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TMI Blog2018 (2) TMI 1938X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/-. Both the aforesaid items of income were exempt under Chapter-III of the Act. Under section 14A of the Income Tax Act, 1961 (Act) any expenditure incurred in earning income which does not form part of the total income under the Act cannot be claimed as a deduction. 3. The assessee computed disallowance of expenses of a sum of Rs. 2,06,890/- u/s 14A of the Act. The AO proceeded to determine the expenses that have to be disallowed u/s 14A of the Act as he was not satisfied with the quantum of expenses disallowed by the assessee u/s 144 of the Act. The AO found that there was interest expenses debited in the profit and loss account of Rs. 2,61,58,696/-. Besides the above the expenses under the head ' administrative and other expenses' d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 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 13,24,255 October'10 5,26,71,5 06 Nil 7,00,00,000 Advance against sale of property 1,73,28,494 November'1 0 3,91,06,1 56 1,32,8 5,372 5,50,00,000 Advance against sale of property 4,65,07,710 December'1 0 3,48,57,2 75 42,29, 824 1,58,80,259 January'11 1,00,000 Nil Nil 1,58,80,259 February'11 Nil nil 1,58,80,259 March'11 38,00,000 2,18,3 5,666 3,39,15,295 Total 14,05,10, 682 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the entire investments. The assessee in this regard placed reliance on the decision of ITAT in the case of REI Agro Ltd in ITA No.1331/Kol/2011 dated 19.06.2013. 7. The CIT(A) agreed with the submissions of the assessee with regard to disallowance in terms of Rule 8D(2)(ii) of the Act and held that the assessee had enough own funds much in excess of the investments made which yielded 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 tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to disallowance under Rule 8D(2)(iii) of the Rules. With regard to ground no.2 raised by the revenue it was submitted by him that the CIT(A) did not set aside the order of the AO and directed the AO to make examination afresh. The direction was only with regard to verification of figures with regard to 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 Rs. 28.85 crores and the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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