Appeal partially allowed, issue remanded for recalculation. Interest addition upheld.

The tribunal partially allowed the appeal, remanding the issue of disallowance under section 14A of the IT Act back to the Assessing Officer for recalculation in accordance with the relevant rules. However, the addition of interest under section 244A of the IT Act was upheld, dismissing the appellant's contention regarding the adjustment of interest refund against tax liability.

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Issues:
1. Disallowance under section 14A of the IT Act
2. Addition of interest under section 244A of the IT Act

Issue 1: Disallowance under section 14A of the IT Act
The appellant, a cooperative society engaged in banking, challenged the disallowance made by the Assessing Officer under section 14A of the IT Act for the assessment year 2013-14. The ld. CIT(A) partially allowed relief but retained a disallowance of &8377; 12,11,042. The appellant appealed against this decision, specifically contesting the addition related to indirect expenses under clause (iii) of Sub-rule (2) of Rule 8D of the Rules. The appellant argued that the computation of average value of investment by the Assessing Officer did not align with the relevant provisions of Rule 8D during the assessment period. The tribunal agreed with the appellant, remanding the matter back to the Assessing Officer to calculate the disallowance under clause (iii) of Sub-rule (2) of Rule 8D in accordance with the Rules applicable at the relevant time. Consequently, this ground of appeal was partly allowed.

Issue 2: Addition of interest under section 244A of the IT Act
The Assessing Officer added &8377; 3,38,468 as interest under section 244A of the IT Act, pertaining to interest on income tax refund received by the appellant for the assessment year 2012-13. The appellant contended that the interest refund was adjusted against the tax liability, leading to ignorance of the interest receipt. However, the tribunal upheld the lower authorities' decision, stating that the adjustment of the refund also constituted receipt of interest. As a result, the ground of appeal filed by the appellant on this issue was dismissed.

In conclusion, the tribunal partially allowed the appeal for statistical purposes, remanding one issue back to the Assessing Officer while upholding the addition of interest under section 244A of the IT Act.

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