TMI Blog2014 (11) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier order of the Tribunal in A.Y. 2008-09 and work out the disallowance. Accordingly ground raised by the assessee is treated as partly allowed. - ITA No. 863/Mum/2013 - - - Dated:- 10-11-2014 - Sanjay Arora (Accountant Member) And Amit Shukla (Judicial Member) For the Assessee : Sanjay B. Sawant For the Revenue : V. K. Bora ORDER Amit Shukla (Judicial Member) This appeal has been preferred by the Assessee against order dated 26.11.2012, passed by the Ld.CIT(A) -14, for the quantum of assessment passed u/s 143(3), for the A.Y. 2009-10, mainly on disallowance of ₹ 48,74,535/- made as u/s 14A read with rule 8D. 2. Brief facts are that, during the year the assessee company had earned exempt income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses, being 0.5% of average investment. Further with regard to amount invested in firms, the direction was given for proportionate disallowance, after following the decision of Special Bench in the case of Vishnu Anand Mahajan Vs. ACIT [(2012) 147 TTJ (Ahd) (SB) 142]. He further submitted that, no fresh investment was made in this year and therefore, the issue is entirely covered by the decision of the Tribunal for A.Y. 2008-09. The Ld. DR on the other hand relied upon order of the AO as well as Ld. CIT(A). 5. After considering the impugned order and also the order of the Tribunal, we find that, the Tribunal has adjudicated the issue in the following manner. 3. We have heard the rival submissions and perused the relevant material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble jurisdictional High Court in the case of CIT Vs. Reliance Utilities and Power Ltd. [(2009) 313 ITR 340 (Born.)] has held that if there are interest free funds available with the assessee sufficient to meet its investment and at the same time loan has been raised it can be presumed that the investments were from interest free funds and resultantly no disallowance of interest can be made, In reaching this conclusion, the Hon'ble High Court followed another judgment of the Hon'ble Supreme Court in East India Pharmaceutical Works v. CIT [(1997) 224 ITR 627 (SC)). In view of the above decisions, it is obvious that no part of interest can be considered to have been incurred towards investment fetching exempt income. Once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jan v. ACIT [(2012) 147 TTJ (Ahd.) (SB) 142) has discussed the issue when there is receipt of interest from the firm chargeable to tax and share in the profits which is exempt. In this order the Special Bench has laid down a mechanism for working out the disallowance u/s 14A. The Assessing Officer is directed to work out the second part of disallowance as per Rule 8D afresh in the light of the afore-noted order of the Special Bench after allowing a reasonable opportunity of being heard to the assessee. 6. Since similar facts are permeating though in this year also and there are no fresh investment in this year, therefore, consistent with the view taken by the Tribunal in the earlier year, we also order accordingly. Thus, AO is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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