TMI Blog2014 (9) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... present case are identical to the facts before in Tex Designers [ 2014 (6) TMI 1067 - ITAT CHANDIGARH] and following the parity of reasoning, we hold that where the cumulative balance of the partner at the close of the year were on the credit side, there is no merit in any disallowance on account of interest being attributable to the debit balance of one of the partner - we direct the AO to delete the disallowance. - Decided in favour of assessee. - ITA No. 774/CHD/2012 - - - Dated:- 15-9-2014 - SHRI T.R. SOOD ACCOUNTANT MEMBER AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER For the Appellant : Shri Subhash Aggarwal For the Respondent : Shri Manjit Singh ORDER PER SUSHMA CHOWLA, JM The appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-II, Ludhiana dated 04.05.2012 relating to assessment year 2008-09 against the order passed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act'). 2. The assessee has raised the following grounds of appeal : 1. That the Ld. CIT(A) -has erred in confirming the computation of disallowance of Rs. 1,11,549/-(48346/-+63203/-)made by A.O. u/s 14A r.w.ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d investments were made out of own funds and no borrowed funds were utilized for making the said investments. Further, it was pointed out that the assessee had a total capital of about 30 crores and the total investment during the year in assets on which income was exempt were about Rs. 1 crore. It was further pointed out by the ld. AR for the assessee that the assessee had himself disallowed a sum of Rs. 46,859/- as computed at page 3 of the Paper Book. Further, it was pointed out that the perusal of the expenditure claimed during the year reflected that none of the expenditure pertained to earning of exempt income. The ld. AR for the assessee also stressed that in the preceding year, only disallowance on account of administrative expenses had been made in the hands of the assessee and no disallowance had been made on account of interest attributable to the tax free investments made by the assessee. 6. The ld. DR for the revenue placed reliance on the order of the Commissioner of Income Tax (Appeals) and pointed out that the disallowance has been correctly worked out by the Commissioner of Income Tax (Appeals). 7. We have heard the rival contentions and perused the record. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the interest expenditure. We find no merit in the plea of the assessee in this regard in view of the fact that the assessee himself had computed the said disallowance out of interest expenditure at Rs. 20,309/- by taking the average value of the assets. In other words, the assessee himself admits that the provisions of Rule 8D(2)(ii) were applicable to the year under consideration. Further, the assessee had also made the disallowance on account of the administrative expenses @ 0.5% of the average value of investments. The said disallowance was worked out under Rule 8D(2)(iii) of the IT Rules. In view of the disallowance made by the assessee sue-motto, we are of the view that the provisions of Rule 8D are applicable to the year under consideration i.e. assessment year 2008-09. The reliance by the ld. AR for the assessee on various case laws in this regard are misplaced. The majority of the said case laws relate to the assessment years prior to assessment year 2008-09 i.e. the year from which the provisions of Rule 8D are applicable. Further, the assessee himself has worked out disallowance both under Rule 8D(2)(ii) and 8D(2)(iii) of the IT Rules and in view of the abovesaid f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that similar issue arose before Chandigarh Bench of the Tribunal in Tex Designers Vs ITO ITA No. 1235/CHD/2011 relating to assessment year 2007-08 vide order dated 19.06.2014 and the Tribunal had held as under : 6. We have heard the rival contentions and perused the record. The assessee was a partnership concern and constituted of three partners as detailed in the partners capital account placed at page 4 of the Paper Book. One of the partner Shri Kanwal Khurana had a net debit balance of Rs. 94,12,693/- at the close of the year as against which the other two partners Shri Mohinder Mohan Khurana and Shri Surinder Lal Khurana had credit balances of Rs. 38,44,234/- and Rs. 52,41,884/- respectively. The net capital balance of the partners was debit Rs. 3,26,575/-. During the year under consideration, the assessee had claimed interest expenditure to bank at Rs. 792,226/- and interest on loans at Rs. 753,804/-. The case of the revenue was that the interest bearing funds were used by the assessee to advance interest free funds to one of the partners who inturn had utilized the same for personal purposes. Consequently, the interest related to such borrowed capital by the partner Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
