TMI Blog2019 (12) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure against such exempted income. Therefore in our view there cannot be any disallowance of the expenses on account of exempted income. See RAKESH K. PATEL (HUF) VERSUS DCIT, CIRCLE-1 (2) , BARODA [ 2019 (7) TMI 1545 - ITAT AHMEDABAD] We hold that there cannot be any disallowance on account of interest and administrative expenses under the provisions of section 14A read with rule 8D - Decided in favour of assessee - ITA No.2598/Ahd/2017, ITA No.1591/Ahd/2018 - - - Dated:- 6-12-2019 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms. MADHUMITA ROY, JUDICIAL MEMBER For the Appellant : Shri S.N. Divatia, AR For the Respondent : Shri N.K. Goel, Sr.DR ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of the Assessee against the separate orders of the Commissioner of Income Tax (Appeals) 6, Ahmedabad [CIT(A) in short] vide appeal nos.CIT(A)- 6/11/16-17 CIT(A)-6/133/17-18 dated 14/08/2017 and 27/04/2018 arising in the assessment order(s) passed under s.143(3) and 143(3) r.w.s.147 of the Income Tax Act, 1961(hereinafter referred to as the Act ) dated 10/03/2016 and 14/11/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted income needs to be disallowed. Accordingly, the AO worked out the amount of interest expenses corresponding to such exempted income in the manner as given below: A. Amount of interest claimed ₹ 1089270/- B. Exempt Income ₹ 332287/- C. Total Income ₹ 1177830/- A+B+C = ₹ 1089270/- X ₹ 332287/- = Rs,.307303/- 1177830/- Therefore, ₹ 3,07,303/- (being proportionate expenses) is added in his return income. Aggrieved assessee preferred an appeal to the learned CIT(A) who has also confirmed the order of the AO. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 5. The learned AR before us filed a paper book running from pages 1 to 15 and submitted that the own fund of the assessee exceeds the amount of investment. The learned AR claimed that the assessee has interest free fund of ₹1,46,21,584/- whereas the total investment stands at ₹87,43,615.00 only. The learned AR in support of his contention drew attention on page 14 of the paper book where the balance sheet of the assessee was placed. 6. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies below. The AO is directed to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 8. In the result, the appeal of the assessee in ITA No.1591/Ahd/2018 for AY 2-012-13 is allowed. Coming to the ITA No. 2598/AHD/2017 for the AY 2013-14 9. The assessee has raised the following grounds of appeal: 1.1. The order passed u/s.250 on 14.08.2017 for A.Y. 2013-14 by CIT(A)-6, Abad upholding the disallowance of ₹ 84,499/- u/s.14A made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2. The Ld.CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned disallowance. 2.1. The Ld.CIT(A) has grievously erred in law and on facts in confirming that the loan taken from LIC was utilized for investment in firm which yielded exempt share of profit so that the disallowance u/s.14A was justified. 2.2. That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Rules, 1962. 14.1. Regarding the interest expenses, we note that in the identical facts and circumstances the impugned issue has been decided in favour of the assessee in his own case vide paragraph number 7 to 7.3 of this order. For the detailed discussion please refer to the relevant paragraph. Respectfully following the same we hold that there cannot be any disallowance on account of interest expenses. 14.2. Regarding the disallowance of administrative expenses, we note that the AO has invoked the provisions of section 14A read with rule 8D mechanically without referring to the books of accounts of the assessee. As such the assessee has not claimed any expenditure against such exempted income. Therefore in our view there cannot be any disallowance of the expenses on account of exempted income. In holding so we also draw support and guidance from the order of this tribunal in the case of Rakesh K. Patel (HUF) Vs DCIT in ITA No. 246/Ahd/2018 for the Assessment Year 2013-14 dated 23rd July 2019. The relevant finding of the order is reproduced as under: 6. We have perused the order of the lower authorities. We find that the assessee has earne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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