TMI Blog2018 (7) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in tax free securities, then no disallowance u/s. 14A of the Act is warranted. So this ground of assessee is allowed for statistical purpose. Whether the Ld. CIT(A) is justified in directing the AO compute the disallowance under rule 8D(ii) and 8D(2)(iii) by adopting those investments which have yielded exempted dividend during the relevant year? - Held that:- This Tribunal has consistently followed the dictum of law laid down in REI Agro Ltd. Vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] in which the Tribunal held that only investment which has given rise to the exempted income should be taken into consideration while computing disallowance u/s. 14A read with Rule 8D (iii) of the Rules. This order has been upheld by the Hon’ble Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order of the Ld. CIT(A)-22, Kolkata dated 27.03.2017 for AY 2009-10. 2. Ground no. 1 of revenue s appeal and ground no. 1 and additional grounds of assessee are against the action of Ld. CIT(A) in restricting the disallowance u/s. 14A read with rule 8D to ₹ 39,57,250/-. 3. Briefly stated facts are that during the year the assessee had earned exempt dividend income of ₹ 92,73,195/-. Against the said income the assessee had offered ₹ 2,25,735/- as expenses attributable in order to earn such exempt income u/s. 14A of the Income-tax Act, 1961 (hereinafter referred to as the Act ). According to Ld. AR the basis of quantifying such expenses was based on the fact that about 20% of the time cost of the Treasury Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings the Ld. AR of the assessee has filed a detailed written submission and explained the details of the workings of the above disallowance. He also submitted that the assessee had not utilized borrowed funds for investment. Hence, no disallowance should be made under Rule 8D(ii) and 8D(2)(iii) of the Rules. Aggrieved, assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee has raised additional ground to the effect that the AO has erred in taking total investments lying in the balance sheet as on 31.03.2008 and 31.03.2009 (excluding foreign investments) instead of those investments which have yielded exempted income during the relevant year. After considering the detailed submission of the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid decision of the Hon ble Bombay High Court, we find force in this ground raised by the assessee. Therefore, we direct the AO to verify the facts stated above and if it is found that assessee had own funds to make investment in tax free securities, then no disallowance u/s. 14A of the Act is warranted. So this ground of assessee is allowed for statistical purpose. Coming to the additional ground of assessee, we do not find any merit in the same because AO has expressed his dissatisfaction in the disallowance suo-motto made by the assessee, so it is dismissed 5. Coming next to the issue in question is as to whether the Ld. CIT(A) is justified in directing the AO compute the disallowance under rule 8D(ii) and 8D(2)(iii) by adopting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) directed the AO to consider the software expenses as allowable revenue expenses by following the decision of ITAT in assessee s own case for AY 2003-04 in ITA No. 189/Kol/2007 dated 20.01.2016 by observing as under: 1. I have carefully gone through the submission filed by the Ld. AR, the explanation made by the Ld. AR during the course of hearing on the issue, observation made by the AO in the order u/s. 143(3) and the order of the Hon ble Kolkata ITAT filed by the appellant for AY 2003-04, 2004-05 and 2008-09. I find that the above expenses were routine maintenance/support services/consultancy services etc. In my view the said expenses should be allowed as revenue expenses. 2. Further, similar disallowance was deleted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest attributable to CWIP. Brief facts are that the AO allocated the interest expense of ₹ 12,27,289/- to CWIP on ad hoc basis applying proportionate method on the ground that the same was incurred for CWIP. On appeal, the Ld. CIT(A) deleted the disallowance by holding that the AO allocated interest expenses on ad hoc basis merely on surmises and conjectures and hence, the same was not sustainable. The AO did not identify any borrowed fund which was utilized for CWIP. The Ld. CIT(A) while deleting the disallowance also relied on the decision of ITAT, Kolkata Benches in departmental appeal for AY 2008-09. Aggrieved, revenue is in appeal before us. 8. We have heard rival submissions and gone through the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
