TMI Blog2020 (8) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee by the Tribunal in assessee's own case right from the AYs 1993-94 to AY 2002-03. Thus, respectfully following the earlier years precedence and the decision of Hon'ble Supreme Court in Taparia Tools [ 2015 (3) TMI 853 - SUPREME COURT] we direct the AO to allow the interest claimed by assessee during the year. - Decided against revenue. Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- Since the assessee was having more surplus funds than the closing value of investments we do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the disallowance under Rule 8D(2)(ii) of I.T. Rules, the same is sustained. Disallowance under Rule 8D(2)(iii) of I.T. Rules - CIT(A) restricted the disallowance to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 for the A.Ys. 2013-14 and 2014-15. 2. Ground Nos. 1 and 2 of Revenue s appeal for A.Y. 2013-14 and A.Y.2014-15 relates to deletion of disallowance made u/s. 36(1)(iii) of the Act. 3. Ld. Counsel for the assessee, at the outset submits that this issue has been decided in favour of the assessee by the Coordinate Bench of the Tribunal in assessee s own case for the earlier assessment years and both authorities below followed early year s orders while deciding the issue. 4. Ld. DR fairly submitted that the issue has been decided by the Tribunal which has been followed by the Ld.CIT(A). 5. We have heard the rival submissions, perused the orders of the authorities below. We find that the issue has been decided in favour of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is in dispute. Not its allowability per se i.e. the expenditure is allowable being of a revenue nature but in the case of project completion method it has to be allowed only when the project is complete and revenue/income is recognized by the appellant - i.e. it has to be matched with the corresponding income and when there is no reorganization of income then there can be no allowability of the corresponding expenditure - otherwise it would result in distortion of the matching principle - as held by Hon ble Bombay High Court in the case of Taparia Tools 260 ITR 102 (Bom) - therefore, since it cannot be linked with the recognization of revenue - in a project completion method - it cannot be allowed till the project is complete and rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has been following completed contract method i.e. project completion method . This method of accounting has been accepted by the Tribunal in AY 1997-98 and 1999-2000 and also the same has been upheld by the Hon'ble Bombay High Court in the earlier years. The assessee has been claiming interest expenses u/s. 36(1)(iii) on payment basis on the loans which are mainly for business and not project specific. The Ld. CIT(A) has directed to restrict the claim of interest to that on the project completion during the relevant previous year and held that it is to be allowed only when the project is complete and revenue/income is recognized by the assessee, because it is then it has to be matched with the corresponding income. If there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld.CIT(A) and reject the grounds raised by the Revenue. 7. Similarly, Ground Nos. 3 and 4 of the revenue s appeals are common for the A.Y. 2013-14 and A.Y. 2014-15 and they relate to partly deleting the disallowance made u/s. 14A r.w. Rule 8D of I.T. Rules. 8. Briefly stated the facts are, the Assessing Officer while completing the assessments for the A.Y. 2013-14 and 2014-15 computed the disallowance u/s. 14A r.w. Rule 8D and made disallowance of interest under Rule 8D(2)(ii) and expenses being 0.5% of average investments under Rule 8D(2)(iii) of I.T. Rules. The Ld.CIT(A) deleted the interest disallowance made under Rule 8D(2)(ii) and restricted the disallowance made under Rule 8D(2)(iii) of I.T. Rules to the amount of exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estments we do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the disallowance under Rule 8D(2)(ii) of I.T. Rules, the same is sustained. 12. Coming to the disallowance under Rule 8D(2)(iii) of I.T. Rules, the Ld.CIT(A) restricted the disallowance to the exempt income earned by the assessee during the year. Ld. Counsel for the assessee before us pleaded that in view of the decision of the Special Bench of Delhi Tribunal in the case of ACIT v. Vireet Investments Private Limited (supra) only those investments which yielded dividend income should be considered for the purpose of computing the disallowance. We direct the Assessing Officer to apply the ratio of the decision of the Special Bench of the Delhi Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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