2014 (1) TMI 1353

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.... u/s.14A ought to be made by considering the interest paid of Rs.7,59,708/-.        2. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing the disallowance of expenses of Rs.4,22,729/- out of total disallowance of Rs.4,26,322/- which includes Transaction charges of Rs.1,10,433/-. Stock Exchange Stamp Duty Rs.3.09,045/- and SEBI Turnover fees of Rs.6,844/-. In doing so, the LD.CIT(A) has erred in admitting new evidence without allowing the same to be verified by the A.O.    3. "On the facts and in the circumstances of the ease, the impugned order of the Ld.CIT(A) is contrary to law and consequential merits to he set aside and that of the Assessing Officer be rest....

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....rative expenses and interest had been incurred to run day to day business activity and not to earn dividend income,that net interest should be considered for purpose of disallowance u/s. 14A as the interest had a direct co-relation with the interest expenses, that during the year the assessee had incurred interest of Rs. 7,59,708/-, that it had received interest from bank of Rs.14,71,130/-, that the AO had considered the interest paid of Rs. 7.95 lacs but ignored the interest received amounting to Rs. 14.71 lacs for the purpose of disallowance made under Rule 8D(ii) of the Act. 4. After considering the submissions of the assessee and the assessment order, FAA held that AO had justifiably invoked the provision of Rule 8D to determine the qu....

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....n the case of Hero Cycles Ltd. (323 ITR 518). 6. We have heard the rival submissions and perused the material before us. We find that while making the disallowance u/s.14A of the Act, AO had not recorded the reasons for invoking the provisions of Rule 8D(ii) of the Rules. Secondly, he did not consider the net interest amount. We are of the opinion that if interest has been paid and received for the same transaction then only net amount of interest has to be considered for apportionment. In other words, AO cannot ignore the interest paid/received while making disallowance under section 14A r.w. Rule 8D. We find that, in the cases relied upon by the FAA, the issue has been decided in favour of the assessee. In the case of Morgan Stanley Indi....

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....t. Assessee filed details in this regard. Taking into consideration the submission of the assessee, he held that out of total expenditure an amount of Rs.35,093/- should be disallowed as the same was for proprietary trading of the assessee. Finally, he gave relief of Rs. 4.22 lacs to the assessee. 9. Before us, DR submitted that details furnished by the assessee before the FAA was not made available to the AO, that FAA should have called for a remand report.AR submitted that all the expenses, barring a small portion, were incurred for carrying out the business of the assessee, that AO had not called for any detail in this regard, that during the appellate proceedings assessee had filed necessary details, that AO was not justifying in disal....