9911796707
TMI Blog2018 (3) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as the 'Act'), dated 13. 12. 2011. 2. The Revenue has raised the following grounds of appeal: "1) That the ld. CIT(A), Kolkata was erred in holding that the expenses to be restricted to the extent of expenses claimed for deduction and not more. But he calculation was made following the provision of section 14A read with Rule 8D. 2) That the department shall crave to add or alter any ground on or before the date of hearing. " 3. The brief facts qua the issue are that during the assessment year under consideration, the assessee earned dividend of Rs. 1,38,21,353/- which was claimed as exempt income. The expenses disallowable for earning dividend income as per section 14A applying Rule 8D of the IT Rules was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee suo moto invoked Rule 8D and disallowed a sum of Rs. 7,31,043/- u/s 14A of the I. T. Act, 1961. The said disallowance comprised of interest of Rs. 6,08,163/- and administrative expenses of Rs. 1,22,880/-. After netting off the interest expenses with the interest income earned in the business of money lending, the net result was interest outgo of Rs. 6,08,163/- which was entirely disallowed by the assessee u/s 14A of the Act. In addition to the foregoing the entire administrative expenses of Rs. 1,22,880/- which was incurred during the year and debited to P&L A/c was also suo moto disallowed by the assessee. The Assessing Officer however in his impugned order completely ignored the facts of the case and mechanically invoked Rule 8D in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Rule 8D. The ld CIT(A) noted that only 'net' interest expenditure is to be considered for the purposes of disallowances u/s 14A and where after setting off interest earned against interest expenditure no further interest expense remains then disallowance cannot be made u/s 14A. The ld CIT(A) observed that on the issue of disallowance of administrative expenses, the jurisdictional Tribunal in the case of DCIT Vs. M/s Trade Apartments Ltd (ITA No. 1277/Kol/2011, dated 30/03/2012, had held that the expenses to be restricted to the extent of expenses claimed for deduction and not more. In this case, the assessee company had suo moto disallowed net interest expenditure and entire administrative expenses debited in the Profit &Loss Account. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that in these circumstances no further interest disallowance should be made. Respectfully following the judgment of coordinate Bench Kolkata in the case of DCIT Vs Trade Apartments Limited (ITA No. 1277/Kol/2011) for Assessment Year 2008-09 wherein on exactly similar facts and circumstances the coordinate Bench held that the 'net' interest expenditure is to be considered for the purposes of disallowance u/s 14A and where after setting off interest earned against the interest expenditure no further interest expense remains then disallowance cannot be made u/s 14A of the Income-tax Act, 1961. Considering the factual position explained above, we do not find any infirmity in the order passed by the ld CIT(A), therefore, we confirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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