TMI Blog2019 (9) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee are towards the secured loans which are secured against the stock and working capital - HELD THAT:- AO cannot consider the above interest on secured loans which are committed to the business exclusively. AO may consider the other interest incurred by the assessee for the purpose of disallowance u/s 14A. Accordingly, these grounds are also remitted to the AO for recalculation. We cannot accept the contention of the assessee that investments were made on business expediency. When assessee makes investments and earns exempt income, irrespective of the fact that whether assessee has own funds or not, when the business has mixed funds, rule 8D will apply. Accordingly, this ground raised by the assessee is dismissed. - 718, 719/H/18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not declared any income from the said investments. Further, the AO noticed from the information furnished by the assessee that it had incurred interest on term loans to the extent of ₹ 6,46,13,482/-. 2.2 The AO referring to the provisions of section 14A rwr 8D, inter-alia observed that no evidence is required to be examined to see that the expenditure has been actually incurred in relation to income not includible in total income. He, therefore, worked out an amount of ₹ 5,74,571/- and disallowed the same u/s 14A. 3.1 Aggrieved, the assessee preferred an appeal before the CIT(A) and contended that it has invested out of its own funds and having reserves and own funds to the extent of ₹ 29.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romote the companies and was on account of business expediency. b. The interest expenditure is fully on account of Fully charge created Secured Term loans and Working capital specifically borrowed from Scheduled Banks and is directly attributable to the earnings of Revenue from operations and not related to income which does not form part of the total income. 3. Without prejudice, the CIT(A) erred in not appreciating that in order to bring any interest expenditure under ambit of rule 8D(2)(ii), it will have to be demonstrated by the AO that said interest is not directly attributable to income which does not form part of the total income. 4. The appellant craves leave to add, alter, amend or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the previous year: B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; C = the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; In particular, the notes for B clearly states that the average value of investment, income from which does not or shall not form part of the total income. It is clear that we have to include those investments which has generated income and exclude those investments, which have not generated income. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(2)(ii) (iii) taking the average investment from which the exempt income is received. 8.2. Coming to ground No. 2b and ground No. 3, ld. AR submitted that the interest expenditure incurred by the assessee are towards the secured loans which are secured against the stock and working capital. Therefore, AO cannot consider the above interest on secured loans which are committed to the business exclusively. AO may consider the other interest incurred by the assessee for the purpose of disallowance u/s 14A. Accordingly, these grounds are also remitted to the AO for recalculation. 8.3 With regard to ground No. 2a, we cannot accept the contention of the assessee that investments were made on business expediency. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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