9911796707
TMI Blog2016 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... for earning exempted income. 2. That is the facts and in law of the case the Ld. CIT(A) erred in restricting the disallowance u/s. 14A to Rs. 8313550/- in violation of the calculation prescribed by Rule 8D of I. T. Act." 3. The assessee is a company it is engaged in the business of making investments earning commission income and dealing in shares. In the course of assessment proceedings u/s.143(3)of the Act. The AO noticed that the assessee had earned exempt dividend income of Rs. 83,13,550/- which is not chargeable to tax and is exempt. 4. In view of the provisions of Section 14A of the Income Tax Act, 1961 (Act), which lays down that any expenditure incurred in earning income which does not form part of the total income under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ½ % of Rs. 13,82,39,781 6,91,198 Total 1,20,82,774/- In view of the above provisions, necessary expenses pertaining to exempted income is calculated at Rs. 1,20,82,774/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.14A cannot in case exceed the amount of dividend income earned during the year. Reliance is placed in this regard on the decision of Hon'ble ITAT, Chandigarh in case of ACIT vs. Punjab State Coop & Marketing wherein the Hon'ble Tribunal has held that disallowance u/s.14A cannot exceed the exempt income. Further, it is stated that in appellant's own case for A. Y.2009-10, the AO has vide his order u/s 143(3) dated 17.11.2011 restricted the disallowance u/s14A to the extent of dividend income earned. In support of this contention a copy of assessment order for A.Y.2009-10 is furnished for ready reference. Thus, it is contended that the disallowance in the relevant year under appeal in case of the appellant, therefore, cannot exceed Rs. 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the interest on loan amounting to Rs. 862668/- which was not utilized for business purpose." 9. The AO disallowed interest expenses claimed by the assessee for the following reasons: "DISALLOWANCE OF INTEREST The assessee has debited Rs. 1,29,16,413/- secured loan and unsecured loan for Rs. 14,61,16,864/- and Rs. 3,95,67,216. Examination of balance sheet also shows investment in unquoted share for Rs. 57,51,120/- as per Sch. 5 and also loan and advance as per Sch,5 for Rs. 88,35,187/-. The assessee was asked to explain vide order sheet dated 08.02.2008 why interest debited to P/L a/e should not be disallowed on pro rata basis considering that investment and loan and advances are not used for business purpose, as no benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the interest paid towards the loan and advances on pro-rata basis on account of non use of the fund for the purpose of business of the appellant since no benefit derived the appellant during the year out of the said loan amount. However, in this regard, the AR of the appellant submitted that the main business of the appellant company is dealing in shares, leasing and finance in all kinds of goods and securities and making investments etc. During the year under assessment, the appellant company has purchased share of Apollo Tyres Ltd. sold shares of Sunlife Trade Links Pvt. Ltd. and secured loan taken from body corporate. It is further submitted that the expenditure incurred by the appellant company during the year under assessment is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not justified in making the impugned disallowance of the interest paid towards loan and advances on pro-rata basis by holding that the funds were not used for the business purposes of 3 appellant. It is seen that one of the main business activities of the appellant has dealing in shares along with leasing and finance in all kinds of goods and securities and making investments. Therefore, I agree with the contention of the appellant that the appellant company has not derived any benefit from the investment of shares in the relevant year under appeal cannot be the sole reason for disallowance of interest expenditure Claimed towards the loan fund so long as the fund has been used for one of the main purposes of business of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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