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TMI Blog2014 (12) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 1,23,924/- and the expenses of Rs. 4,16,399/- without appreciating the fact that from A.Y.2008-09 onwards the disallowance u/s.14A has to be mandatorily computed as per Rule 8D. II. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of short deduction of TDS u/s.40(a)(ia) of Rs. 4,88,500/-, without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer in the Assessment Order. IV. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of short deduction of TDS u/s.40(a)(ia) of Rs. 4,88,500/-, without appreciating the fact, that the assessee who has not deducted TDS at prescribed rate cannot be said to have complied with the provision of TDS as required under section 40(a)(ia). 2. The Ld. CIT(A)'s order is perverse in law and on facts and deserves to be set aside. 3. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary." 3. Ground Nos. 1 & 2 regarding disallowance u/s.14A, the assessee was holding investments of Rs. 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that there was no dividend income and therefore, assessee has not claimed any exempt income during the year under consideration. Accordingly, in view of the decisions of Hon'ble Gujarat High court in the case of Corrtech Energy (P) Ltd. (223 Taxman 130), the judgment of P&H High Court in the case of Winsome Textile Inds. Ltd. (319 ITR 204), and the judgment of Hon'ble P & H High Court Lakhani Marketing Ind. (226 Taxman 45) no disallowance u/s.14A can be made. The Ld. AR has also relied upon the decisions of this Tribunal in case of Garware Wall Ropes Ltd. v. ACIT 65 SOT 86) & JM Financial Ltd. v. ACIT (Mum). The Ld. AR has referred the assessment order and submitted that assessee has explained before the AO that assessee's own interest free fund is more than sufficient for investment in question. 5. We have considered rival submissions as well as relevant material on record. There is no dispute that there is fresh investment during the year by the assessee and the investment of Rs. 8,32,79,820/- was made in the earlier years that too in the subsidiary of the assessee. The assessing officer did not disallow the interest expenditure u/s.14A, in the Assessment years 2006-07 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, against the revenue, is not shown to be perverse. Consequently, disallowance is not permissible. We have taken this view earlier also in IT Appeal No.504 of 2008, CIT v. Winsome Textile Industries Limited, decided on 25th August, 2009 wherein it was observed as under:- '6. The contention raised on behalf of the revenue is that even if the assessee had made investment in shares out of its own funds, the assessee had taken loans on which interest was paid and all the money available with the assessee was in common kitty, as held by this Court in CITy. Abhishek Industries Ltd. [2006] 205 CTR (P&H) 304 [2006j 286 ITR I (P&H) and therefore, disallowance under section l4A was justified. 7. We do not find any merit in this submission. Judgment of this Court in Abhishek Industries (supra) was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. Observations made therein have to be read in that context. In the present case, admittedly, the assessee di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case under consideration, the Appellant has deducted tax at rate lower than prescribed under the Act/Rules. Thus, it is not a case where no TDS was deducted at all. In the following case, i t has been held that the provisions of Sec.40a(ia) are applicable only where no TDS has been made and the provisions are not applicable where TDS has been made though at a lower rate. - Chandabhoy & Jassobhay (49 SOT 448), ITAT Mumbai - S.K Tekriwal (15 taxman.com 289), Calcutta (HC) -ACIT Vs. Quality Cine Labs Pvt Ltd , (2012) 31 CCH 053 Mum Tribunal order dated 29/3/2012. Since in the case under consideration, the Appellant has deducted TDS though at a lower rate, therefore provisions of Sec.40a(ia) was not applicable as held in the above case. Following the above decisions of Tribunals and courts, disallowance made by the AO is deleted." 9. There is no quarrel so far as the decisions of this Tribunal on the issue that if the assessee has deducted the TDS at the rate provided under a different provision of chapter XVII and subsequently, the AO found that the TDS should have been deducted under a different provision of the said chapter at a higher rate. In those cases the tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with identical directions. 12. For the Assessment Year 2010-11, the Revenue has raised following effective grounds in this appeal. "i)The Learned CIT(A) has erred on facts and in law in deleting the disallowance u/s.14A as per Rule 8D amounting the Rs. 23,88,124/- being interest of Rs. 19,71,825/- and the expenses of Rs. 4,16,399/- calculated @ 0.5% of Average Investments, without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer in the Assessment Order. ii)The Learned CIT(A) has erred on facts and in law in deleting the disallowance u / s .1 4A as Rul e 8D amounting to Rs. 23,88,124/- being interest of Rs. 19,71,825/- and the expenses of Rs. 4,16,399/-, without appreciating the fact that from A.Y. 2008-09 onwards the disallowance u/s14A has to be mandatorily computed as per Rule 8D." 13. The only issue arising for this Assessment Year is regarding disallowance u/s.14A. So far as the investment which was made in the earlier years is concern no disallowances can be made in view of our finding for the assessment year 2008-09. There is a fresh investment during the year by the assessee which is not in the subsidiary bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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