9911796707
TMI Blog2018 (11) TMI 1865X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational airlines. The assessee came into existence pursuant to joint venture between Mangalore Refinery and Petro Chemical Ltd., (MERPL) and Shell MRPL. In the course of asst. proceedings for asst. year 2011-12, the AO noticed that the assessee had earned dividend income of Rs. 2,07,61,748/- (dividend on mutual funds) which was exempt under Chapter III of the Income-tax Act 1961 ('the Act'). In view of the provisions of sec. 14A of the Act, the AO called upon the assessee to show cause as to why disallowance of expenses incurred to earn tax free income should not be disallowed and added to the total income of the assessee. The assessee submitted that it had not incurred any expenditure to earn tax free income. The assessee submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the details of utilization of borrowed funds on which interest was paid and claimed as expenditure in computing income, were being filed with supporting documents, as was required by the CIT(A) in the personal hearing on 26/7/2017. In the aforesaid submission, the assessee contended as follows:- "In additions to our paper book filed on March 15, 2015 we hereby submit the documents! Information to substantiate that the amount of working capital loan obtained by the Appellant during FY 2010-11 was used for the purpose of making payment towards its business expenses; and no amount of the loan was used for investing in UTI Mutual Funds. During the year, the Appellant has received working capital loans from Corporation and Kotak Mahi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f invoking Rule 8D and disallowing investments u/s 14A is found to be in order. Reliance is placed on the order of Hon'ble ITAT Mumbai in the case of Asha Lalit Kanodia Vs. Addl. CIT Range-12(2), Mumbai 2016 71 Taxmann.com 84 (Mumbai) Trib. dated 17th February 2016. In the cited case, the Hon'ble ITAT Mumbai held that where assessee claimed that no expenses were incurred to earn exempt dividend income , onus was on assessee to substantiate her claim with her accounts and on failure to do so, disallowance is to be made u/s 14A read with rule 8D. The ground fails. Disallowance is upheld," 6. Aggrieved by the order of the CIT(A), the assesee has preferred an appeal before the Tribunal. The grievance of the assessee is projected in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has wrongly disallowed an amount of Rs. 20,762,657 instead of Rs. 9,861,700 while computing disallowance under section 14A. 2. The learned AG has erred in considering the average of the total assets as Rs. 32,96,00,000 instead of Rs. 86,07,70,000 while applying the formula prescribed under Rule 8D. B. Non-grant of set off of brought forward losses 1. The learned AO and Hon'ble CIT(A) has erred in not granting set-off of brought forward losses of AY 2009-10 amounting to Rs. 1,816,502 claimed by the appellant in the return of income. C. Levy of Interest under section 234B and 234C of the Act 1. The Ld. AO has erred in levying interest under section 234B at Rs. 2,803,510 instead of Rs. 1,109,472. 2. The interest under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance under section 14A of the Act would be restricted to an amount of exempt income earned during the year under consideration. 1.2 Wrong computation of disallowance under section 14A 1.2.1 Notwithstanding and without prejudice to the above, the learned AO has wrongly disallowed an amount of Rs. 20,762,657 instead of Rs. 9,861,700 while computing disallowance under section 14A. 1.2.2 The learned AO has erred in considering the average of the total assets as Rs. 329,600,000 instead of Rs. 860,770,000 while applying the formula prescribed under 2. Non-grant of set off of brought forward losses 2.1 The learned AO and Hon'ble CIT(A) has erred in not granting set-off of brought forward losses of AY 2009-10 amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich needs to be adjudicated is ground No.1 raised by the assessee. As far as ground No. 1 of the assessee is concerned, it is clear that the CIT(A) has not taken note of the written submission filed by the assessee dated 23/8/2017 along with annexure. The ld counsel for the assessee by taking us through the relevant annexure to the written submission dated 23/8/2017 wanted to demonstrate that the borrowed funds on which interest was paid by the assessee was used only for the purpose of business and not to make investment which yielded the tax free income. The ld. DR pointed out that the documents which are annexure to written statement dated 23/8/2017 were not filed before the AO and the assessee therefore ought to have filed along with app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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