TaxTMI 
TaxTMI 
2014 (7) TMI 907
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. 2. The grievances of the assessee read as under: "On the facts and in the circumstances of the case the appellant prays that provisions of Section 14A read with Rule 8D are not applicable on the facts of the case and no disallowance should be made u/s l4A read with Rule 8D. 2. On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (A) has erred in confirming that the interest of Rs. 1.83 crores is to be considered for computing the disallowance u/s 14A. The appellant prays that conclusion reached by Learned Commissioner of Income Tax (A) is erroneous. The appellant prays that the interest of Rs. 1.83 crores should not be considered while computing disallowan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant. In the absence of any such finding we submit that the Learned Assessing Officer was not justified in invoking the provisions of Section 14A and making the disallowance of interest and administrative expenses. 7. On the facts & circumstances of the case the Learned Commissioner of Income Tax (A) has erred in confirming that the expenditure as per formula provided under Rule 8D is to be considered while computing the book profit u/s. 115JB. The appellant prays that the conclusion reached by Learned Commissioner of Income Tax (A) is erroneous and the expenditure computed as per formula provided under Rule 8D cannot be considered for computing book profit u/s.115JB." 3. The grievances of the Revenue read as unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....penses incurred in this respect. This explanation of the assessee was rejected by the AO who was of the firm belief that Sec. 14A has been introduced providing that no deduction shall be allowed to the assessee in respect of the expenditure incurred by the assessee in relation to income which does not form part of total income. The AO went on to disallow expenditure u/s. 14A r.w. Rule 8D and computed the total disallowance at Rs. 7,94,60,371/-. The AO also added the amount disallowed u/s. 14A r.w. Rule 8D to the Book Profit u/s. 115JB for the computation of MAT thereon. 5. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A), it was argued that the borrowed funds have been utilized for the purpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sallowance, the Ld. CIT(A) was not convinced that the opening balance of loans were not utilized for the purpose of investment and therefore did not accept the contention of the assessee that interest expenditure of Rs. 1.83 crores should not be considered for the purpose of disallowance u/s. 14A r.w. Rule 8D. The Ld. CIT(A) accordingly directed the AO to rework out the disallowance u/s. 14A r.w. Rule 8D by considering the interest expenditure of Rs. 1.83 crores only. 6. The Revenue is in appeal against the direction of non consideration of interest amounting to Rs. 16.22 crores and the assessee is in appeal against the balance amount of interest to be considered for disallowance amounting to Rs. 1.83 crores. 7. In so far as the adjus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d force in the contention of the Ld. Counsel. None of the loans have been utilized for the investment into shares of the companies. We have also carefully perused each and every loan taken in A.Y. 2008- 09 and the corresponding end use of the said loans. The provisions of sub-clause (ii) of Rule 8D(2) are very clear on this wherein it has been provided that only such interest expenditure is required to be considered which is not directly attributable to any particular income or receipt. Considering the facts in totality in the light of the details submitted by the assessee, we do not find any error in the findings of the Ld. CIT(A) in so far as interest expenditure of Rs. 16.22 crores is concerned. We, accordingly, confirm the findings of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndings on the net worth vis-à- vis investments of the assessee. No doubt, the decision relied upon by the assessee by the Hon'ble Delhi High Court (supra) is in favour of the assessee. Since the fact relating to the Special Purpose Vehicle was not before the AO, in the interest of justice and fair play, we restore this issue back to the file of the AO to decide this issue afresh. The AO is directed to verify the net worth of the assessee vis-a-vis investments. The AO is also directed to verify the claim of the assessee that it creates SPV for the purpose of its business and make investments in such SPV in the light of the decision of the Hon'ble Delhi High Court. The AO is also directed to verify the claim of the assessee tha....