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2019 (7) TMI 236

HELD THAT:- A perusal of the order of the ld.CIT(A) would reveal that the assessee has net interest income. It has shown interest income of ₹ 58,38,817/-therefore interest is not required to be computed for making disallowance. For buttressing our view point, we rely upon judgment of Hon’ble Gujarat High Court in the case of CIT Vs. Nirma Capital & Credit P.Ltd., 8 [2017 (9) TMI 485 - GUJARAT HIGH COURT]. The ld.AR during the course of hearing also pointed out that if the calculation is being made on the basis of 0.5% of average value of the investment, which has yielded dividend, then total expenditure could be worked at ₹ 548/- only. Therefore, considering the details submitted by the assessee as well as the fact tha .....

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were relatable to earning of exempt income, and how those expenditure have been added back by the assessee while filing the return. The assessee has filed written submissions which has been reproduced by the AO, and thereafter he disallowed a sum of ₹ 13,88,959/-. The discussion made by the AO reads as under: 5.3 I have duly considered the above reply of the assessee. The main emphasis of the assessee is on the fact that he has invested surplus fund and no borrowed fund was utilized for the investment. Here it will be better to refer to the balance sheet of the assessee which shows that the assessee has total funds of ₹ 6,48,82,007/- as on 31.03.2013 which is its own capital. Further, total investment as on 31.03.2013 has been s .....

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d. (iii) Punjab State Cooperation Federation Ltd. vs. CIT 336 ITR 0495 (2011), in this case Hon'ble Punjab and Haryana High Court held that expense incurred by the assesses for earning income which does not form part of total income under the Act shall not be allowable expenditure. Disallowance required to be made u/s 14A read with Rule 8D is also examined in view of following case laws: CIT vs. Popular Vehicle Service Ltd. 325 ITR 0523 (2010 Kerala) Pradeep Kar vs. Asstt. Commissioner of Income Tax 319 ITR 0416 (2009) Karnataka. 5.4 Provisions of Rule 8D specifically make a mention, in respect of formula given for computing indirect expenses attributable to income claimed as exempt under section 14A of the Act. Therefore, following the .....

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.counsel for the assessee in the past no disallowance was made nor in the subsequent year. On the other hand, the ld.DR relied upon the order of the ld.CIT(A). 6. We have duly considered rival submissions and gone through the record carefully. A perusal of the order of the ld.CIT(A) would reveal that the assessee has net interest income. It has shown interest income of ₹ 58,38,817/-therefore interest is not required to be computed for making disallowance. For buttressing our view point, we rely upon judgment of Hon ble Gujarat High Court in the case of CIT Vs. Nirma Capital & Credit P.Ltd., 85 taxmann.com 72 = Tax Appeal No.409 and 409 and 514 of 2017. As far as administrative expenses are concerned, it is pertinent to observe tha .....

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