2015 (3) TMI 58

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.... section 14A of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of satisfaction of statutory preconditions provided in section 14A(1) of the Act, no disallowance could be validly made on an application of Rule 8D of the Income Tax Rules, 1962. 1.2. That while upholding the disallowance, the learned Commissioner of Income Tax (Appeals) has overlooked the decision of the Hon'ble Tribunal in the case of the appellant company for Assessment Year 2008-09 wherein it has been held that no disallowance was permissible under clause (i) and clause (ii) of Rule 8D on the facts of the appellant company. 1.3 That even otherwise the computation made by the learned Assessing Officer and ....

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....ctural set up for earning income which did not form part of total income under the Act. The AO disallowed a sum of Rs. 41,22,933/- by observing in paras 3.3 and 3.4 of the assessment order dated 29.12.2011 as under: "3.3 It is pertinent of mention here that during the year the assessee had agricultural income as well as income from the business activities. There have been administrative expenses booked under the business activities but no such expenses have been claimed against earning of exempt income including agricultural income. The administrative expenses works out to Rs. 2,12,64,280/- apart form labour & salaries totaling to Rs. 83,99,818/- against sale of bars of Rs. 256,80,64,575/- and agricultural income of Rs. 2,08,76,215/-. Th....

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....at there was no evidence filed to show that the initial investments in mutual funds had not been made out of mixed account or the CC limit had not been used for making the initial investment. The ld. CIT(A) observed, that the dividend income did not form part of total income under the Act, the provisions of Section 14A of the Act were applicable and the allowance of expenditure in relation to dividend income was not admissible in computing the income of the assessee. She was of the view that the disallowance was to be made irrespective of the fact whether any income was earned by the assessee or not as Section 14A of the Act did not envisage any such exemption. The ld. CIT(A) also referred the following case laws: • Godrej & Bo....

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....ecific term loans against plant & machinery and against vehicle and the working capital of total limits were only to the extent of Rs. 8.49 crores which was invested fully in the net current assets in the form of inventories of Rs. 12.7 crores, sundry debtors Rs. 24.88 crores, cash and bank balance Rs. 1.84 crores, loans & advances Rs. 13.93 crores. Out of these investments in current assets, Rs. 20.46 crores was financed through current liabilities and provisions leaving net investment in working capital to the extent of Rs. 32.26 crores. In view of the fact that specific term loans were obtained for specific assets and investment in net working capital was much more than working capital limit, it can be said that no borrowed funds were us....