TMI Blog2015 (6) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... are set aside and the addition made is deleted. Disallowance u/s 14A - only objection of the ld. Counsel is that interest on loan alone could be considered for disallowance and the interest on overdraft facility which was availed for exporting the goods is for business purposes and therefore, cannot be considered for disallowance under Rule 8D - Held that:- The claim of the assessee with regard to interest on overdraft facility was not considered by either of the authorities below. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance u/s 14A is remitted back to the file of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (Mds.) of 2013 - - - Dated:- 19-6-2015 - N.R.S. GANESAN, JUDICIAL MEMBER AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ORDER N.R.S. Ganesan, Judicial Member This appeal was dismissed earlier by an order dated 29.10.2014. However, on the application filed by the assessee in M.P.No.165/Mds/2014, the order of this Tribunal dated 29.10.2014 was recalled and the appeal was restored on record. Accordingly, the same was posed for hearing on 11.6.2015. 2. Shri N. Devanathan, ld. Counsel for the assessee submitted that the first issue arises for consideration is claim of bad debt to the extent of ₹ 20,98,200/-. According to the ld. Counsel, the assessee has business transaction with M/s Madras Polymounds. M/s Madras Polymoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance u/s 14A. The ld. Counsel submitted that the assessee has invested its own funds for earning the exempted income. Referring to section 14A and Rule 8D, the ld. Counsel submitted that disallowance has to be made only as per the formula provided in Rule 8D of the I.T. Rules. In this case, the assessee has borrowed overdraft and paid interest on such overdraft. The interest paid on the overdraft cannot be considered for computing disallowance under Rule 8D. Referring to the judgment of Hon'ble Delhi High Court in the case of CIT v. Ms. Sushma Kapoor [2009] 319 ITR 299/[2010] 188 Taxman 24, and that of Hon'ble Bombay High Court in CIT v. HDFC Bank Ltd. [2014] 366 ITR 505/226 Taxman 132/49 taxmann.com 335, the ld. Counsel submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, there is no question of allowing the same as bad debt. 7. Referring to the claim of the assessee with regard to expenditure for earning the exempted income, the ld. DR submitted that the assessee received exempted income to the extent of ₹ 8,90,086/-. However, no expenditure was claimed. Therefore, the Assessing Officer applied Rule 8D and computed the disallowance. 8. Referring to the claim of the assessee with regard to club expenses of ₹ 40,169/-, the ld. DR submitted that the assessee claimed before the Assessing Officer that foreign delegates were entertained in Madras Cricket Club and Cosmopolitan Club etc. However, no evidence was filed to show that these expenses are for business purposes. Therefore, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied goods to M/s Madras Polymounds and the amount is due from M/s Madras Polymounds. The only contention of the ld. DR is that the assessee continued business even after the debt became bad and also received money in respect of other transactions from M/s Madras Polymounds. Therefore, the Department claims that the amount due has not become bad. The fact remains that the material supplied by the assessee to the extent of ₹ 20,98,200/- remains unpaid and M/s Madras Polymounds refused to pay the same on the ground that they could not recover the same from the purchaser located outside India. Therefore, it is obvious that there was a loss in the course of business transaction. Admittedly, the assessee has written off the amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t facility was not considered by either of the authorities below. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance u/s 14A is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider this issue in the light of the material available on record and thereafter find out whether the interest paid by the assessee on overdraft facility has to be considered for disallowance under Rule 8D or not and thereafter decide the same in accordance with law after giving a reasonable opportunity of hearing to the assessee. 12. The next issue is with regard to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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