TMI Blog2021 (8) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has parked its surplus funds in fixed deposits of the bank from which it earned interest income - we find that the assessee has also paid interest to the bank. In our considered opinion, interest earned has to be netted off with interest expenditure. We, accordingly, direct the Assessing Officer to net off interest income with interest expenditure. - ITA No. 192/DEL/2013 CO No. 30/DEL/2013 - - - Dated:- 18-8-2021 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER Assessee by : Shri Sachit Jolly, Adv Shri Rohit Garg, Adv Revenue by : Smt. Sushma Singh, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the Revenue and cross objection by the assessee are preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer / CIT (Appeals) on the interest received on Bank FDRs is not in accordance with law and the interest received on Bank FDRs has to be adjusted against the interest paid on borrowed funds having a direct nexus and the remaining, if any only can be taxed. 4. That the disallowance of interest under Section 14A of Income Tax Act, 1961 on the funds borrowed for purpose of acquisition of shares for controlling the stake, as sustained by the Id CIT(Appeals) is not in accordance with law and purpose for which Section 14A was enacted. 5. Without prejudice to all other grounds the disallowance of interest for the purpose of Section 14A ought to have been considered on net basis. 4. The representatives of both the sides were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer also noticed that the assessee has received interest income of ₹ 1,12,72,374/-. The Assessing Officer was of the opinion that this interest income has a source with the interest expenditure of the company and accordingly, computed net profit of 10% at ₹ 11,27,234/- treating the balance interest for computation of disallowance for earning exempt income. 8. The assessee assailed the assessment before the ld. CIT(A). 9. After considering the facts and submissions, the ld. CIT(A) held as under: 4.4 Considering the above, the Assessing Officer s decision of applying rule 8D read with section 14A of the Act on exempt income earned by the appellant is upheld. However, the appellant s claim that part of the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come surely cannot swallow the entire amount as has happened in this case. 11. The ld. DR has relied upon the decision of the Amritsar Bench of the Tribunal in 93 Taxmann.com 39 but we are of the opinion that the same is not relevant considering the ratio laid down by the Hon'ble Jurisdiction High Court Delhi [supra]. 12. Respectfully following the ratio laid down by the Hon'ble High Court of Delhi [supra] we direct the Assessing Officer to restrict the disallowance to the extent of exempt income which is ₹ 37,93,374/-. 13. Ground of appeal of the Revenue and the cross objection by the assessee is partly allowed on this issue. 14. It is an undisputed fact that the assessee has parked its surplus funds in fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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