TMI Blog2020 (10) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 (1) TMI 757 - SUPREME COURT] . There should not be any dispute that, if the assessee is able to demonstrate that the interest free funds available with the assessee is more than the value of investments and further the loan funds have not been used to make the investments, then no disallowance out of interest expenditure is called for under rule 8D(2)(ii). Since the factual details relating to the issue require examination, we are of the view that the assessee, in the interest of natural justice, should be provided with an opportunity to present its case to the A.O. With regard to the disallowance of administrative expenses made under rule 8(D)(iii), it is the submission of the assessee that the majority of expenses debited to Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years and further the loans taken during the year under consideration were used for general business purposes. The A.O. did not agree with the contentions of the assessee and accordingly proceeded to make disallowance u/s 14A of the Act read with rule 8D of IT Rules. Accordingly, he made disallowance of ₹ 52.10 crores u/s 14A of the Act, which consisted of interest disallowance of ₹ 46.88 crores under rule 8D(2)(ii) and expenditure disallowance of ₹ 5.22 crores under rule 8D(2)(iii). 4. The assessee challenged the addition by filing appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee reiterated the contentions with regard to the interest disallowance. With regard to the expenditure disallowance made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the A.O. has mechanically computed the expenditure disallowance under rule 8D(2)(iii) without having regard to the actual expenses incurred by the assessee. The Ld. A.R. submitted that the expenditure relating to exempt income is very less and major portion of the expenses have been incurred by the assessee towards other activities and hence the disallowance out of administrative expenses should have been restricted to the actual expenditure relating to the exempt income. 7. On the contrary, the Ld. D.R. submitted that the A.O. was not satisfied with the claim of the assessee with regard to the disallowance made u/s 14A of the Act and hence he has computed the disallowance by applying rule 8D. 8. We have heard the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administrative expenses made under rule 8(D)(iii), it is the submission of the assessee that the majority of expenses debited to Profit loss account are not related to the exempt income and further the expenses relatable to the exempt income could be identified and the same is lower than the amount computed by the A.O. under rule 8D(2)(iii). This contention of the assessee also require examination at the end of the A.O. 10. Accordingly, we are of the view that this issue requires fresh examination at the end of the A.O. in the light of the discussions made (supra). Accordingly, we set aside the order passed by Ld. CIT(A) and restore this issue to the file of the A.O. for examining it afresh. 11. We shall now take up the appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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