TMI Blog2014 (3) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... e delete the addition made under section 14A read with Rule 8D(ii) at ₹ 33,08,071/-. In view of the assessee having incurred various expenditures, the disallowance warranted under Rule 8D(iii) at ½ % of the average of the value of investment at ₹ 672,635/- is upheld. The grounds of appeal No. 1 to 4 raised by the assessee are thus, partly allowed. - ITA No.927/CHD/2012 - - - Dated:- 27-3-2014 - SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER Appellant by : Shri Subhash Aggarwal Respondent by : Shri J.S.Nagar O R D E R PER SUSHMA CHOWLA, JM The appeal by the assessee is directed against the order of the Commissioner of Income Tax-II, Ludhiana dated 23.08.2012 against the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/-, the assessee was show caused to explain why disallowance under section 14A of the Act in relation to the said investment should not be made. The Assessing Officer, in view of the provisions of section 14A of the Act read with Rule 8D of the IT Rules computed the disallowance under Rule 8D(ii) at ₹ 33,08,071/- and under Rule 8D(iii) at ₹ 6,72,635/- as the assessee had borrowed funds on which interest was being made and on the other hand, certain amounts had been invested in earning tax free dividend income. 5. The Commissioner of Income Tax (Appeals) noted that the investment in shares had been made by the assessee in the earlier years and the assessee had sufficient interest free funds available with the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that the assessee was carrying on the business as consignment agent of Tata Steels Ltd. as sole proprietor of M/s Saligram Shiv Parshad. The ld. AR for the assessee further pointed out that no interest had been paid to the bank. However, interest of ₹ 77,72,910/- was paid to family members for the specific purpose of advancing loans to M/s Aarti Steels Ltd. to earn higher rate of interest. During the year under consideration, the investment with M/s Aarti Steels Ltd. as on 31.3.2009 was ₹ 11.33 Cr while the borrowing was ₹ 7.63 Cr meaning thereby that additional amount of ₹ 3.69 Cr was out of the own capital of the assessee. It was further pointed out by the ld. AR for the assessee that the investments in the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad income from other sources in the computation of income filed for the year under consideration placed at pages 8 to 10 of the Paper Book. On the other hand, the assessee had shown investment of ₹ 13.45 Cr in the shares and mutual funds, which the assessee claims to have made out of its own funds i.e. its capital of ₹ 25.02 Cr. The said investment in shares and mutual funds, income from which is exempt was made in the preceding years and during the year under consideration, only investment of ₹ 35,749/- was made. 9. In the totality of the abovesaid facts and circumstances, where the assessee had incurred interest expenditure which is set-off against the interest income offered under the head income from other sources ..... X X X X Extracts X X X X X X X X Extracts X X X X
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