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TMI Blog2018 (10) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of appeal; "1. That the learned Commissioner of Income Tax (A) erred in confirming the disallowance u/s 14A of the Act at Rs. 11,26,876/- instead of revised claim of the appellant to restrict such disallowance at Rs. 3,47,930/- only. He ought to have appreciated that legal claim can be raised during assessment as well appellate proceedings for the first time having a bearing on tax liability of the assessee. Such powers are inherent for determination of correct income as held by Supreme Court in the case of M/s. National Thermal Power Company Ltd Vs. CIT (1998) 229 ITR 383, provided such omission to raise it earlier was bonafide and not willful or unreasonable. 2. That the learned Commissioner of Income Tax (A) erred in not apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment. Revised working was furnished before the assessing authority for considering the correct claim of disallowance u/s 14A of the Act and reduce the disallowance to Rs. 3,47,930/-. However this contention of the assessee did not find any favour from the Ld. A.O and he maintained the disallowance u/s 14A at Rs. 11,26,875/-. Ld.A.O also made an addition towards valuation of closing stock by invoking the provisions of section 145A of the Act at Rs. 55,52,139/-. 4. Aggrieved assessee preferred an appeal before Ld.CIT(A) on both the issues relating to valuation of closing stock as well as disallowance u/s 14A of the Act and partly succeeded as Ld.CIT(A) gave no relief to the ground raised against the disallowance u/s 14A of the Act. Ld.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. It was claimed that there being direct nexus of borrowed fund, interest on Rs. 4 crores at Rs. 1,05,000/- only should have been disallowed instead of applying the formula prescribed under Rule 8D. Revised calculation of amount disallowable u/s 14A of the Act read with Rule 8D was submitted before the assessing authority with a request to consider the claim at the stage of assessment proceedings and reduce the disallowance to Rs. 3,47,930/- only instead of Rs. 11,27,042/- offered for tax without considering aforesaid fact. Reliance is placed on the judgment in the case of Bharatiya Reserve Bank Note Mudran (P) Ltd Vs. DCIT, LTU (2014)150 ITD 678 (Bangalore) wherein it was held that no disallowance of interest could be made under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority that the average investments appearing in the method provided in Rule 8D of IT rules, the investment made in SBI Premier Liquid Mutual Fund at Rs. 4 crores has also been included which was actually invested for 7 days and that too at the insistence of the banker i.e. State Bank of India. It is not disputed that there is a nexus of borrowed fund being applied for investment in SBI Premier Liquid Mutual Fund of Rs. 4 crores but the interest disallowance should have been limited only for number of days for which the funds were used rather than being spread for the whole year proportionately. There is no dispute at the end of both the parties that the investment made in SBI Premier Liquid Mutual Fund was made for only 7 days i.e. from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest for 7 day on Rs. 4 crores may be added for the purpose of disallowance u/s 14A which works out to Rs. 1,05,000/- 10. We have perused the above working of the disallowance u/s 14A of the Act and observe that an apparent mistake was pointed out by the assessee during the course of assessment proceedings itself before the Ld.A.O by way of providing the revised calculation of the disallowance u/s 14A r.w.s.8D of the IT rules. It has been consistently held in various judgments that during the course of assessment proceedings if any new claim or a revised claim by way of filing a revised computation of income or placing any material facts on record, then the Assessing Officer is duty bound to assess the correct income of the assessee on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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