical facts and circumstances, as are in the year under consideration, has allowed the netting of interest and has held that the disallowance of interest should be made with reference to the net interest only. The Tribunal upheld the findings of the learned CIT (A) directing the AO to verify the figures given by the assessee and to take into consideration only net interest if any, for computation of disallowance of expenditure under Rule 8D of the Rules. The Tribunal has further upheld the findings of the learned CIT (A) allowing bifurcation of the expenses between the Head Office and Regional Offices and to re-compute the disallowance on proportionate basis relatable to the Head Office only. It has been further noted by the CIT (A) in the impugned order that the AO has followed the aforesaid decision of the Tribunal while completing the re-opened assessment for assessment year 2007-08 and regular assessment for assessment year 2010-11. The learned CIT (A) accordingly has directed the AO to verify the allocation of the expenses as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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