TMI Blog2018 (10) TMI 1894X X X X Extracts X X X X X X X X Extracts X X X X ..... O is directed to modify accordingly. Ground is partly allowed. As the issue under consideration is materially identical to the said decision, following the conclusions drawn therein, we direct the AO to VBC Ferro Alloys Ltd., Hyd. [ 2018 (8) TMI 130 - ITAT HYDERABAD] delete the disallowance made u/s 14A r.w.r. 8D(2)(iii) as the disallowance u/s 14A cannot exceed the exempt income. - Decided against revenue. - ITA No.735/Hyd/2018 - - - Dated:- 3-10-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For the Assessee : Sri Laxminiwas Sharma For the Revenue : Smt. V. Rajitha, DR ORDER PER Smt. P. Madhavi Devi, J.M.: This is Revenue s appeal for the Assessment Year 2014 -15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned by the assessee. Accordingly, CIT(A) restricted the disallowance to ₹ 34,90,601/-. Against the relief granted by the CIT(A), the Revenue is in appeal before us. While the Learned Departmental Representative supported the order of the A.O, the Learned Counsel for the Assessee placed reliance upon the decision of the CIT(A) and also placed reliance upon various precedents on the issue which are as under: - 1. Capital Fortunes Private Limited vs Dy. Commissioner of Income Tax, Circle1(2), Hyderabad - ITAT Hyderabad - ITA No. 1165/HYD/2017 - order dated 31.07.2018. 2. VBC Ferro Alloys Ltd. Versus Income-Tax Officer, Ward -17 (1), HyderabadITAT Hyderabad - ITA No. 1541/Hyd/2017 - order dated 31.07.2018Copy enclosed. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Having regard to the rival contention and the material on record, we find that in the case of VBC Ferro Alloys Ltd vs. ITO (2018) 8 TMI 130 ITAT Hyderabad, coordinate Bench of this Tribunal to which both of us are the signatories, have followed the precedents on the issue to hold that the disallowance u/s 14A read with Rule 8D cannot exceed exempt income. The relevant portion is reproduced hereunder for the sake of reference. 10. Considered the rival submissions and perused the material on record. The issue in dispute is squarely covered by the decision of the coordinate bench of this Tribunal in the case of SNJ Synthetics Ld. (supra) wherein the coordinate bench has observed as under: 6. We have considered the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Financial Corpn. Ltd., Vs. DCIT [41 taxmann.com 251] (Delhi-Trib) and has held as under: 8.1. As can be seen from the nature of expenditure, there is no indication even that the above expenditure is expended for earning dividend income. AO without giving any satisfactory reason, just invoked Rule 8D(iii) and disallowed the amount. 9. The Co-ordinate Bench in the case of Sahara India Financial Corpn. Ltd., Vs. DCIT(supra) has held in para 81 as under: We have heard the rival contentions and perused the material available on record. It has not been disputed that the administration, expenses and books of account of investment division are separately carried out and maintained by the assessee. No infirmity has been found by the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed the income earned. In our view this judgment takes a holistic view that disallowance in terms of sec. 14A can be maximum to the extent of exempt income, there is no dispute that in this case which is at ₹ 68,37,583/-. This judgment implies that reasonable expenditure less than the exempt income can be disallowed. In our considered opinion, in the interest of justice, it will be reasonable to estimate and disallow, 50% of exempt) income (₹ 68,37,583/-) as relatable to exempt income u/s 14A r/w rule 8D. We do not go into various plea taken by both sides offering diverse views based on judicial citations. This ground of the assessee is partly allowed. 10. Respectfully following the above principles, as the disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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