TMI Blog2021 (1) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ntually go to reduce the returned income of the assessee and in that regard, we hold that the revenue is authorised to collect taxes in accordance with law as per Article 265 of the Constitution of India and not based on the consent or acceptance of the assessee either in the return or during the course of assessment or appellate proceedings. There is no estoppel against the statute. In view of our aforesaid decision directing the ld AO to delete the disallowance of interest under second limb of Rule 8D(2) of the Rules, the alternative ground raised by the assessee on without prejudice basis that only the net interest is to be considered for working out the disallowance, need not be gone into and accordingly not adjudicated herein. Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival submissions and perused the materials available on record. At the outset, the ld DR sought for an adjournment on the ground that he requires some time to go through these files. As the issue involved in both the appeals is only disallowance made under section 14A of the Act read with Rule 8D(2) of the Rules, these items were passed over and sufficient time was given to ld DR to go through the same. Later it was taken up for hearing. We find that the assessee had earned dividend income of ₹ 1,54,67,944/- during the year under consideration and claimed the same as exempt. We find that the assessee had made suo moto disallowance of ₹ 80,41,586/- u/s 14A of the Act while filing its return of income. We find that the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 8D(2) of the Rules. The assessee also submitted that the said issue has been decided in its favour by the predecessor ld CITA for the Asst Years 2011-12 and 2012-13. 6. The ld CITA observed as under:- 5.3 I have considered the facts of the case and the appellant's submissions. As far as disallowances under Rule 8D(2)(i) and Rule 8D(2)(iii) are concerned, the suo moto disallowances made by the appellant and the disallowances computed by the Assessing Officer are the same and are not being disputed. In respect of proportionate interest under Rule 8D(2)(ii), the Assessing Officer has computed the disallowance at ₹ 3,00,91,762/- as against the appellant's suo moto disallowance of ₹ 7,35,564/-. Perusal of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 8D(2) of the Rules over and above the disallowance made by the assessee voluntarily in the return. We find that the assessee is in appeal against the interest disallowance of ₹ 7,35,564/- upheld by the ld CITA (though voluntarily made by the assessee in the return) under second limb of Rule 8D(2) of the Rules; even if it is to be made, on without prejudice basis, only the net interest (i.e interest paid less interest income) should be considered for such disallowance and that only those investments which had actually yielded exempt income should be considered for working out the disallowance under second and third limb of Rule 8D(2) of the Rules. 8. We find that there is a categorical finding recorded by the ld CITA that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no water. Accordingly, there cannot be any disallowance of interest under the second limb of Rule 8D(2) of the Rules. Hence we direct the ld AO to delete the disallowance of interest under second limb of Rule 8D(2) of the Rules to the extent of ₹ 3,00,91,762/- which also includes the disallowance voluntarily made by the assessee in the return to the extent of ₹ 7,35,564/-. This is in view of the fact that once sufficient own funds are available with the assessee for making investments, then there cannot be any disallowance of interest under second limb of Rule 8D(2) of the Rules, eventhough the same was erroneously made by the assessee in the return of income. We are conscious of the fact that this direction may eventually go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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