TMI Blog2017 (1) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... of rule 8D(ii) and not in the context of disallowance under rule 8D(2)(iii). In our opinion the findings given by the ld. CIT (A) are correct so far as the disallowance under section 14A read with rule 8D(2) is concerned and accordingly we uphold the same by dismissing the appeal of the assessee on this ground. Disallowance of deduction under section 57(iii) - assessee in order to claim credit facilities from the bank borrowed money from his HUF and put the same into FDRs which were pledged with the bank as security as the assessee was having FDRs in his HUF - HELD THAT:- Assessee transferred funds from HUF account to his individual account in order to make FDR which was pledged with the bank for obtaining credit facilities' at concessional rate. During the year the assessee received interest on FDR which were made out of the funds borrowed from HUF account. We also find that the assessee after showing the same as income under the head other sources also claimed deduction of the equal amount under section 57(iii) as interest paid to HUF and shown in the return of income filed by the HUF which was proved from the return of income and computation of income, balance sheet a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80D of the Income Tax Rules, 1962 should not be disallowed and added to the income which was replied by the assessee vide letter dated 26.12.2013 submitting that the assessee was having the investments in fixed deposits and the interest received from the same was offered for taxation in the return of income filed. The AO was not convinced with the contentions and submissions of the assessee. The AO after considering and rejecting the assessee's contentions came to the conclusion on the basis of perusal of balance sheet that the assessee has invested his funds mainly in shares and mutual funds on which the assessee has earned income which was claimed as exempt. Likewise, the assessee has received share profit from the partnership firms which was too not includible in the total income. Accordingly, the AO invoked the provisions of Rule 8D of the Rules and added ₹ 1,66,519/- to the income of the assessee. 4. During the proceedings before the first appellate authority, part relief was allowed to the assessee after considering the submissions and contentions raised during the appellate proceedings by observing and holding as under: 4.3 I have considered the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were sufficient to meet the investments, then Rule 8D is not to be applied. Similar is the ratio decendi in the case of Hon'ble Punjab and Haryana High Court in the case of Max India Ltd. (supra) and therefore prayed that the ground raised by the assessee be dismissed by upholding the order of ld. CIT (A). 7. We have carefully considered the rival submissions and perused the material placed before us. We find that the ld. CIT (A) has already given finding that since own funds of the assessee is more than the investments in shares and securities and therefore no interest can be disallowed in view of the decision of the Bombay High Court in the cases of HDFC Bank Ltd. (supra) and CIT v. Reliance Utilities Power Ltd. [2009] 313 ITR 340. Following the ratio the ld CIT (A) directed to compute the disallowance at the rate of 0.5% of the average investments excluding fixed deposits which in our opinion is correct findings as the addition made under rule 8D)(2)(ii) was deleted in total. So the only remaining issue of sustaining the addition u/s. 8D(2)(iii) is before us and the assessee has relied on a couple of decisions as discussed hereinafter praying for the additions as sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n wholly and exclusively incurred for the purpose of earning such income. The AO added the same to the total income of the assessee. Aggrieved by the order of the AO, the assessee preferred appeal before the first appellate authority who also dismissed the appeal of the assessee on this ground by holding as under : 6.3 I have considered the appellant's submissions. The appellant had paid ₹ 2,15,261/- under section 57 on the amount borrowed from HUF which was invested in fixed deposits for increase in the limit of bank overdraft on which appellant received loan. The AO disallowed this payment of ₹ 2,15,261/- under section 57 stating that no nexus was proved between these deposits on loan which was offered by the bank. Even during the appellate proceedings, appellant had not provided evidence to show that this deposit was mainly for the purpose of obtaining bank overdraft facility. The appellant has other FDS which is enough for obtaining bank overdraft facility. Hence AO's addition is confirmed and ground of appeal is dismissed. 10. The ld. AR vehemently contended before us that the same income could not be taxed twice first by way of disallowance of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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