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TMI Blog2022 (8) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is have reserve and surplus by way of share capital, and general reserve, and therefore, the appellant is having interest free fund, and as such, there is no question of application of sec. 14A of the Act. The appellant craves leave to add/delete/alter and/or amend any of grounds as aforesaid as and when necessary." 3. The brief facts of the case are that the assessee earned dividend income to the tune of Rs. 64,30,214/- which is exempt from tax. The AO during the course of assessment proceedings observed that the assessee has investments to the tune of Rs. 14,88,93,893/- as at 31-03-2009, while the value of investment was Rs. 7,28,78,623/- as at 31-03-2008. On being requisitioned, the counsel for the assessee submitted that investment in mutual fund amounting to Rs. 14.78 crores was made out of IPO proceeds, which funds were lying idle with the assessee company. Further, the counsel for the assessee submitted that no direct expenditure was incurred in relation to receiving income of dividend as these investments were made out of temporary idle IPO proceeds. Accordingly, since no expense was incurred for earning exempted income, there should be no disallowance under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time-barred by 462 days. The Ld. Counsel for the assessee submitted an affidavit and submitted that delay is caused due to the fact on receipt of order passed by Ld. CIT(Appeals), the CA of the assessee advised that though penalty has been initiated, but the same would not be levied by the Department. However, subsequently 263 proceedings were also separately initiated against the assessee for the captioned assessment year, for which appeal was filed before ITAT, Ahmedabad. The AR of the assessee advised that since penalty has not been dropped, it would be now advisable to file an appeal against the order passed by Ld. CIT(Appeals). It was pursuant to the advise of AR of the assessee that the present appeal has been filed, and this process has caused a delay in filing of appeal. The law is well settled by the Higher Courts that while dealing with the application for condonation of delay, the Court has to see the conduct of the party and plausible and sufficient cause for non-filing of the statutory appeal within time. The Apex Court in Collector, Land Acquisition v. Mst. Katiji 1987 taxmann.com 1072, analyzed the provisions of law qua limitation Act and held that the expression &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat alone is not enough to turn down the pleas and to shut the doors against him. If explanation does not smack mala fide or does not put forth as a dilatory strategy, the Court must show utmost consideration of such litigant. 4.1. Coming to the instant case, we have perused the affidavit filed by the previous counsel of the assessee who deposed that the delay was caused due to advise of the assessee's CA and for reasons/circumstances mentioned in the Affidavit. The entire process caused a delay of 462 days. In our considered view, the Assessee has demonstrated the bonafide reasons and sufficient cause for non-filling of the appeal within the time limit. The contention of the assessee is supported by the affidavit and even we could not find any material contrary and/or adverse to the claim of the assessee, therefore explanation offered and cause shown qua delay of 462 days in filling of the instant appeal seems to be bonafide, reasonable, sufficient and unintentional, hence deserves to be condoned. Consequently the same stands condoned. 5. On merits, the counsel for the assessee drew our attention to page 12 the paper book to submit that as at 31-03-2009, the assessee had res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect. In case of Gujarat Fluoro chemicals Ltd. [2020] 120 taxmann.com 433 (Gujarat), the Gujarat High Court again reiterated that where interest free funds available with assessee were far more than gross investment, it could safely be harboured that interest bearing funds was not invested by assessee and, thus, no disallowance under section 14A to be made. In view of the consistent position taken by the Gujarat High Court, as applied to the facts instant case, in our considered view, no disallowance is called for in respect of interest expenses under section 14A of the Act amounting to Rs. 3,72,347/- (as per the break-up provided by the assessee, reproduced at page 6 of Ld. CIT(Appeals) order), when the assessee is having sufficient interest-free funds at the disposal in excess of investment made in instruments yielding exempt income. 7. However, so far as disallowance of administrative expenses concerned amounting to Rs. 5,54,406/- (as per the break-up provided by the assessee, reproduced at page 6 of Ld. CIT(Appeals) order), is concerned, the counsel for the assessee submitted before us that no administrative expenses were incurred in respect of investment yielding exempt inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonableness and fairness. The Mumbai ITAT in the case of Taj Sats Air Catering Ltd. (20 Taxman.com 80) held that where assessee had not allocated any expenditure for earning interest free dividend income, reasonable disallowance was justified. The Ahmedabad in the case of Sun Pharmaceutical Industries Ltd.[2017] 84 taxmann.com 217 (Ahmedabad - Trib.) directed the A.O. to compute the disallowance for administrative expenditure as per the formula given under Rule 8D. This issue again came up before the Mumbai ITAT in the case of Future Retail ITA 5959/Mum/2016, wherein the Mumbai ITAT observed as under: "We do not agree with the submission of ld. AR that assessee has not incurred any expenditure and not warranted to remit this issue back to AO. The investment does require constant monitoring even though it is made within the group concern. Sometimes the method applied as per rule 8D(2)(iii) gives absurd result like the disallowance is more than the actual administrative expenses. Therefore, we are directing AO to determine the total administrative expenses and also determine the total income earned by assessee including taxable and exempt income apply the ratio of income to dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the facts of the instant case. In the case of Sintex Industries Ltd., the assessee has made the disallowance of administrative expenses of Rs. 52,000/- for the expenses incurred in relation to exempted income. However, in the case on hand assessee has not made any disallowances, therefore, we are of the view that the ratio of the Supreme Court judgment cannot be applied in the given facts and circumstances. Similarly, the order relied upon by the ld. AR in the case of Gulshan Investment company Limited (Supra) does not support the case of the assessee. It is because the issue involved in such case was based on the disallowance of the expenses in relation to the shares held as stock in trade though such facts are not there in the case on hand. Therefore we are reluctant to take any guidance and support from such a case, i.e. Gulshan Investment company Limited (Supra). Thus, we are of the view that the disallowances made by the AO and subsequently confirmed by the Ld. CIT(A) are as per Rule 8D(2)(iii) of Income Tax Rule. Thus, the ground raised by the assessee in its CO is dismissed. 9. In view of the consistent position taken by various Tribunals including the Ahmed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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