TaxTMI 
TaxTMI 
2014 (5) TMI 621
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....omputer accessories. 2. On the facts and circumstances of the case and in law, the ld. CIT (A) has erred in deleting the disallowance of Rs.23,04,021/- made under section 14A r.w. Rule 8D." 2. So far as regards Ground No.1, the assessee claimed depreciation @ 60% on computer, UPS and printers, etc. The AO, however, held that UPS, printers, etc., are not part of computer, but part of machinery, allowed depreciation @ 15%. The ld. CIT (A) accepted the claim of the assessee and allowed the depreciation claimed at 60%. 3. The matter, it is seen, is covered in favour of the assessee by the following decisions:- '1. CIT vs. BSES Rajdhani Powers Ltd.', 1266/2010; 2. 'CIT vs. Orient Ceramics and Ind. Ltd.', 200 Taxman 64; 3. 'CIT vs. Citicorp....
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....ive expenses had to be incurred for the purpose of earning of exempt income also. She, therefore, worked out the disallowance under Rule 8D of the IT Rules, as follows:- "Expenditure incurred in relation to exempt income = Rs.1,15,394/- Average Investment = Rs.1.5 crore + 2.5 crore/2 = Rs.2,00,00,000/- Average Assets = Rs.35,28,77,346/- Interest paid = Rs.92,28,237/-" 6. The ld. CIT (A) held the AO's action in invoking the provisions of Rule 8D of the IT Rules to be bad in law and deleted the disallowance of Rs. 1 lac made by the AO. 7. The ld. DR has contended that while erroneously deleting the disallowance correctly made, the ld. CIT (A) has failed to take into consideration the fact that as correctly observed by the AO, administra....
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....icle loans, cannot be disallowed; and that all these facts have duly been taken into consideration by the ld. CIT (A) while rightly holding in favour of the assessee. Reliance has been placed on 'ACIT vs. Champion Commercial Company Ltd.', rendered by the Calcutta Bench of the Tribunal, in ITA No.644/Kol/2012 and CO No.55/Kol/2012, for AY 2008-09, vide order dated 21.09.2012 (copy at APB 104-109). 9. We have heard the parties on this issue and have perused the material on record with regard thereto. The assessee has maintained all through that no expenses were incurred for earning the exempt income of Rs. 37,92,143/- by way of dividend. The AO made disallowance of 0.5% of the average investment of Rs. 2 crore, amounting to Rs. 1 lac. At th....
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....6,633/-. This is as per Schedule-17 to the accounts (APB- 13), which shows the interest. 11. As evident from a perusal of the assessment order, none of the above facts and figures were taken into consideration by the AO while making the disallowance and it was only alleged that "the assessee's representative submitted that no expenses have been incurred for earning exempted income. The assessee's arguments are not acceptable because the administrative expenses have to be incurred for the purpose of earning of exempted income also......" (emphasis supplied). 12. Further, in 'Champion Commercial Company Ltd.' (supra), while dealing with the issue, it has been held thus:- "16. Once the revenue authorities have taken a particular stand about....
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....i) or by adopting an interpretation as per plain words of the said rule, but even on the face of things as they are at present , in our humble understanding, revenue authorities cannot take one stand when demonstrating lack of 'perversity, caprice or irrationality' in rule 8D before Hon'ble High Court, and take another stand when it comes to actual implementation of the rule in real life situations. Therefore, even as we are alive to the fact that the stand of the learned Departmental Representative is in accordance with the strict wording of rule 8D(2)(ii), we have to hold that, for the reasons set out above, this rigid stand cannot be applied in practice. " 13. In the present case, to reiterate, from the facts as discussed, it is evincib....