TMI Blog2021 (7) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for the specific projects and further the usage of loans will also monitored by the bank. Accordingly, in the absence of any material to show that the project specific loan has been diverted for investment in partnership firms, the disallowance out of interest expenditure is not called for - we are of the view that there is no necessity to apply the provisions of rule 8D. Addition of other expenses - Assessee has claimed other expenses of ₹ 14.13 crores, out of which only ₹ 48.52 lakhs alone can be said to be common expenses. A.R submitted that the services and facilities used by assessee from other concerns and also by the other concerns from the assessee have been quantified and cross charged. Hence, overall supervisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aggregating to ₹ 20.32 lakhs and claimed the same as exempt u/s 10(2A) of the Act. The AO noticed that the assessee did not make any disallowance u/s 14A of the Act. Hence, the A.O. proceeded to compute disallowance u/r 8D of I T Rules read with section 14A of the Act. The disallowance made by the AO consisted of interest disallowance under Rule 8D(2)(ii) amounting to ₹ 8,56,691/-and expenditure disallowance of ₹ 33,85,377/- under Rule 8D(2)(iii), both aggregating to ₹ 42,42,668/-. The Ld. CIT(A) also confirmed the same. 3. The Ld. A.R. submitted that the assessee did not incur any expenditure for earning the exempt income. He further submitted that the main income of the assessee is income from property devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the claim of the assessee for not disallowing anything u/s 14A of the Act is not correct. He further submitted that though the assessee has invested in many partnership firms, yet it has earned share income only from two concerns namely M/s. Century Airport City M/s. Century Corbel. Hence, for deciding the applicability of provisions of sec.14A, only investments made in these two concerns alone are required to be taken into consideration. Accordingly, he submitted that the disallowance u/s 14A of the Act is not warranted. 4. On the contrary, the Ld. D.R. supported the order passed by Ld. CIT(A). 5. We heard the rival contentions and perused the record. We notice that the A.O. has computed the disallowance u/s 14A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been quantified and cross charged. Hence, overall supervision of the activities of partnership firms by the assessee would be relevant for sec.14A of the Act. Considering these facts and also the fact that major income of the assessee is from property development, we are of the view that the disallowance u/s 14A of the Act can be made at an adhoc figure of ₹ 2.00 lakhs and the same, in our view, would meet the requirements of section 14A of the Act. 7. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to restrict the disallowance to two lakhs rupees u/s 14A of the Act. 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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