TMI Blog2022 (4) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of interest expenses, therefore, we are confining our adjudication only to the said extent. Ground of appeal No.1 is partly allowed in terms of aforesaid observations. Disallowance out of management and development expenses for investments - attributing the same towards investments made in exempt income yielding assets - HELD THAT:- On the one hand the A.O. had worked out the disallowance of the administrative expenses to the extent the same were relatable to earning of the exempt income i.e, by triggering the provisions of Section 14A r.w Rule 8D, while for on the other hand he had separately, on a pro-rata basis, disallowed an amount out of the management and development expenses, for the reason, that the same to the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s partly allowed. - ITA No.290/RPR/2017 - - - Dated:- 30-3-2022 - Shri Ravish Sood, Judicial Member And Shri Jamlappa D Battull, Accountant Member For the Assessee : Shri R.B. Doshi, C.A. For the Revenue : Shri Sanjay Kumar, Sr. D.R. ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-1, Raipur, which in turn arises from the order passed by the A.O. under section 143(3) of the Income Tax Act, 1961 (in short Act ), dated 30.10.2015 for A.Y. 2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us : On the facts and circumstances of the case the Learned Commissioner of Income Tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 4. We have heard the Learned Authorised Representatives of both the parties, perused the orders of the lower authorities and the material available on record. Adverting to the disallowance of interest expenditure made by the A.O. under section 14A of the Act, the Learned Authorised Representative (in short A.R. ) has assailed the same before us on two grounds, viz., (i) that the A.O without recording his satisfaction that the assessee s claim that no part of its expenditure was relatable to earning of the exempt income could be accepted i.e, after referring to its accounts, had invalidly assumed jurisdiction and mechanically worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C = Average value of total assets as appearing in B/s 35,85,55,099/- 3. % of average value of investment 80,367/- Total of (1) + )2) + (3) 4,70,298/- In so far the disallowance of the interest expenditure worked out by the A.O. under section 14A r.w Rule 8D(2)(ii) is concerned, we find substantial force in the claim of the Learned A.R. that as the assessee during the year under consideration had sufficient interest-free funds available with it i.e., in the form of partners capital account on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in Pr. CIT-IV vs. Syntex Industries Ltd. in SLP (Civil) Diary Nos.39602/2017 dated 23.03.2018. As the present assessee before us undeniably has sufficient self-owned funds available with it to explain the investments made in exempt income yielding assets, therefore, in the backdrop of our aforesaid deliberations the disallowance of interest expenditure of ₹ 3,89,931/- made by the A.O. under section 14A r.w Rule 8D(2)(ii) cannot be sustained and is accordingly vacated. Before parting, we may herein observe, that as the assessee has in his grounds of appeal assailed the disallowance u/s 14A only qua the disallowance of interest expenses, therefore, we are confining our adjudication only to the said extent. Ground of appeal No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under Sec. 14A as per the mechanism contemplated in Rule 8D, and thereafter, on a pro-rata basis made a separate disallowance of the amount debited in the P L A/c. We are unable to concur with the aforesaid novel disallowance made by the A.O. and set-aside the order of the CIT(A) to the extent he had upheld the same. The Ground of appeal No.2 is allowed in terms of our aforesaid observations. 8. Adverting to the ad-hoc disallowance of ₹ 1 lac made by the A.O out of telephone and travelling expenses, it is the claim of the assessee before us, that as the personal telephone expenses of the assessee firm were separately debited in the respective capital accounts of the partners, therefore, there was no justification in disallowi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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