2014 (4) TMI 388

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....,476/- that are held to yield exempt income and having deleted the disallowance of Rs. 8,76,424/- made by the Assessing Officer under the provisions of rule 8D(2)(iii), the ld. CIT(A) ought to have similarly deleted the disallowance of Rs. 7,31,351/- made by the Assessing Officer under the provisions of Rule 8D(2)(iii). 3. As it is held that the investments of Rs. 18,89,57,476/- are made out of own funds, the Ld. CIT(A) ought to have deleted the entire disallowance u/s 14A, whether effected by the Assessing Officer or mistakenly by the appellant itself. 4. The CIT(A) ought to have also noticed that the investments in unquoted shares and mutual funds to the extent they are debt funds are eventually liable to capital gains tax and so ev....

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....n amount of Rs. 20,53,857/-. After adjusting the disallowance of Rs. 4,46,082/- already made by the assessee, balance disallowance made u/s 14A was to the tune of Rs. 16,07,775/-. 5. Being aggrieved of the disallowance made by the AO, the assessee preferred an appeal before the CIT(A). 6. In course of hearing before the CIT(A), the assessee contended that there was no nexus between the borrowed fund and the investment made and no expenditure relating to the exempted income had actually been debited to the P&L a/c. It was contended that the assessee not being aware of the correct legal position had erroneously made a disallowance u/s 14A of the Act, which otherwise, was not warranted. It was submitted that all the investments have been....

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....re was any mistake in the return, the assessee could have rectified by filing revised return of income, but, the assessee cannot obviously file an appeal against its own return of income. Referring to the grounds of appeal taken before the first appellate authority, the CIT(A) observed that the appeal has also been filled quite specifically against the disallowance made by the AO and not against the disallowance made by the assessee itself. She, therefore, sustained the disallowance u/s 14A of an amount of Rs. 2,32,646/- under the interest expenses. However, so far as the disallowance of other expenses of Rs. 9,44,785/- made by the AO u/s 14A, the CIT(A) upheld the same. Being aggrieved of the order of the CIT(A), the assessee is in appeal ....

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....of the parties and perused the orders of the revenue authorities as well as other materials on record. The undisputed facts are the assessee in the computation of income filed along with the return of income made a disallowance u/s 14A of the Act, of an amount of Rs. 4,46,082/-. The computation made by the assessee is extracted hereunder for the sake of clarity:   (Rs.) A - Interest expenditure related to sec.14A income 20,53,597 B-Average of opening & closing NT Inv.(incl.MF) 4,26,87,166 C- Average of total assets of the company 37,68,05,067 (i) A *B/C  2,32,646 (ii) 1/2 % of B 2,13,436 Total disallowance u/s 14A 4,46,082     10. The AO has computed the disallowance as ....