TMI Blog2018 (2) TMI 1938X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue. In such circumstances we find no merits in this appeal by the revenue challenging the deletion of addition in terms of Rule 8D(2)(ii) of the rules,. In so far as the disallowance of other expenses under Rule 8D(2)(iii) of the rules is concerned we are of the view that direction of CIT(A) to include only investments which yielded dividend income while computing average value of investments before applying the formula of Rule 8D(2)(iii) of the Rules is in accordance with the decision of the tribunal in the case of REI Agro Ltd [ 2013 (9) TMI 156 - ITAT KOLKATA] - Decided against revenue. - ITA No.2299Kol/2016 - - - Dated:- 14-2-2018 - Hon ble Shri N.V.Vasudevan, JM And Shri Waseem Ahmed AM For The Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed funds on which interest was paid and claimed as deduction were not used for the purpose of making investments that yielded tax free income. The AO was also of the view that the managerial skills of the personnel, directors and staff was also used for managing investments. He was of the view that disallowance of expenses in terms of section 14A r.w. Rule 8D of the Act should be made. The AO accordingly computed disallowance u/s 14A of the Act read with Rule 8D of the IT Rules, 1962, as follows 4. Before the CIT(A) the assessee challenged the disallowance in terms of rule 8D(2)(ii) and 8D(2)(iii) of the IT Rules. With regard to disallowance of interest expenses under Rule 8D(2)(ii) the assessee submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,24,255 July 10 2,00,000 Nil 13,24,255 August 10 1,00,000 Nil Nil 13,24,255 September 10 Nil Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,39,15,295 Total 14,05,10, 682 3,93,5 0,862 13,64,00,00 0 5 . The assessee submitted that all the loans funds reflected in the balance sheet of ₹ 25.02 crores was not interest bearing and that loan amount to the extent of ₹ 4.43 crore did not carry any interest. The assessee submitted that the assessee had interest free own funds available during the previous year viz. ₹ 8.55 crores (share capital) ₹ 4.43crores (non interest bearing l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d exempt income and therefore no disallowance under Rule 8D(2)(ii) could be made. With regard to disallowance under Rule 8D(2)(iii), the CIT(A) held that the said disallowance should be made by taking into consideration only the investments that yielded exempt income. 8. Aggrieved by the order of the revenue has preferred the present appeal before the tribunal raising the following grounds of appeal : 1. On the facts and in circumstances of the case Ld. CIT(A) had erred to allow relief on this ground on the view that considering that the appellant had enough funds of its own, much in excess of the investment's made which yielded exempt income and amply evidenced by its audited accounts, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct computation of value of average value of investments by excluding investments that yielded tax free income and thereafter applying formula in Rule 8D(2)(iii) of the Rules. 10. We have considered the rival submissions. In our view there is no merit in this appeal by the revenue. As rightly contended by the ld. Counsel for the assessee the availability of own funds of the assessee to the tune of ₹ 28.85 crores and the fact that the closing value of investment in the balance sheet as on the last date of the previous year was ₹ 22.3 crores clearly demonstrates that the assessee had sufficient own funds which were more than the value of investments. Apart from the above the source of investments on each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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