TaxTMI 
TaxTMI 
2013 (1) TMI 14
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....eciating the fact that the assessee here has indulged in camouflaging by inflating the revenue and thereby claiming higher deduction 80-IB in ignoring the fact that the assessee cannot inflate the profit with an eye for the claim of higher deduction as held by the Apex Court in the case of Sanjeev Woolen v/s CIT - 279 ITR 434 (SC). 4. That the CIT (A)-II, Kanpur has erred in law and on facts in not appreciating the fact that the provisions of Instructions No.4 of 2009 dated 30.06.2009 are not applicable in this case as the conditions other than the completion of projects are also not fulfilled and the books of account are not reliable. 5. That the CIT (A)-II, Kanpur has erred in law and on facts to restrict the administrative expenses to the extent of Rs. 50,000/- which was made u/s 14A read with Rule 8D. 6. That the appellant craves leave to amend anyone or more of the grounds of appeal a stated above. 7. That the order of the Ld. CIT (A) II, Kanpur being erroneous in law and on the facts deserves to be vacated and the order of the A'O be restored. 2. Grounds No.1 to 4 relate to the claim of deduction....
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....he ld. CIT(A) to the Assessing Officer for computation of the income in a particular manner. The ld. CIT (DR) has contended that the ld. CIT(A) has no jurisdiction to set aside the matter to the Assessing Officer for recomputation of income either afresh or in a particular manner. In support of his contention, the ld. CIT (DR) has invited our attention to the provisions of section 251(1)(a) of the Act with the submission that the ld. CIT(A) is only empowered, while dealing with an appeal against an order of assessment, either to confirm, reduce, enhance or annul the assessment. He has no power to set aside the matter to the Assessing Officer for either readjudication of the issue afresh or to compute the income in a particular manner. Power to set aside was withdrawn by the Finance Act, 2001 w.e.f. 1.6.2001. Before this amendment, the ld. CIT(A) was also empowered to set aside the assessment to the Assessing Officer for readjudication of the issue either afresh or in a particular manner. Since the ld. CIT(A) has exceeded his jurisdiction by issuing directions to the Assessing Officer to recompute the income in a particular manner, the order of the ld. CIT(A) deserves to be set asid....
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.... his order without interfering the findings on merit. 9. Ground No.5 relates to the restriction of administrative expenses at Rs.50,000, which was made under section 14A read with Rule 8D. 10. From a careful perusal of record, we find that the Assessing Officer has computed the disallowance of Rs.5,47,150 in accordance with rule 8D, which was challenged before the ld. CIT(A) on the ground that rule 8D is applicable only w.e.f. assessment year 2008-09. Therefore, no disallowance is to be made in accordance with rule 8D as assessment year involved is 2007-08. In support of this contention, the assessee has placed reliance upon various judicial pronouncements. The ld. CIT(A) examined the case of the assessee and was convinced with the explanation that rule 8D would not be applicable in the case of the assessee as it would be applicable from assessment year 2008-09. He, however, made disallowance of Rs.50,000 as administrative expenses. The relevant observations of the ld. CIT(A) is extracted hereunder:- "5.1 The assessee has made following written submissions before me:- 2. "The AO has made a disallowance of Rs.5,47,150....
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....er held that nexus between borrowed funds and investments can be said to be established only where it is shown that interest free funds are not available with the assessee. Similar view has been expressed by the Delhi Branch of ITAT in Escorts Ltd. Vs ACIT (2006) 102 TTJ 522 and the Madhya Pradesh High Court in the case of Shree Synthetic Ltd. Vs CIT & Anr. 205 CTR 386. vi) The Punjab & Haryana High court in case of CIT vs Hero Cycles Ltd. 31 DTR 307 have held that where there is a finding that no expenditure has been incurred by the assessee for earning exempt income, no disallowance U/s 14A can be made. vii) In CIT vs. Winsome Textile Industries Ltd. 319 ITR 204 the Punjab & Haryana High court have held that if the assessee has made investment for earning exempt income out of his own funds the interest paid by the assessee cannot be disallowed u/s 14A. viii) The Cochin Branch of ITAT in the case of State Bank of ....