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TMI Blog2023 (9) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... g the disallowance made u/s. 14A of the Act. 3.1. We have heard rival submissions and perused the materials available on record. The assessee is a company engaged in the business of manufacturing of air-conditioning and refrigeration equipments. For the assessment year 2009-10, the assessee company earned dividend income of Rs. 34,99,371/- and tax free interest income of Rs. 19,81,310/- totalling to Rs. 54,80,681/- and claimed the same as exempt u/s. 10(34) & 10(35) of the Act. The assessee had made suo-moto disallowance of expenses of Rs. 67,885/- in the return of income u/s. 14A of the Act as expenses incurred for the purpose of earning exempt income. The assessee also furnished the list of expenses that were considered for the purpose of making suo-moto disallowance before the ld. AO. In other words, the basis of suo-moto disallowance u/s. 14A of the Act made by the assessee in sum of Rs. 67,885/- was duly furnished by the assessee before the ld. AO. The ld. AO did not record any objective satisfaction with cogent reasons as to why the suo-moto disallowance made by the assessee in the return of income is incorrect. Without doing the same, he directly proceeded to apply the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that he was having co-terminus powers with that of the ld. AO and proceeded to record his satisfaction by stating that both direct and indirect expenses should be subject matter of disallowance u/s. 14A of the Act as attributable to investment activity. Since direct expenses have already been identified by the assessee himself, the ld. CIT(A) upheld the disallowance under Rule 8D(2)(i) of the Rules at Rs. 67,885/-. With regard to disallowance of indirect expenses, the ld. CIT(A) observed that the ld. AO was justified in applying the third limb of Rule 8D(2) of the Rules. 3.3. We have gone through the balance sheet of the assessee and we find that assessee is having sufficient interest free funds in its kitty, which would meet the investments that yield exempt income. Hence the presumption of availability of own funds theory would certainly come to the rescue of the assessee. This view of ours is further fortified by the recent decision of Hon'ble Supreme Court in the case of South Indian Bank Ltd reported in 438 ITR 1, wherein it was observed as under:- 17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest-bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en into account the salaries of concerned employees who were related to investment activity, bonus, provident fund, ESI, employee welfare expenses, insurance expenses, electricity & water, repairs to furniture fixtures, electrical fittings etc., conveyance charges, telephone expenses, stationery and the newspapers/periodicals with complete basis thereon mentioning the name of the employee and directors of the company, the role performed by them, approximate time spent by them towards the investment activity etc. When all these details were placed before the ld. AO , it is bounden duty of the ld. AO to go through the same having regard to the accounts of the assessee and record objective satisfaction with cogent reasons as to why the suo-moto disallowance made by the assessee is incorrect. This is the clear mandate of the statute has provided in section 14A(2) of the Act r.w.r 8D(1) of the Rules. Without recording such satisfaction, the ld. AO is prohibited from directly applying the computation mechanism provided in Rule 8D(2) of the Rules and make disallowance 14A of the Act. This view of oura is fortified by the decision of Hon'ble Supreme Court in the case of Maxopp Investment ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO ought to have taken cognizance of the same while framing the assessment. Admittedly, the assessee had made fresh claims in the revised return of income filed on 29.03.2011, in the revised computation of income filed during on 30.08.2011 and 09.11.2011. These claims were merely rejected by the lower authorities by applying the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. reported in 284 ITR 323. 4.2. We find that in the recent Supreme Court decision rendered in the case of Wipro Finance Ltd. vs. CIT reported in 443 ITR 250, the Hon'ble Supreme Court after considering the decision rendered in the case of Goetze (India) Ltd. had reiterated that the decision in Goetze (India) Ltd. make it very clear that limitation period for considering any fresh claim of an assessee would apply only to the assessing authority and does not impinge upon the preliminary powers of the Tribunal bestowed u/s. 254 of the Act. The relevant observations made in this regard by the Hon'ble Supreme Court or reproduced here under:- 11. Learned ASG had placed reliance on the decision of this Court in Goetze (India) Ltd. v. CIT[2006] 157 Taxman 1/284 ITR 323 in support of the object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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