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TMI Blog2019 (5) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... hort the 'Act') dated 20.03.2014 framed by 2. Revenue has raised following grounds of appeal; 1. Whether on the facts and in the circumstances of the case, Ld.CIT(A) erred in deleting the addition of Rs. 2,23,40,745/- on account of disallowance ix]« 14A of the IT Act read with Rule 8D, ignoring the fact that correctness of claim of disallowance in return of income was not proved by the assessee. 2. Whether on the facts and in the circumstances of the case, Ld,CIT(A) has erred in deleting the addition of Rs. 2,23,40, 745/ - on account of disallowance si]« 14A of the IT Act read with Rule 8D, ignoring the fact that assessee failed to prove direct nexus between interest expenditure with taxable income and non- taxable income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - was deleted by Ld. CIT(A). 4. Now revenue is in appeal before the Tribunal. 5. At the outset Ld. Counsel for the assessee submitted that the issue raised in this appeal is squarely covered by the decision of the Co- ordinate Bench in the case of M/s. Turquoise Investment & Finance Pvt. Ltd vide ITA No.332 & 333/Ind/2017 order dated 06.02.2019 wherein the case of one of the group concern has been dealt and the Hon'ble Tribunal has sustained the disallowance only towards administrative expenses at Rs. 7,50,000/-. 6. Ld. Departmental Representative supported the orders of Ld. A.O but could not controvert the fact that the issue is squarely covered by the decision of the Co-ordinate Bench in the case of M/s. Turquoise Investment & Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant himself made the disallowance u/s 14A amounting to Rs.l 0, 17,78,678/- as under:- A.= Gross interest and finance charges = Rs. 13,90,34,745/- B= Interest income on inter-corporate loans granted= Rs. 3,72,56,740/- The disallowance on account of interest charges equal to A - B= Rs. 10,17,78.005/- The appellant has also considered the demat charges expenses at Rs. 673/-. Thereby making the total disallowance of Rs.l0,17,78,678/(Rs.1 0, 17,78,005/- + Rs. 673/-). The above action of the appellant of making disallowance of net interest has been upheld by following judicial authorities:- > Morgan Stanley India Securities Private Limited Vs ACIT, Circle 1 (2), Mumbai [ITA NO. 5072/ Mu m/ 2005 dated 13.04.2011)(ASSESSMENT Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . U-555/07 -08 made the disallowance of interest u./s 14A on a net basis i.e interest paid (-) interest received. (Para 5.3 & 5.4, Page 13 & 14) Assessment Year 2005-06 In this year, the CIT(A), Ujjain vide order dated 22.03.2010 in appeal No.U-398/08-09 made the disallowance of interest u/s 14A on a net basis i.e interest paid (-) interest received. (Para :.3. Page 3). In view of the above, the AO is not justified in applying Rule 8D and rejecting the claim of the Appellant without showing non-satisfaction is not as per the law and therefore, the action of the AO in applying Rule 8D is to be trated as justifiable and the disallowance u/s 14A is to be restricted to Rs. l0,17,78,678/- as made by the appellant while filing the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,22,648/-. We find that for A.Y. 2008-09 average investments fetching exempt income stood at Rs. 421.98 cr. which has grown to Rs. 803.40 cr. for A.Y. 2011-112. We, therefore, being fair to both the parties and taking consistent approach, are of the view that disallowance of Rs. 7,50,000/- shall be justified towards the disallowance of administrative expenses which may have been incurred for administrating the investments fetching exempt income. We accordingly order so and direct the assessing officer to sustain the disallowance u/s 14A of the Act at Rs. 7,50,000/- under Rule 8D(2)(iii) of the IT, Rules. 15. In the result, against total disallowance of Rs. 65,73,689/- made by the Ld. AO u/s 14A of the Act, we sustained the disallowance at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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