2015 (12) TMI 1021

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....in motor cars, and spares had filed its return of income for the impugned assessment year declaring an income of Rs. 5,02,32,420/-. During the course of assessment proceedings, it was noted by the AO that assessee had earned dividend income of Rs. 3,90,135/- which was claimed as exempt. As per the AO, the assessee had only offered Rs. 56,55,867/- as expenses relating to exempt income. In the opinion of the AO, assessee had not admitted any amount for indirect expenditure attributable to the earning of the tax free income. Relying on Rule 8D(2), AO concluded that disallowance under clauses-(ii) (iii) were also required in addition to the suo-motu disallowance made by the assessee. He re-computed the disallowance u/s 14A of the IT Act, as und....

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....ssailing the order of the CIT(A) submitted that the assessee could not produce any evidence for having used the loans raised by it for its business. As per the learned DR the sum of Rs. 18,90,931/- was only the net of out flow of interest. Learned AR submitted that Rule 8D(2)(ii) of the Act, had to be applied, as such irrespective of the actual utilization of loans on which interest was paid. 6. Per contra, learned AR in support of the order of the CIT(A) submitted that a similar issue had come up before the Tribunal in revenue's appeal for the assessment years 2009-10 & 2010-11. According to him, copy of the Tribunal order was placed at paper book pages 19 to21. Learned AR submitted that at para-7 of the order, it was clearly held that ....

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....Rs. 5,09,57,984 Interest on HDFC Bank Trade Adv. Rs. 1,21,97,267 Interest on ICICI Bank Trade Adv. Rs. 98,92,429 Interest on Kotak Mahindra Prime- Trade Advance Rs. 67,98,590 FCNR Charges   Bank Charges   Total Rs.10,23,55,341 The loans which were used for the purpose of placing investments resulting in tax free income were also furnished by the assessee and this totalled only to Rs. 18,90,931/-. The CIT(A) directed the AO to confine the disallowance under Rule 8D(2)(ii) of the IT Act, 1961 to such amount. This Tribunal almost in a similar situation in its order dated 22-01-2015 in ITA No.1352(B)/2012 & 1326(B)/2013 in assessee's own case had held as under; "7. We have perused the or....