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TMI Blog2017 (11) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 1,2,3 & 4 of the Petitioner's appeal it had objected to the CIT (A)'s order confirming AO's order making disallowance u/s 14A read with Rule 8D(2)(ii) & (iii) amounting to Rs. 17,15,98,000/-. The amount disallowed by the AO u/ s 14A inter-alia included interest disallowance of Rs. 1,573.03 Lacs and Administrative Expenses of Rs. 143.00 Lacs. 3. In Para - 7.1 of the appellate order dated 10.03.2017 the Ld. ITAT dealt with the issue of disallowance u/s 14A read with Rule 8D(2). The ITAT noted that the Petitioner had offered the disallowance only in respect of administrative expenses, under Rule 8D(2)(iii), but no disallowance was offered towards interest as required under the provisions of Rule 8D(2)(ii). The Tribunal furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The investments in dividend yielding securities as on 31.03.2008 came down to Rs. 283.46 crores whereas the Petitioner's own funds in the form of share capital, free reserves and balance of profit & loss account together aggregated Rs. 2,569.19 crores. In fact the profit of the Petitioner for the year itself was Rs. 1,256.55 crores. These material facts proved beyond doubt that the investments capable of yielding dividend income had recorded a net decrease of Rs. 12.27 crores during F.Y. 2007-. 5. The attention of the Ld. Tribunal is further invited to the CIT(A)'s order for the A.Y. 2007-08 in the Petitioner's own case which was at Pages 64 to 69 of the Supplementary Paper Book. The attention is particularly invited to Page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 /Kol/20 11 dated 20.05.2016 for the A.Y. 2007 -08 in the Petitioner's own case. On perusal of Paras 25 to 29 of the said order, it will be noted that in Ground No. 2 of I.T.A. No. 589/Kol/2011 the Revenue had objected to the relief allowed by the CIT(A) out of interest paid and administrative expenses. After taking due note of the findings recorded by the CIT (A) in Para 7.1 of his appellate order the Hon'ble Tribunal in Para 29 of the order dated 20.05.2016 dismissed the revenue's appeal. It will therefore be appreciated that the CIT(A)'s finding recorded in the appellate order for A.Y. 2007-08 stood merged in the order of the ITAT. It will therefore be appreciated that in the Petitioner's own case for the immediate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 the net investment in shares & securities had recorded net decrease by Rs. 12.27 crores meaning thereby no incremental investment was made during F.Y. 2007-08. 8. The Petitioner submits that even though all these material facts & figures were available before the Hon'ble Tribunal there is no discussion about these facts in Para 7.1 of the Hon'ble Tribunal order. The Petitioner further finds that in deciding the issue of applicability of Rule 8D(2)(ii) the Hon'ble Tribunal neither considered nor dealt with the findings recorded by the CIT(A) & upheld by the ITAT for the A.Y. 2007-08 even though these findings had material bearing on the decision for the A.Y. 2008-09. The Petitioner submits that non consideration of the relevant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances the Hon'ble ITAT in the own case of the assessee for A.Y.2007-08 was pleased to decide the issue in favour of the assessee in ITA No. 589/Kol/2011 order dated 25.05.2016 wherein the Hon'ble ITAT after considering the order of the ld. CIT(A) deleted the addition made by the AO. The relevant extract of the ld. CIT(A) as well as the Hon'ble ITAT order is reproduced below :- "The following were the relevant observations of the CIT(A) in this regard :- "In the above decision Hon'ble Bombay High Court has said that though Rule 8D will not apply to assessment years prior to assessment year 2008-09 but for earlier years the disallowance u/s. 14A should be estimated on a reasonable basis. In the case of the assessee we find that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court. The following decisions were referred to in this regard : 1. Himtaj Consultants Pvt. Ltd. vs. I.T.O. (ITA No. 721/Ko1l2007- AY. 2004-05) Order dated 27.04.2007. 2. CHNHS Association vs. ACIT(ITA No.74/KoI/2008-AY.2004-05) Order Dated 19.02.2008. 3. I.T.O. vs. M/s S.P.S. Securities (P) Ltd. (ITA NO.123/KoI/2010- AY.2000-01 Order dated 19.08.2010 He further pointed out that the Hon'ble Calcutta High Court in the case of CIT Vs. M/S.R.R.Sen & Brothers Pvt.Ltd. in GA No.3019 of 2012 in ITA No.243 of 2012 dated 4.1.2013 held that computation of 1% of exempt income as disallowance u/s.14A of the Act was proper. The learned DR relied on the order of the CIT(A) and submitted that the disallowance in any case has to be 1% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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