TMI Blog2021 (4) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance is confirmed. However coming to the disallowance under Rule 8D(2)(ii), it is indirect interest expenditure. The contention of the assessee is that the assessee is having interest free funds in the form of reserves and surplus and no part of interest bearing funds were used for making these investments which yielded exempted income. The availability of interest free funds in the year of investment has not been demonstrated by the assessee before the lower authorities by producing the relevant financials which shows that there was actually interest free funds available with the assessee. It is the duty of the assessee to prove that no interest bearing funds were utilized for investment in these assets which yielded exempted inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before the Tribunal. The ld. AR submitted that the assessee was pursuing alternate remedy by filing petition u/s. 154 of the Income Tax Act, 1961 ('the Act') before the lower authorities which resulted in delay. In our opinion, there is a good and reasonable cause for delay of 110 days in filing the appeal before the Tribunal. Accordingly, we condone the delay and admit the appeal for adjudication. 2. The grounds of appeal raised by the assessee are as under : 1. The impugned Appellate order dated 08-02-2018 passed by the Learned CIT(A), Bangalore - 3 is opposed to law, facts and circumstances of the case. 2. The Ld. CIT(A) has erred in confirming the addition of ₹ 26,17,670/- which was disallowed by the AO u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing enough surplus in the form of share capital and reserves surplus and the investment made out of these funds, the Assessing Officer has not agreed with the contention of the assessee and passed the assessment order making the above addition. Aggrieved by the order of assessment, the assessee appealed before the CIT (Appeals) and pleaded before him that the investments related to exempted income which made in earlier years and not made in the Assessment Year 2013-14. The CIT (Appeals) observed that even if the investment was made in earlier year, the onus is on the assessee to show that the investment actually made in earlier years out of interest free funds. According to the CIT (Appeals), the assessee is not discharged the onus cast u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities has to be confirmed. 6. We have heard both the parties and perused the material on record. The Assessing Officer made disallowance by invoking the provisions of Section 14A r.w. Rule 8D(2)(ii) and 8D(2)(iii) of the Income Tax Rules. The disallowance made by invoking the provisions of Rule 8D(2)(iii) is at ₹ 5,88,840 and Rule 8D(2)(ii) is at ₹ 20,28,830. The disallowance under Rule 8D(2)(iii) is with regard to administrative and other common expenses when the assessee derive exempted income. The management of the assessee is involved in taking a decision with regard to investment in exempted income. This investment decision is very strategic which resulted in incurring of various administrative expenses. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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